The following is a stock (stock name not display) that was listed on SGX market in 2003. Since then till now, the price movement (with price adjustment for corporate action such as dividend) follows Elliott Wave nicely.
From 2003 to 2007 was Elliott Wave 1 of Primary degree
From 2007 to 2008 was Elliott Wave 2 of Primary degree
From 2008 to 2015 was Elliott Wave 3 of Primary degree
From 2015 to 2017 was Elliott Wave 4 of Primary degree
From 2017 onward should be doing Elliott Wave 5 of Primary degree
Elliott Wave uses 3 simple rules to define whether it follows Elliott Wave pattern, let see so far does the above stock break any of the rules.
1. Wave 2 never retraces more than 100% of wave 1
-- the starting point of Wave 1 is the day it was listed in 2003 and from the chart Wave 2 did not drop to lower than start of Wave 1. So no violation of this rule
2. Wave 3 cannot be the shortest of the three impulse waves, namely waves 1, 3 and 5
-- from the chart it is very obvious Wave 3 is much longer than Wave 1. Hence, regardless what Wave 5 turns out to be, Wave 3 can never be the shortest among the 3 impulse waves. So no violation of this rule
3. Wave 3 does not overlap with the price territory of Wave 1, except in the rare case of a diagonal triangle formation
-- from the chart it is very obvious that Wave 4 stops well above peak of Wave 1. So no violation of this rule
So since day 1 till now the price performance of this stock behaves exactly in Elliott Wave pattern.
Elliott Wave also have some guidelines to define its pattern formation but it is not mandatory that these guidelines must be met. Should these guidelines be met it pretty much resemble that of a classic textbook scenario.
1. Wave 2 usually does a Fibonacci retracement of between 61.8% to 78.6% to Wave 1
-- from that chart Wave 2 retraces almost 78.6% of Wave 1
2. If Wave 2 retraces more than 61.8%, Wave 4 will do a shallow retracement of not more than Wave 2. However, if Wave 2 retraces is a shallow one then Wave 4 will do a deep retracement that is more than Wave 2
-- from the chart Wave 4 retraces between 50% to 61.8%, less than the 61.8% to 78.6% of Wave 2
3. The corrective pattern of Wave 2 and Wave 4 should be alternate that is should Wave 2 be a zigzag then Wave 4 shall be a flat, triangle or combination and vice versa
-- from the chart, Wave 2 did a simple zigzag and Wave 4 is a triangle (descending triangle)
4. Length of Wave 3 shall be between 1.618x to 2.618x of Wave 1 if Wave 1 is not extended
-- from the chart, length of Wave 1 is 0.695 (0.975 - 0.28) and length of Wave 3 is 1.51 (1.955 - 0.445) and that gives a Wave 3 to Wave 1 ratio of 2.17
As Wave 5 still undergoing with the corrective Wave A, B and C yet to run out hence any guidelines relating to those will be too early to compare with.
In summary, price performance since 2003 till now all met the criteria of Elliott Wave rules and it also fall within the Elliott Wave guidelines. Thus, it is very difficult to rule out the stock behaves in Elliott Wave pattern.
Going forward, if the stock continues to behave in Elliott Wave pattern, then peak of Wave 5 shall be higher than that of peak of Wave 3 ($1.955 after price adjustment or $2.15 without price adjustment). For those who happen to know what is this stock might be shocked and find it difficult to believe price can hit higher than $1.955 ($2.15 without price adjustment) but in Elliott Wave it is not about the absolute value instead it is all about relative value.
Another interesting fact (if disregards about Elliott Wave) is the big descending triangle that was formed from 2015 to 2017 and there was a breakout of the descending triangle in February 2018 with high volume (marked in the yellow circle region in the chart above). Any chartist will be able to tell you the outcome of the breaking out of descending triangle with high volume is a bullish sign. If you don't believe in Elliott Wave but you can't ignore that bullish sign.
