While looking at the wave count of the 3 local banks (refer here), discovered STI chart looks very similar to the 3 local banks. That raise the possibility that the STI wave count leading to present correction might be incorrect. That is instead STI Primary Wave 1 to peak in January 2018, it behaves like the 3 local banks that peaked in May 2018. This is possible if taken into account of the Intermediate Wave 3 extension (similar to the 3 local banks) for the Primary Wave 1. Below is the chart to illustrate that
The Intermediate Wave 3, S3C3P1I3 is extended in which the sub-level Minor degree is seen clearly defined (S3C3P1I3M1 - S3C3P1I3M5). Applying the Fibonacci ratio, the followings are recorded :-
S3C3P1I2 = 59.95% S3C3P1I1
S3C3P1I3 = 207.78% S3C3P1I1
S3C3P1I4 = 30.07% S3C3P1I3
S3C3P1I5 = 69.79% S3C3P1I1
The standard model for 3rd wave extension is w1:w3:w5 = 1:2.618:1. Though not closely matches as wave 3 is less than 261.8% but more than 161.8% of wave 1 and wave 5 falls short of 100%, it is still possible as no rules violation were observed for that count. Looking into lower degree, the Minor degree, for the extended 3rd wave, the followings were recorded :-
M2 = 62% M1
M3 = 219.60% M1
M4 = 28.05% M3
M5 = 167.20% M1
Comparing to the standard model, this 5-wave matches more closely than that of the Intermediate degree. Thus, the possibility that this wave count should be the correct one instead of previous analysis. What's the implication ? The peak of Primary Wave 1 is different, the Fibonacci level for which Primary Wave 2 to retrace also different (different slightly -- 2954 - 3085 vs 2942 - 3070) and the most important, the wave count for the present correction, the pattern of the correction is different.
The top chart is the previous correction wave count, a double-three combination of Expanded Flat - Zigzag. The Expanded Flat consists of a Flat as the first 3 of the 3-3-5 structure.
The bottom chart is the new correction wave count. The Flat pattern within the Expanded Flat in the previous wave count is no more as it is actually the S3C3P1I4 correction. The 5-wave impulse of the Expanded Flat now becomes the 1st pattern of the correction. With that, this makes the overall correction pattern more simple. In fact, is similar to the 3 local banks correction pattern. The only correction pattern with a 5-wave as first part except of a combination is a zigzag (5-3-5). Its also make more sense as a wave 2 (Primary Wave 2) correction typically is a zigzag, deep and sharp. The 5-wave impulse ended at 3176 making it Wave A, the rebound to 3348 is Wave B and presently is Wave C. Wave C should be another 5-wave but looking at the way it is being played out, it looks more like a 5-wave diagonal than an impulse. The 5-wave diagonal of Wave C looks only completed of wave i and ii. Thus the ongoing is wave iii.
Statistical calculation for Wave A :-
wave ii = 46.22% wave i
wave iii = 133.61% wave i
wave iv = 48.43% wave iii
wave v = 268.07% wave i or 143.05% wave i - iii
Not really the typical model ratio but it is acceptable given the guideline stating that should wave iii is less than 161.8% of wave i, wave v length would be 100% or 161.8% of wave i - iii.
For the Primary Wave 2,
50% of Wave 1 = 3086
61.8% of Wave 1 = 2954
78.6% of Wave = 2767
If Wave C = Wave A, it will end up at 2883, which is between the 61.8% - 78.6%, which happens 15% of the time while 73% of the time happens between 50% - 61.8%. It is a race between whether should it follow the guideline of Wave A = Wave C or where Wave 2 occur most of the time. Technically, looking at the 5-wave of Wave C should be able to project the ending point but a 5-wave diagonal unfortunately has not Fibonacci ratio guideline. Just have to wait for the Wave C 5-wave diagonal to develop for the time being.
Added 25th Oct 2018
The gap down today, the second for this correction and hitting an intra-day low of 2984.47 before closing at 3012.84 could be the wave 3 of the Wave C part. A reasonable good rebound to maybe cover the gap should be wave 4 of Wave C. This will follow by the wave 5 of Wave C. Depending of the strength of the rebound to form wave 4, the downside of wave 5 will vary. The 61.8% Fibonacci retracement for Primary Wave 2 stands about 2950 and may or may not break. Should that break for wave 5, 2880 level (Wave A = Wave C) could be hit. Things be it good or bad most of the time happen in three. STI has 2 gap down already so don't rule out the 3rd in the wave 5.
Above chart is the wave count for the Primary Wave 1 to Wave 2, that is since the low in 2016 till now. The Intermediate, Minor and Minute degree were all marked with their respective statistic shown. Those statistic might not follow exact the Elliott Wave model but pretty much close to it. Then another perspective at looking at the correction. Instead of identifying all the individual patterns (zigzag, flat, triangle, etc) that form the correction, just use a simple 3-wave a-b-c model. Wave count starts with Minute degree (mA - mC), after a complete Minute degree it will form a Minor degree (MA - MC). Upon completion of that it will be Intermediate degree (IA - IC). Since this correction is a Primary degree Wave 2 correction, it will not go any level higher than Intermediate. With that reasoning and logic, today could be forming the mC of MA of IC. This means STI is short of a MB (could see a mA-mB-mC) and a MC (should see mA-mB-mC) to finally form the IC, the end of correction. This wave count also fit well with the above wave count that it is now in the wave 3 of the 2nd zigzag.
Added 26th Oct 2018
STI fell into intra-day low of 2955.68, hitting the 61.8% Fibonacci retracement level for Primary Wave 2, rebounded from there and closed at 2972.02. This 2956 level was a thrice tested resistance turned support from April to December 2016. Theoretically, this should provide some support or perhaps the bottom for this correction but looking at the selling pressure, this is questionable.
As mentioned, this Primary Wave 2 correction is a zigzag (5-3-5) pattern with Wave A and B formed. Now it is in its final Wave C, doing a 5-wave impulse/diagonal. Wave i and ii of the impulse/diagonal have completed but the question is has wave iii done ? When STI hit a low of 3030.21 on 16th Oct, it rebounded to 3087.84. The question is can those be considered as wave iii and iv ? If yes, then now it is wave v, the final plunge else any reasonable rebound shall be wave iv. Going by the guideline that for a zigzag pattern Wave C = Wave A, this will give Wave C a target of 2882.
Something worth nothing, there were 2 gap down on STI on 11th & 25th Oct as shown from the above chart. However, the volume decreases with each gap down and that could be exhaustion gap. Since STI is on a downtrend, exhaustion gap is renowned as a trend reversal indicator, this could be the bullish exhaustion gap. Going forward if there is another gap down with even lower volume, this more or less confirm as bullish exhaustion gap and the bottom is round the corner. Capitulation, a word that yet to hear about for quite sometime. The last time capitulation occur was in 2016 and STI bottom. This is another sign or indicator leading the correction coming to an end. Now, STI still yet to show any sign of capitulation and will it occur it is anybody guess. Should it happen (the moment one feel the maximum fear when prices are tumbling) that should be the day when STI finally hit the bottom for this Primary Wave 2 correction.
