A new development happened to OCBC price performance today.
As shown from the chart above, OCBC hit an intra-day high of $11.21 and closed $11.15 today. This level appears to be breakout from the downtrend channel with high volume. Does that mean the Primary Wave 4, P4, correction for OCBC has ended at $10.36 on 30th Oct 2018 ? Unfortunately, it is still uncertain until the price level moves to the a conclusive level. However, do not rule out the possibility that it is too.
This is a P4 correction, a retracement of between 23.6% - 38.2% occurs 15% of the time while between 38.2% - 50% is 60% of the time. Also P1 peaked at $9.50 and price should not fall below $9.50 as that will result in rule violation. P3 peaked at $13.60 so a 38.2% retracement will be at $10.95 and is considered invalid as price went below that. 50% retracement is at $10.13 and so far the low is at $10.36.
Red Wave Count
The correction IA-IB-IC is doing a 5-3-5 zigzag pattern with IA and IB completed. The wave count suggests $10.36 is the IC-M3. Today rebound is the IC-M4. Since today price level already overlaps IC-M1, it is doing a 5-wave diagonal. For this wave count to be valid meaning $10.36 is not the end of the correction, IC-M4 cannot exceed IC-M2 at $10.57. If this case is the valid wave count, it will have 1 last drop to complete IC.
Green Wave Count
This wave count uses 3-wave A-B-C method to label the wave count starting from Minute degree to Minute degree and finally to Intermediate degree. This wave count presents both IA and IB same as the Red Wave Count. The different is the IC part has completed at $10.36. This suggests if this wave count is valid, correction has ended and now is the post-correction uptrend M1. This bodes well with the fact of today breakout at the downtrend channel. This wave count will be valid and invalidate the Red Wave Count if price moves further up above $11.57 going forward.
While there are 2 different wave counts giving different conclusion, the critical level at $11.57 is the same. It is at this critical level that it will determine either the Red or the Green Wave Count is valid and also whether the correction has finally ended.
Some statistical analysis for this correction.
1. IB = 38.89% IA, a guideline that Wave B in general retraces 38% - 79% of Wave A
2. IC = 61.8% IA => $10.24. If $10.36 is the end of correction, it will be less than 61.8% of IA, something that is outside the guideline
3. IC = 100% IA => $9.20. Though this is the typical case, it is also an impossible case as at this level, P4 will overlap P1 result in rule violation.
Thus, there is no strong conclusion that correction has ended but there is also a possibility that it is so. Just have to watch out for the critical level at $11.57. Should this is the case, OCBC will be the FIRST of the 3 local bank to get out of correction, STRONGEST bank in Singapore !
Added 5th Nov 2018
Fell short of the $11.57 instead just managed a high of $11.54 on 2nd Nov 2018. Now is looking at how much it will pull back and this will have different interpretation and also provide an early confirmation that has the correction over.A pull back not below $10.80 is the key level now. Should the correction has ended, this will be the post-correction sub-level wave 1. The pull back will be sub-level wave 2 and $10.80 is the 61.8% Fibonacci Retracement level, a very typical value for wave 2 correction. Any pull back below $10.80 raise the possibility of correction has not ended. A break below the $10.36 low will definitely confirm still in correction.
Added 15th Nov 2018
Finally, the price fell to hit the 50% Fibonacci level at $10.96 when its hit an intra-day low of $10.94.
If this is the post-correction uptrend wave, the current pull back should be M2. Whether M2 has finished today to still have some more downside to hit the 61.8% Fibonacci level at $10.82 is still too early to tell. Couple of events noted :-
1. Price hit a high at $10.56, just 1 cents lower than the $10.57 resistance level, a theoretical level for peak of M1 if this is the post-correction uptrend
2. The upper limit of the downtrend channel which OCBC broke out on 1st Nov 2018 intersect nicely the 61.8% Fibonacci level at $10.82 making it a potential ending target for M2 correction.
3. Should the price fell further and breakdown at the 78.6% Fibonacci level at $10.62, it raise the possibility that the correction actually has yet to ended and back to square one.
Added 20th Nov 2018
Price hit intra-day low at $10.79, hitting the 61.8% Fibonacci retracement level at $10.82 and closing at $10.81.
So is that considered the end of M2 correction ? Technically and statistically is no as M2 can hit as low as the 78.6% Fibonacci retracement level at $10.62 or somewhere between $10.82 - $10.62. However, the $10.62 level will be a key level now. Should that break, the previous analysis that OCBC has ended the correction at $10.36 could become invalid meaning it is still in correction. If that case happens, will have to relook at the wave count.
