Above is the chart of STI as of 25th Jun 2018. Nothing special has happened despite the drop to an intra-day low of 3246.92. However, there are several questions I presume trying to know where the bottom is. Thought I'll use this update to clarify these doubts.
1. The 38.2% Fibonacci Retracement at 3265, the 50% Fibonacci Retracement at 3157 are just guidelines of where STI could possible end for this Intermediate degree Wave 4 correction. They are NOT rules of Elliott Wave. Guidelines mean they happen most of the times that all. Hence, STI as of now has hit 38.2% Fibonacci Retracement level and that doesn't mean it will not go down further to hit the 50% Fibonacci Retracement level.
2. As Intermediate degree Wave 2 correction did an almost 61.8% Fibonacci Retracement and due to the alternative nature guideline between Wave 2 & 4, Wave 4 correction normally retraces 38.2% or 50% but rarely 61.8% and beyond.
3. From my observations so far, if Wave 2 did a 50% Fibonacci Retracement, most of the time Wave 4 will do a 23.6% to 38.2% and occasionally a 50% retracement. If Wave 2 did a 61.8% retracement, most of the time Wave 4 stops at 38.2% but still can go to 50% occasionally. If Wave 2 did a 78.6%, Wave 4 usually can drop to 50%.
4. There is also a guideline that states after a Wave 1,2,3,4,5 the correction of Wave A,B,C normally ends around the bottom of Wave 4. In our STI case if we treat the Intermediate degree Wave 3 and Wave 4 as a simple Wave 1,2,3,4,5,A,B,C Elliott Wave, the bottom of Wave 4 is around the 3200 level (as highlight in the above chart) and this could be another possible target at which this correction will bottom.
5. There is question whether the continuous drop in STI will invalidate the count. There are only 3 rules in Elliott Wave and to invalidate the present count (ie STI is in Intermediate degree Wave 4 correction), STI cannot drop to and overlap peak of Intermediate degree Wave 1 which is at 2965. If such a case happen, the count will be invalidated and a re-count will be needed.
The motive wave (wave 1,3,5) of Elliott Wave principle is very simple and straight forward to identify but the corrective wave (wave 2,4) is much more difficult as if I remembered correctly there are a total 29 combinations of pattern. Hence, one might think knowing Elliott Wave could pick the exact bottom of a correction. I would not say it is impossible but need a lot of skills and analyzing. This is mainly there isn't any rule in Elliott Wave principle to state where the bottom is. Similarly, there isn't any Elliott Wave rules to state where the peak is. The peaks and troughs are all just guidelines. Should anyone want to pick the bottom using those guidelines, you have to cater all the possibilities. That is why when doing Elliott Wave analysis the norm is to have all the possible counts.
I have came across in online forum that people using Elliott Wave to do trading. There is nothing wrong BUT the way it is being carried out raise a big question mark and there is a high risk of analyzing it incorrectly. Said analysis only rely on the simple structure of Wave 1,2,3,4,5,A,B,C with the typical Wave 1 : Wave 3 : Wave 5 = 1 : 1.618 : 1 and the typical Fibonacci Retracement of 38.2% and 61.8% only. Elliott Wave principle is more than that.
I have came across in online forum that people using Elliott Wave to do trading. There is nothing wrong BUT the way it is being carried out raise a big question mark and there is a high risk of analyzing it incorrectly. Said analysis only rely on the simple structure of Wave 1,2,3,4,5,A,B,C with the typical Wave 1 : Wave 3 : Wave 5 = 1 : 1.618 : 1 and the typical Fibonacci Retracement of 38.2% and 61.8% only. Elliott Wave principle is more than that.
