Wednesday, October 10, 2018

STI Analysis -- the next peak and trough ? (28)

Continued from STI Analysis -- the next peak and trough ? (27)

The drop in HSI yesterday has invalidated the Elliott wave count that it has ended the correction since January 2018.  Indicating HSI still in that correction wave.  As such, perhaps it is time to re-look STI wave count.  From past analysis it was concluded that the correction wave count ended last month at 3110.79.  The current pull back is the post-correction Wave 2.  However, this wave count can be invalidated if STI fall below 3110.79.  As of now, STI hits an intra-day low at 3140.73, that is more than the 78.6% Fibonacci Retracement level already.  From experience, most of the time when more than 78.6% will mean count invalid, it is like an early warning signal.

Should that wave count become invalid, the followings doubts shall become true that indicating the correction is not done yet.

1. The post-correction wave 1 fails to hit 3340 before pull back.  This is the expected level that was looking for.

2. The correction is less than 50% Fibonacci Retracement level for a wave 2 correction.  Only 12% of the time it falls less than 50%.

Now, if the previous wave count is invalidated and STI still in correction, the wave count shall be as followed.

This is looking at Intermediate degree only since the correction is Primary degree Wave 2.  The closest 3-wave correction pattern is a triangle (or a falling wedge for non-Elliott Wave pattern).  Each wave of the triangle (A-B-C-D-E) is a 3-wave zigzag, hence triangle is known to be 3-3-3-3-3 pattern.  The A, B and C waves of the triangle have been formed.  The recent peak at 3272.88 is the D wave.  Now STI is into the final E wave.

For the previous wave count to be still valid, the current correction cannot fall below 3110.79 and the rebound must break the recent peak as that will be wave 3.

For the wave count correction is still ongoing, STI will have to break 3110.79 OR any rebound from now is unable to break the recent peak (this will form the up part of the 3-wave zigzag pattern of wave E).

While the correction might not be done since January, that doesn't warrant alarm.  Anything that were bought below STI 3340 with holding power should be fine going forward.  This is because as mentioned in previous analysis, STI 3340 is the key level to confirm correction is finally over regardless through Elliott wave count or other mean of Technical Analysis.  Just for the possible downside, 50% Fibonacci Retracement level is at 3070 and 61.8% Fibonacci Retracement level is at 2942.  

Added 11th Oct 2018

The plunge today confirmed correction since January was not done.  STI still in correction and hitting an intra-day low of 3035.20 before closing at 3047.39 made STI now in between the 50% to 61.8% Fibonacci level.  A more common sight for wave 2 correction now.  The big drop today should not be the last of the correction despite moving out of the triangle pattern (stated above).  Though the full detail of the wave count will need some time to map it, the overall correction pattern should be the triangle.

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