By Elliott Wave count, STI correction which started in end January 2018 finally ended on 18th Sep 2018. The lowest point for STI was 3102.73 happened on 12th Sep 2018. The last Elliott Wave count for this correction does not necessary translate to lowest point as in Elliott Wave there is the case of truncation. In this correction the last wave count was a truncation of the 5-wave impulse resulting in the end point not lower than the peak of the wave 3 of the 5-wave impulse.
Going forward will be Intermediate wave 3 of the Primary wave 3 (P3I3), suppose and should be the steepest climb for the Elliott Wave Cycle which started in 2009. That will surpass the peak in 2007. In Elliott Wave, the bottom-up approach wave count should tally with the top-down approach wave count else the whole structure will be invalid. Take the case for this correction, a bottom-up approach was adopted to map all the way throughout the whole correction but in the end still need to look from top-down to validate the count. Normally most will look at past wave counts from the top-down approach to verify whatever it is counting now, to add another level of certainty, I will also project the future from the top level and back track to ensure whatever it is counting now is valid going forward.
The following is the projection going forward post correction. It is a projection, a guideline and not the exact. To facilitate that, the very basic structure of an Elliott Wave is being used -- wave 1 : wave 3 : wave 5 = 1 : 1.618 : 1 which wave 2 a 61.8% retracement of wave 1 and wave 4 a 38.2% retracement of wave 3. As such, any case of wave 3 or wave 5 extension is not factoring in. Should extension occurs, the actual value will be very much larger than what is being projected here.
Without any doubts the famous Fibonacci Ratio will be used and there is a Fibonacci Calculator in this blog helps calculating all these ratios.
Statistical Analysis
Primary Wave 0 = 1455.47
Primary Wave 1 = 3549.85
Primary Wave 2 = 2528.44
With these values,
Primary Wave 3 = 4844 (ignoring Primary Wave 2 input)
Primary Wave 3 = 4622 (with Primary Wave 2 input)
The above two Primary Wave 3 values are different due to the fact that Primary Wave 2 was not an exact 61.8% Fibonacci Retracement of Primary Wave 1. Since it is a projection or guideline, all possibilities have to be factored in. Thus, Primary Wave 3 shall be in the range between 4622 to 4844.
Taking the minimum projection of Primary Wave 3 = 4622, with Primary Wave 2 at 2528.44, a 38.2% Fibonacci Retracement (typical) for Primary Wave 4 will end around 3822. Take the worst case of 50% Fibonacci Retracement for Primary Wave 4, it will end around 3575. Both these values are above the Primary Wave 1 peak of 3549.85 and thus ensuring there is no rule violation of Wave 4 overlaps into Wave 1. Now if the minimum projection for Primary Wave 3 will not result in Elliott Wave rule violation then any extension occurs (which is a norm) in Primary Wave 3 will definitely make the wave count valid.
The following is the bottom-up approach for future projection based on present wave count. Going forward there will be Intermediate Wave 3, 4, 5 (P3I3 - P3I5) to complete Primary Wave 3. In the bottom-up approach, the Minute degree will be used as the base layer to project the next higher degree, the Minor degree which in turn project its next higher degree, the Intermediate degree.
Primary Wave 3 Intermediate Wave 3 Minor Wave 1 Minute Wave 0 = 3110.79
Primary Wave 3 Intermediate Wave 3 Minor Wave 1 Minute Wave 1 (P3I3M1M1) = 3340
STI 3340 was a multi-tested support turned resistance during the correction and therefore assuming that level to be P3I3M1M1 makes logical sense. With that, this will give a projection of P3I3M1M5 to be 3710.
Primary Wave 3 Intermediate Wave 3 Minor Wave 0 = 3110.79
Primary Wave 3 Intermediate Wave 3 Minor Wave 1 (P3I3M1) = 3710
With this value, Primary Wave 3 Intermediate Wave 3 Minor Wave 5 (P3I3M5) which is also P3I3 is projected to be at around 4679. This is very close to the 4622 being projected above from the top-down approach. At present, the Minute Wave 1 still unknown, the bottom-up approach will have to be re-projected once Minute Wave 1 is confirmed. Thus, the above is just an initial projection.
This is the plus thing about Elliott Wave as it is a closed-loop system unlike any other technical indicators.
Some 2 weeks ago before STI broke below 3176.26 (the last low prior to end of correction), came across in a popular online forum one claimed to have gone through several market crashes and have a self-invented reliable technical indicator sounded alarm that STI likely to "crash" based on his self-invented indicator. That was the period when Elliott Wave count was doing the last stretch of Wave C wave iii of final 5-wave impulse. A break below 3176.26 is expected and there will just be another 2 more counts in wave iv and wave v to finish the correction. After breaking down at 3176.26, STI fell to low of 3102.73, a further drop of less than 2.5% only. Even if STI were to fall to the possible 50% Fibonacci Retracement ratio at 3070, it will only just drop further by less than 3.5%. How to qualify that as "market crash" ?
Another incident was from a Hedge Fund who claimed to be top technical analyst selling off 1/2 of DBS share (mostly bought before DBS went into correction and as high as $27 as then strongly claimed it was on a supercycle uptrend) just near the end of correction at $24+ citing to reduce risk and waiting to buy back at $20 without realizing the correction is coming to an end. When DBS share rebounded strongly past few days, the analysis was DBS supercycle uptrend still intact. If so, why sell off near the end of correction ? This is a typical characteristics/personality for Wave C and it is this type of observation that help affirm when correction is coming to an end.
Even people with good technical analyzing skills still cannot escape being described by Elliott Wave.
