Saturday, December 1, 2018

STI Analysis -- the next peak and trough ? (34)

Continued from STI Analysis -- the next peak and trough ? (33)

Previously, mentioned STI still stuck in both scenario of still in correction and doing post-correction uptrend by Elliott Wave count.  However, new development surfaced for the past 1 week.


Still In Correction
This is the Elliott Wave count marked in Red in the above chart.  However, due to the development of STI in the past 1 week rising above 3121.27, this has broken the pattern of the correction.  That is the M1-M4 wave in IC wave is no longer valid.  As such, the Elliott Wave count associated to it is considered invalid.  So does that mean STI correction since May 2018 has ended at 2955.68 on 26th Oct 2018 ?  In Elliott Wave count it is a YES since the correction pattern, the wave count is no longer valid.  However, to be on the conservative side, confirmation is needed like breaking out of the downtrend channel.  To leave the option still open meaning STI will have to breakdown at 3007.31 to initiate another correction wave count.  

Uptrend -- Primary Wave 3
This is the case marked in Magenta showing the correction ended at 2955.68 and the post-correction uptrend is labeled in Blue with M1 and M2 completed and now in M3 phase.  The uptrend is the Primary Wave 3 of Cycle Wave 3 of SuperCycle Wave 3 (S3C3P3).  Technically, it is the most impulsive of the whole Elliott Wave.  This can be shown in the previous analysis when mentioned on 21st Nov STI within the next 3 days shall break 3088 level and it did on the 3rd day.  On 26th Nov, it was again mentioned within the next 3 days STI shall break 3121.27.  Though the next 3 days STI failed to close above 3121.27, it did manage to move higher than 3121.27 on 29th and 30th Nov.  Not a perfect projection but promising one as this shows the impulsive action of wave 3 against the time axis.

Now, since it is more or less confirm of the correction has ended based on Elliott Wave count unless a breakdown at 3007.31 occur.  The rest of the analysis shall focus on the uptrend wave count.

As shown in the chart above is the statistical calculation of the P3 wave.

M0 = 2955.68
M1 = 3121.27
M2 = 3007.31 (68.82% M1)
M3 = 3275.24 (161.8% M1 calculated)
M4 = 3172.88 (38.2% M3 calculated)
M5 = 3338.48 (100% M1 calculated) = I1

The value 3338 (or around 3340) surfaces and it was mentioned previously that this is the most critical level as breaking above that regardless Elliott Wave or non Elliott Wave analysis will 100% confirm STI is in uptrend.  From Elliott Wave perspective, this level makes theoretical sense to be peak of Intermediate Wave 1 (I1), a higher degree than Minor degree.  From the above statistical calculation, this converges making it a very promising signal.

The above calculation is made with the basic Elliott Wave model.  However, there are more than 1 possibilities in completing the M3 wave, different Fibonacci ratio with respect to M1.  The following shall discuss the 2 most possible scenarios.

Case 1
STI going forward will continue the ascend to reach 3275, a destination for M3 based on statistical calculation before doing a M4 correction then complete with M5 to 3338.  Straight forward trajectory.

Case 2
The failure to close above 3121.27 for the past 3 days has raised the possibility that STI could be developing into the 3rd wave extension of the 3rd wave.  This is the most powerful impulsive wave in whole of Elliott Wave.  The length of it as a guideline will be 261.8% of M1.  Within this wave, a sub-level 5 waves could be seen.  This will mean M3 could end at 3440.83 (261.8% M1).  So is this case possible ?  Should there be a pull back within the next 3 days to around 3055 (61.8% Fibonacci Retracement), this will form the sub-level Minute Wave 2, m2 of the 3rd wave extension.  Thus, the possibility is there.

Since the trade war between US-China and the outcome of the G20 Summit becomes a key point in determining the direction of STI.  Whatever the outcome, Elliott Wave should get all those possibilities covered.  A breakdown in G20 Summit meaning more trade war to come shall lead to breaking down at 3007.31, indicating the correction is not over and a new correction wave count shall be initiated.  A positive outcome shall see STI following the M3 trajectory as listed above.

Added 3rd Dec 2018

STI finally breakout from the downtrend channel affirming exit of correction technically.  It hits an intra-day high of 3192.88 before coming at 3190.62.


The thrust up today allows STI on track to hit the projected target of 3275 for M3 before a pull back as M4 and hit the critical level around 3338 - 3340 to complete M5 which is also peak of I1.  After I1 will be the deep pull back of I2 as shown in the chart above.

The rally today was due to the development of a relatively positive outcome between US & China at the G20 Summit over the weekend.  However, do note that, nothing has been agreed on (signed in paper) regarding the trade war.  There also been 2 different versions of announcements from US and China regarding what was being discussed during the G20 Summit.  It appears that some verbal agreement has been made to temporary further increasing in tariff by the 2 nations for 90 days in order for them to negotiate for some deal.  This implies the trade war between US & China is not over but just a "take-5" moment.  Taking that into account and with a period of 90 days, there is a high possibility that STI could sink into I2 correction before any meaning outcome between the 2 after 90 days.  Before getting into I2 correction, STI will have to navigate through a M4 correction first.  90 days period is more than enough to accommodate these 2 corrections.

Regarding whether at this level is it still possible to develop into a 3rd wave extension of 3rd wave, have to look at the Fibonacci statistic.

M3 = 3275
m0 = 3007.31
m1 = 3119.79
m2 = 3050.28
m3 = 3232.27
m4 = 3162.75
m5 = 3275.24

Unfortunately, none of that has happened from 3007.31 to 3190.62

M3 = 3440 (261.8% M1)
m0 = 3007.31
m1 = 3189.31
m2 = 3076.83
m3 = 3371.30
m4 = 3258.82
m5 = 3440.83

STI closed 3190.62, around the calculated m1 as above.  Hence any pull back subsequently and tracking the above calculated level, it is possible to enact a 3rd wave extension of 3rd wave

Added 4th Dec 2018

The pull back today suggested STI should be on the 3rd wave extension of 3rd wave trajectory.  This has to be confirmed when STI reached those Minute degree wave level as stated yesterday.


The chart above shows the possible trajectory for the 3rd wave extension of 3rd wave.  Note also the pull back for m2 is also the back testing of the breakout from the downtrend channel.  Due to the possible development of the 3rd wave extension of 3rd wave, the possible target for M3 shall be at 3543.15 (for m5 = 161.8% m1).


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