Before any update, there is something that was missed out in the previous analysis on the case of STI possible ended the correction at 2955.68. This update will rectify that.
Firstly, on the case that Elliott Wave count for the correction has not ended -- the Red and the Grey as shown in the above chart, there isn't any different in wave count from the previous analysis. The rebound to 3121.27 on 2nd Nov 2018 is taken as M4 of the 5-wave diagonal of the 2nd 5 of the 5-3-5 zigzag pattern. This means failure to break above 3121.27 going forward will see STI coming down to complete the M5, the last wave count of the correction. The statistical destination is noted in the above chart.
Secondly, on the case that Elliott Wave count for the correction has ended that was posted in previous analysis and reproduced as followed.
That was incorrect wave count as IW of double-three cannot be of the same Elliott Wave degree as IA. Hence, the wave count is considered invalid. The correct wave count is shown in the above chart labeled in Magenta. Also added in a statistic that was overlooked in previous analysis that is at 2955.68, IC = 68.16% IA, which meets the minimum guideline of 61.8%. Thus in certain aspect, it is considered valid.
Focusing on the case correction has ended and what STI doing now is the post-correction uptrend Elliott Wave as shown in the chart below.
The high of 3121.27 is the Minor Wave 1, M1 of the post-correction uptrend. The weakness in the past few days is the Minor Wave 2, M2. As a wave 2 correction, it is expected to retrace between 50% to 61.8% (occurrence of 73% of the time) to 3038 - 3019. So far, the low it has hit was 3056.42, slightly more than 38.2% Fibonacci Retracement only. This situation only happens 12% of time for a Wave 2 correction. Thus, going forward, STI might have some more downside or M2 correction has ended at 3056.42. A break above 3121.27 signals end of M2 else further downside is to be expected. However, if STI retraces more than 78.6% that is falls below 2990, the P2 correction has ended scenario could be invalid and back to the above wave count (Red or Grey scenario).
Next week should be a critical week to determine the eventual outcome of STI.
1. A break down at 2990 signals P2 correction still ongoing and it will be the last drop with target between 2807 - 2882.
2. Rebound off between 3019 - 3038 will signals M2 correction ended and starts of M3.
3. A move higher than 3121.27 signals M2 correction done and it is on M3 with a possible target of 3324 (161.8% of M1) to 3490 (261.8% of M1).
Added 10th Nov 2018
Supposed to be included in yesterday post but somehow overlooked, now added in. This are couple of observations made for the case of correction has ended but somehow being debatable.
Firstly, there was observation made that came across counting STI up to 3121.27 having doing a M1, M2 and M3 wave already with current pull back being M4. On the surface it does look like it but going into statistically might paint a different picture. As shown in the chart above, the statistic is as followed :-
M0 = 2955.68
M1 = 3005.03
M2 = 2961.23
M3 = 3121.27
M4 = 3056.42
This will give the following Fibonacci ratio :-
M2 = 88.75% M1
M3 = 324.30% M1
M4 = 40.52% M3
M2 is very deep, even more than 78.6% Fibonacci Retracement. It is not a rule violation as long as it does not pull back below M0 but the possibility of that happening is only 15%. That 15% represents retracement below 61.8%, so it is questionable is that really M2. M3 as calculated is 324.30% of M1 which only 8% of the time it has happened given the most common range is between 161.8% - 261.8%. For M4 if it has already ended is on the reasonable possibility as 60% of the time it falls between 38.2% - 50% Fibonacci retracement. On a supposed uptrend when having 2 events that fall on the least possible occurrence statistic is very questionable whether that wave count is valid or not.
Secondly, there was observation made of an Island Reversal pattern being formed as shown in the chart. There is no debate about the pattern as it fits all the description, a gap down after a primary trend followed by a gap up in the opposite trend with the gap roughly the same level. The size of the island reversal pattern as calculated in the chart is 73.92. With the size of the island, the minimum target is 3114.85 and this has reached when STI hit the high of 3121.27 on 2nd Nov 2018. However, to confirm the impact of Island Reversal being a successful reversal indicator, that minimum target has to turn into a support for further upside. At the moment STI is not doing that as it still struggling to break higher than 3121.27 for the past 4 days. As long as the minimum target cannot be transformed into a support level, the basic objective of the Island Reversal has reached (hit the minimum target) only and nothing else. Do note that Island Reversal for short-term is pretty highly accurately true but for longer-term, it is very debatable.
Thirdly, the close on 9th Nov 2018 has developed into a candlestick pattern of dragonfly doji. A dragonfly doji is supposed to be a bullish reversal signal. However, STI needs to move higher creating all the white candlesticks in the next few days to confirm the validation of this pattern.
In TA regardless Elliott Wave or non-Elliott Wave, confirmation is always needed to conclude a trend if not all being observed are just nothing but hope. To rely on hope is always risky !
Added 13th Nov 2018
STI fell to intra-day low of 3026.08 and at this level it is a retracement of 57.49% since rising from the low of 2955.68 to a high of 3121.27. Assuming this is the case of the post-correction M1 and M2, it is just slight above the 61.8% Fibonacci level at 3018.
Another interesting observation regarding the pull back as shown in the above chart is the way how the Minute degree A-B-C being formed with respect to the Fibonacci ratio.
M1 = 3121.27
mA = 3056.42
mB = 3097.59 (63.48% mA)
mC = 3026.08 (110.27% mA)
If today low is the end of the M2 correction, the ratio as stated above fit all the guideline of wave 2 correction. This in turn fit the case 2 as described above provided STI shall not fall further and break down at 2990.
