Continued from
STI Analysis -- the next peak and trough ? (22)
Not a good sign, that the comment on STI at the moment. The continued selling and weakness has raised the possibility of invalidating the wave count that STI is in Minute wave 2 (P3I5M1M2). In previous analysis mentioned that should STI fall below the 6th Jul 2018 low of 3176.26, it will invalidate the Scenario 1 and 2.1. Have to retract that statement as it will not invalidate Scenario 1 and 2.1, it will just invalidate the wave count that STI is in P3I5M1M2 and back track to STI is still in Intermediate wave 4 correction which started since end January 2018. The Scenario 1 and 2.1 still valid and can only be invalidated by EW rule that Intermediate wave 4 overlap Intermediate wave 1. There is another Scenario 3 should 1 and 2.1 being invalidated but not getting into detail yet since STI is still in Scenario 1 and 2.1.
Above is the chart to indicate why STI still largely in Scenario 1 and 2.1 as there are many points that fit the guidelines to suggest that.
1. Primary wave 2 is the 2016 low, no argue about that
2. From 2016 to end January 2018, STI has managed to complete Primary wave 3 Intermediate wave 1,2,3.
3. Intermediate wave 3 is an extended wave with Minor 1,2,3,4,5 very clearly defined
4. Minor wave 3 ended very close to the 261.8% Fibonacci Ratio (3344 level) indicating one of the norm that wave 3 = 2.618x of wave 1.
5. Minor wave 5 completes the Intermediate wave 3 with the famous ending diagonal structure
6. The peak of Intermediate wave 3 almost hit 261.8% Fibonacci Ratio (3663 level) further evidence that Intermediate wave 3 is an extended wave
7. Intermediate wave 2 is a simple zigzag correction with a 61.8% Fibonacci Retracement while Intermediate wave 4 develops into a combination correction following the guideline of the alternate nature between wave 2 and wave 4
It just pen out a very "textbook" case for STI at the moment.
The only not so "textbook" case is the depth of Intermediate wave 4 correction. Theoretically, if wave 2 is 61.8%, wave 4 normally ends at 38.2%. Unfortunately, in this case STI looks like heading toward the 50% Fibonacci Retracement level of 3157 as shown in the above chart. A drop to 50% still acceptable given Intermediate wave 2 did a 61.8% so there is still an alternate scenario. However, the puzzling sign is what if STI Intermediate wave 4 falls to the 61.8% level at 3050 ? Though in Elliott Wave there is no rule that states wave 4 cannot fall the same amount as wave 2 but the occurrence of that is rather rare. Should that happen, it is not a violation but rather a rare case. The one and only violation and that going to invalidate the above wave count is STI falls below 2960, the peak of Intermediate wave 1 resulting in overlapping. Should that happen, STI will be in Scenario 3 as mentioned previously.
For Intermediate wave 4 correction the picture now looks like the chart below
Both the W and X wave have been formed with the W wave consists of a mini double-three combination. Present STI is in the Y wave of the double-three formation. For the Y wave, it can be seen as a 5-wave impulse (wave i,ii,iii,iv,v) or another mini double-three structure. Should that be correct, the next drop to either 50% or 61.8% Fibonacci Ratio will complete the sequence. Another interesting statistic that I discovered is :-
For Y wave to be a 5-wave impulse, the total length from start of wave i to wave v if is 261.8% Fibonacci Ratio, that will end around 3057 which is very close to the 61.8% Fibonacci Retracement level at 3055.
Hence, STI 3050 is a very interesting level to watch out for.
Added 20th Aug 2018
It is the 8th consecutive day STI closed in the red. Despite opening positive and rose to intra-day high of 3222.84, the strength was not there. To make it worse, the daily volume increases as STI drifts lower. To be exact, STI is struggling to stay at the 78.6% level (3211) for a Minor wave 2 correction. That is definitely not a good sign. The possibility of invalidating the wave count of Minor wave 2 has further increased. That will revert back to STI still in Intermediate wave 4 correction as described above.
Added 21st Aug 2018
9th straight days closed in the red, that what STI is now. A gap down on open below 3200 level with a rebound to intra-day high of 3212.14 failed to hold the gain eventually closed 3199.89. By Elliott Wave rule can't invalidate Minor wave 2 count but now it is just waiting for it to be invalidated and fall back to still in Intermediate wave 4 correction only. There will be some event namely US-China tariff rolls out, a lower level US-China trade talk and US Fed Jackhole meeting comes end of this week. Should all those events develop into positive and rebounded STI meaning Minor wave 2 is not invalidated, that will be an interesting situation in term of Elliott Wave count !
Added 23rd Aug 2018
Finally STI avoided a 10th straight days closing in the red. A "strong" rebound to close at 3249.89 just slight below the intra-day high of 3256.24 due to mainly SingTel share up 6.5%. STI now is in a very interesting situation as described on 21st Aug 2018. The rebound failed to invalidated Minor wave 2 count BUT can't confirm worse is over unless 3340 breakout. It is still biased towards invalidating Minor wave 2 count and fall back to Intermediate wave 4 count as the current rebound could be the famous "Ending Diagonal" structure of the 5th impulse. The rebound today could be the wave ii and that could get STI to a high of 3287, the 61.8% Fibonacci Retracement between 3187 - 3348.
Added 24th Aug 2018
STI closed the red at 3213.00 and from the look of it, it is doing the ending diagonal pattern with today down as wave iii. Ending diagonal pattern unfortunately has no rule nor a standard guideline as to where each phase of the wave it will be. Thus, STI going forward will be choppy. This has further increases the odd of invalidating Minor wave 2 count (which I have ruled out already) though technically can only be so when STI below down at 3176. For the ending diagonal pattern, wave iii could have further downside meaning heading lower than 21st Aug 2018 low or could have achieve today. After wave iii will be the rebound wave iv and finally the last leg (hopefully really is the last leg down for this correction since end January 2018) wave v.
Added 27th Aug 2018
STI was positive for the day in line with regional markets but lack the momentum and strength. A bullish harami candlestick appearing to be forming and should there be further upside thereafter, around 3280 region would be one resistance level. Unable to cross that would be forming the wave ii of the ending diagonal pattern or the wave x of the wave (y) leg.
Added 28th Aug 2018
STI hit an intra-day high of 3263.14 but closed almost flat from its open value again showing the lack of strength moving up. Current movement still on track being the wave ii of the ending diagonal or the x-wave of the wave (y). Though STI was up on day mainly due to selective index stocks, the broad market was relatively weak.
Added 29th Aug 2018
Finally STI closed in the red despite open in the green. The lack of strength to move higher than yesterday looks highly the start of wave iii of the ending diagonal pattern or the y-wave of the wave (y). However, from today activities, there seem to be some month end window dressing going on. An expected target of wave ii of the ending diagonal is around 3280 so a month end window dressing pushes STI there is not something unexpected. On the other hand, that will just continue the path of the x-wave of wave (y) only.
Added 30th Aug 2018
As expected STI though opened positive but closed down 0.56% at 3225.72 with an intra-day low of 3217.32. This pictured nicely into the wave iii of the ending diagonal of the y-wave of the wave (y). This down wave should break the recent low of 3187.83. As an ending diagonal, the wave iv is able to overlap wave i and thus the rebound from wave iii should have no problem to move above 3190 creating a false sense that 3190 is being tested as a support. Now the question is will the final thrust down (wave v of ending diagonal) be able to stop at the 161.8% Fibonacci level at 3170 else anything between 3050 to 3100 will become a high probability. There is definitely month end window dressing going on but bias towards dressing down.
Added 31st Aug 2018
STI opened in the red dip to an intra-day low of 3199.34 before closing at 3213.48. Though on an intra-day basis it did an rebound but that did not negate away it is in wave iii of the ending diagonal. Each wave of the ending diagonal pattern displays a zigzag pattern which has not been fully play out in wave iii yet.
