Firstly, need to look at Supercycle degree to determine which Supercycle it is currently in. The usual criteria applies to eliminate and narrow down possibilities.
1. Supercycle degree corrective wave shall occur in economic recession scenario
2. Supercycle and Cycle degree corrective wave shall occur in severe weakness in company or industry fundamental
Wave Count 1 (Black)
Supercycle Wave ((1)) peaked in 1996 and Wave ((2)) ended in 2001 due to AFC and dot.com bubble. This was largely different from majority of the stocks and STI as for rest of them Wave ((2)) would stretch till 2003 as from 2001 to 2003 there was recession in economy plus the SARS crisis. The blue trend line also clearly ruled that the correction ended in 2001. The only reason for that was oil price. Oil price (from the chart below) was on a super uptrend from 1999 till 2008 and the rise in oil price cushioning its price to be still in Wave ((2)). However, due to the economic condition during 2001 to 2003, it went into Cycle degree correction. Supercycle Wave ((3)) peaked in 2007 (peaked in Jul rather that Oct like STI). From Jul 2007 till 2009 was Supercycle Wave ((4)) due to 2008 GFC. However, this will lead to Wave ((4)) overlaps Wave ((1)), a rule violation. Thus this wave count is invalid.
Wave Count 2 (Red)
Wave Count 2 (Red)
Supercycle Wave ((3)) peaked in 1996. Supercycle Wave ((4)) ended in 2001 rather than 2003 (reason as in Wave Count 1). Supercycle Wave ((5)) peaked in Jul 2007 and the correction Supercycle Wave ((C)) ended in 2009 due to 2008 GFC. The new Supercycle Wave ((1)) peaked in 2011. From then on till 2016 it was Supercycle Wave ((2)). The correction was due to oil price crash, severe weakness in industry fundamental despite there isn't any economy recession. Now it is on Supercycle Wave ((3)).
Wave Count 3 (Green)
Supercycle Wave ((5)) peaked in 1996 and the Supercycle Wave ((C)) ended in 2001 (reason as in Wave Count 1). From 2001 till 2007, it was Supercycle Wave ((1)) followed by Supercycle Wave ((2)) in 2009 due to 2008 GFC. 2011 peak was Cycle Wave (1) and the correction ended in 2016, Cycle Wave (2). Though this wave count doesn't have any rule violation but doubts make it inappropriate. The length of Supercycle Wave ((1)) is too long and the Supercycle Wave ((2)) correction is too deep (more than 78.6%).
On a more reasonable and logical bias, Wave Count 2 (Red) should be considered the valid one. According to this wave count, it is now in Supercycle Wave ((3)) and Cycle degree Wave (1) of that just completed in Jan 2018. Now it is in Cycle degree Wave (2) correction.
Wave Count 3 (Green)
Supercycle Wave ((5)) peaked in 1996 and the Supercycle Wave ((C)) ended in 2001 (reason as in Wave Count 1). From 2001 till 2007, it was Supercycle Wave ((1)) followed by Supercycle Wave ((2)) in 2009 due to 2008 GFC. 2011 peak was Cycle Wave (1) and the correction ended in 2016, Cycle Wave (2). Though this wave count doesn't have any rule violation but doubts make it inappropriate. The length of Supercycle Wave ((1)) is too long and the Supercycle Wave ((2)) correction is too deep (more than 78.6%).
On a more reasonable and logical bias, Wave Count 2 (Red) should be considered the valid one. According to this wave count, it is now in Supercycle Wave ((3)) and Cycle degree Wave (1) of that just completed in Jan 2018. Now it is in Cycle degree Wave (2) correction.
Above is the present correction chart. The correction which started in Jan 2018 unfortunately is yet to run its full course. It is playing out to be a double-three combination W-X-Y with only W and X waves have formed. Presently it is doing the final Y wave.
In the W wave, a (a)-(b)-(c) pattern is being formed.
S3C1 = $8.582
(a) = $7.216
(b) = $8.103 or $8.142 at its highest point
(c) = $6.42
Considering W as a zigzag pattern, (b) retraced slightly more than 61.8% of (a) (calculated $8.06), a guideline for zigzag pattern. Wave (c) with (b) at $8.103 is 123.6% of wave (a), another zigzag pattern guideline ($6.42 vs $6.415 calculated).
In the X wave at $7.30, it is slightly more than 38.2% retracement of wave W, below the 50% calculated value of $7.50.
For wave Y which is still ongoing, should it follow the guideline closely, the followings are the possible destination :-
61.8% of wave W = $5.964
100% of wave W = $5.138
123.6% of wave W = $4.628
The 50%, 61.8% and 78.6% Fibonacci retracement for Cycle Wave (2) is at $6.345, $5.818 and $5.067 respectively. A 123.6% of wave W would fall more than 78.6% which is highly unlikely. Another Elliott Wave guideline states that the correction is likely to end around wave 4 of the lower degree, Primary degree Wave 4, which is at $5.855. Taking all these statistic into account and finding a convergence point, the destination is likely to be between $5.818 (61.8% Fibonacci retracement for S3C2) to $5.964 (61.8% of wave W). However, as the pattern of wave Y is yet to the known at this moment, the above is just an estimation. Now, the worth archiving part is not the above of how and where the correction will end but the correction itself.
The above is the wave W of the correction. This is a clearly zigzag pattern as a 5-3-5 wave count is being played out. The interesting part is wave (b) is not the typical zigzag but an inverted flat (3-3-5) pattern at lower degree level. This is something rather "rare" to be seen in practice despite that in theory it is possible. The statistic of wave (b) is 61.8% of (a) matches the guideline. Wave (c) is 138.2% of wave (a), something out of the guideline that states wave c = 61.8%, 100%, 123.6% or 161.8% of wave a for a zigzag pattern.
This is the tricky part where people can get caught out thinking correction has ended at $6.27, the low on 7th Sep 2018. Wave X played out an inverted Expanded Flat (3-3-5) pattern as shown above. Another Flat pattern in the B/X wave of the correction, that is twice within the correction, something have not came across until this. Wave (b) is slightly more than 123.6% of wave (a), a typical guideline for Expanded Flat pattern. However, wave (c) is between 138.2% to 150% of wave (a)(b), much more than the 61.8% - 100% guideline. If it is 100%, it will end at the same level of wave (a). Furthermore, on its way to surpass peak of wave (a), its displays a 5-wave impulse. This can cause misinterpretation that the correction has ended at $6.27 and it is on a post-correction uptrend.
Chart above is the portion on the ongoing wave Y. The early warning signal that the correction is not over came when the fall to $6.67 on 11th Oct 2018 from $7.30. The drop was too sharp and on 1 straight line down without rebound in between (a simple zigzag pattern). Though it is not a rule violation but a high probability (warning signal) that the drop is still part of the correction since Jan 2018. With that, the wave count has changed to a double-three with $7.30 being wave X. Going forward, it is still too early to tell how wave Y will be played out. It could be a zigzag, a flat or a triangle pattern. Given that from the above, the possible destination is between $5.818 to $5.964, it has enough downside to play out those patterns. Moreover, within the whole Cycle Wave (2) correction, there is already a Zigzag embedded with an inverted Flat and an inverted Expanded Flat, any other correction pattern is possible for wave Y.
This correction is the educational part for Elliott Wave analysis and learning !
