Wednesday, October 10, 2018

OCBC Analysis

OCBC still yet to get out of the correction that started in Apr 2018.  Its correction pattern brought out some interesting point for worthy of archiving.

The above is the Supercycle degree Elliott Wave count.  

Supercycle Wave ((3)) = peaked in 1996
Supercycle Wave ((4)) = 1998 due to AFC
Supercycle Wave ((5)) = peaked in 2000
Supercycle Wave ((C)) = 2003 due to bubble and recession in 2001 - 2003
new Supercycle Wave ((1)) = peaked in 2007
new Supercycle Wave ((2)) = 2009 due to 2008 GFC

Now it is in the new Supercycle Wave ((3)) in which when the next financial crisis comes, it will be new Supercycle Wave ((4)).

The new Supercycle Wave ((3)) is being break down into Cycle degree (1)-(2)-(3)-(4) (marked in magenta).  The current correction is Cycle degree (4).  The Primary degree of Cycle degree Wave (1) and (3) are labeled in red.  Noticeably, there is a leading diagonal in Cycle (1).  There is also an ending diagonal (not label above) in Cycle (3).   

The above is the current correction wave count.  The Wave A and Wave B portion are defined and now it is in Wave C.  Wave C appears to be playing out to be a triangle pattern with wave a and b done.  Wave c of the triangle should be still ongoing as no zigzag sighted.  A check on Fibonacci Ration, the lowest point the correction has hit at $10.87 is slightly more than 38.2% Fibonacci Retracement, a very typical value for Wave (4).  As triangle pattern really stretches in time meaning could still have a while before the correction is done.  The triangle pattern started in July is only 3 months old so could be another 3 months more to go.  The final shape of the triangle has yet to established as wave c still ongoing, thus, there could be downside to the 50% Fibonacci level if the triangle is like a falling wedge shape.  The completion of the triangle pattern will result in the overall correction pattern as a double-three combination of zigzag - triangle.

What's interesting is OCBC is the the first bank among the 3 to develop this correction pattern.  UOB is following closely behind.  As for DBS, at the moment is a 50-50 call.  It could lagging behind OCBC and UOB to develop this pattern or it is on another correction pattern.  Both UOB and DBS have yet to hit the 38.2% Fibonacci Retracement level for a Wave (4) correction so could have further downside as they could break below recent low. 

As a whole, afraid the 3 banks have yet to come out of Wave (4) correction.

Added 11th Oct 2018

The drop today move it to between 38.2% and 50% Fibonacci level, probably more convincing level as it happens 60% of the time.  The Cycle Wave (1) peak is at $9.50 (adjusted for dividend) and this level should not be overlapped given it is a Cycle Wave (4) correction.  This price level is very close to the 61.8% Fibonacci level.  For wave 4 to land in between 50% to 61.8% Fibonacci level it only happens 15% of the time.  As for the shape of the correction pattern now, the triangle pattern still not yet invalidated.

Added 12th Oct 2018

Redefined the correction pattern.  It is not the triangle pattern as stated above.

The current correction is Supercycle Wave ((3)) Cycle Wave (4) degree.  Cycle Wave (3) ended in March 2018 and since then till July 2018, it formed an Expanded Flat pattern as shown in the chart above.  The outcome of this Expanded Flat if the W wave of a double-three pattern.  It then rebound to Aug 2018 to form the X wave and now is the final Y wave.  This Y wave turns out to be a Zigzag pattern, actually is a double zigzag if looking at its sub-level (Intermediate level as WXY is Primary level).  The zigzag still have an up, that is today and another down to form the 3-wave correction basic pattern.  Looking at the Fibonacci Ratio guideline, yesterday fell into between 38.2% to 50% level, a very common level for wave 4 correction.  With now forming the b wave probably resistance at $11, the final c wave according to Fibonacci guideline shall have 2 possibilities

1. wave (c) = 161.8% wave (a) which will end at $10.30
2. wave (c) = 161.8% wave (b) which will end at $10.50

Both the above 2 possible levels fall within the 38.2% to 50% Fibonacci level for the whole correction and lower than yesterday low.  This will result in the Wave (4) correction as a double-three combination of Expanded Flat - Zigzag.

As the correction still ongoing, the double-three combination of Expanded Flat - Zigzag is not a 100% assure structure as the latter part of the double-three could turn out to be a triangle too, so have to keep this possible scenario in mind.

The confirm correction is over level is the breaking out at the level of the X wave, that is $11.93.

Added 21st Oct 2018

The Supercycle wave count as above is found to be incorrect and the correct wave count should be the one being analyzed in DBS, OCBC, UOB Analysis.  Despite that, the wave count for the correction itself still remain valid.

Rectified to correct wave count -- Present correction is Primary Wave 4 of Supercycle Wave ((3)).

Added 23rd Oct 2018

With the new Supercycle wave count, this has adjusted the peak before the correction.  As such, the correction pattern is also redefined.

The peak before the correction, Cycle Wave (3) now appeared in May as shown from the chart above.  With that, a new wave count for the correction appears.  The most tricky part was how to fit in the region circled in yellow.  It doesn't look like a straight zigzag and making the fall from $13.6 to $10.87 having difficulty in provide a reasonable wave count.  The only way to fit in was a 5-wave impulse with wave 3 having an extension.  The 5-wave impulse is (i) - (v) and the 3rd wave extension is i - v.  Applying Fibonacci ration to wave i - v found the following :-

wave ii = 60.26% wave i
wave iii = 140.40% wave i
wave iv = 27.36% wave iii
wave v = 132.45% wave i

With no rules violation and the Fibonacci ratio reasonable, that should be the best fit.  With a 5-wave there, it is also impossible to fit in a flat pattern (3-3-5) as after wave v, there is still a drop to $10.87 before rebound.  Also should be be a flat, the wave c leg is too long according to Fibonacci guideline.  So the only way to fit a wave count is this 5-wave is an extension of a bigger 5-wave, wave (i) - (v) as shown in the chart.  A check on the Fibonacci ratio, the following was noted :-

wave (ii) = 44.04% wave (i)
wave (iii) = 189.91% wave (i)
wave (iv) = 21.74% wave (iii)
wave (v) = 45.87% wave (i)

The Fibonacci ration looks reasonable except for wave (v), falling short of the 100% level, meaning that could be a truncated wave (v).  Should that is accepted, this will make Wave A a 5-wave.  The only correction pattern with Wave A a 5-wave is Zigzag (5-3-5) meaning the rebound to $11.93 is Wave B (a clear zigzag pattern), doing slightly more than 38.2% retracement of Wave A.  Now, Wave C which is ongoing, should be another 5-wave (impulse or diagonal) else the whole correction pattern is unrecognizable.  At this moment, it looks like wave (i) and (ii) have formed with either wave (iii) being completed at $10.55 or still ongoing.  Looking at the Fibonacci level for this Cycle Wave (4) correction, it is now between 38.2% to 50% and is in line to complete wave (iv) and (v) of the 2nd 5-wave and not falling below the 50% level.  Just have to wait for the whole pattern to develop to see whether this new wave count is valid.

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