The pull back for STI after hitting 3192.88 on 3rd Dec 2018 wasn't something unexpected. The pull back should have some more downside to go to around the 3078 level and it does look very possible next week given STI closed 3111.12 on 7th Dec 2018. This is because considering STI is developing into a 3rd wave extension of 3rd wave pattern as shown in the chart below.
The 3rd wave is the M3 wave and its extension is the 5-wave pattern of its lower degree, the Minute degree (m1 - m5). The pull back STI is doing now is the m2 corrective wave. For this pattern to be valid, the current pull back should not fall below 3007.31 while a drop below 3047 (the 78.6% Fibonacci level) could be an early sign of invalidation. For the upside validation of this pattern, the m3 wave should be a strong impulsive rally with no significant pull back in between to the calculated 3378 (161.8% of m1). Fulfilling these criteria, STI will be on track to break the key level at 3338, a level that really signifies correction since May 2018 is totally over. At least for non Elliott Wave TA practitioners, the shout of bull market is back will be heard.
In the past analysis, the top-down and bottom-up statistical analysis were calculated at every stage of development to determine any convergence point occurs. This is another way to affirm the existing Elliott wave count is valid or not. However, past efforts always result in non convergence. Now, another attempt to look at it.
Statistical Analysis
1. Top-down Analysis
March 2009 low of 1455.47 was SuperCycle wave 2 (S2), the high of 3549.85 on April 2015 was the Cycle wave 1 of SuperCycle wave 3 (S3C1). The low of 2528.44 on February 2016 was the Cycle wave 2 of SuperCycle wave 3 (S3C2). Now, STI is in Cycle wave 3 of SuperCycle wave 3 (S3C3).
S2 = 1455.47
S3C1 = 3549.85
S3C2 = 2528.44 (48.77% S3C1)
Using the basic Elliott wave model of w1 : w3 : w5 = 1 : 1.618 : 1, S3C3 = 5917.15.
2. Bottom-up Analysis
S3C3 will be broken down into lower degree levels of Primary, Intermediate, Minor and Minute and from there work all the way up.
Minute Degree
S3C3P3I1M3m0 = 3007.31 (21 Nov 2018)
S3C3P3I1M3m1 = 3192.88 (3 Dec 2018)
S3C3P3I1M3m2 = 3078.20 (calculated 61.8% S3C3P3I1M3m1)
S3C3P3I1M3m3 = 3378.45 (calculated 161.8% S3C3P3I1M3m1)
S3C3P3I1M3m4 = 3263.75 (calculated 38.2% S3C3P3I1M3m3)
S3C3P3I1M3m5 = 3449.32 (calculated 100% S3C3P3I1M3m1)
Minor Degree
S3C3P3I1M0 = 2955.68 (26 Oct 2018)
S3C3P3I1M1 = 3121.27 (2 Nov 2018)
S3C3P3I1M2 = 3007.31 (21 Nov 2018)
S3C3P3I1M3 = 3440.83 (calculated 261.8% S3C3P3I1M1)
S3C3P3I1M4 = 3275.22 (calculated 38.2% S3C3P3I1M3)
S3C3P3I1M5 = 3543.15 (calculated 161.8% S3C3P3I1M1)
Elliott wave model of w1 : w3 : w5 = 1 : 2.618 : 1.618 was used instead of 1 : 1.618 : 1 as this is to cater for the 3rd wave extension of 3rd wave STI could be developing now. S3C3P3I1M3m5 (=S3C3P3I1M3) from Minute Degree calculation is 3449.32 while from Minor Degree calculation is 3440.83. That is only a difference of 8.49, a small enough value to be considered both values as being converged.
Intermediate Degree
S3C3P3I0 = 2955.68 (26 Oct 2018)
S3C3P3I1 = 3543.15 (from calculation of S3C3P3I1M5)
S3C3P3I2 = 3180.09 (calculated 61.8% S3C3P3I1)
S3C3P3I3 = 4130.62 (calculated 161.8% S3C3P3I1)
S3C3P3I4 = 3767.52 (calculated 38.2% S3C3P3I3)
S3C3P3I5 = 4354.99 | 4718.05 (calculated 100% | 161.8% S3C3P3I1)
Elliott wave model of w1 : w3 : w5 = 1 : 1.618 : 1 and 1 : 1.618 : 1.618 are used.
Primary Degree
S3C3P0 = 2528.44 (3 Feb 2016)
S3C3P1 = 3641.65 (2 May 2018)
S3C3P2 = 2955.68 (61.62% S3C3P1)
S3C3P3 = 4756.85 (calculated 161.8% S3C3P1)
S3C3P4 = 4068.81 (calculated 38.2% S3C3P3)
S3C3P5 = 5869.98 (calculated 161.8% S3C3P1)
S3C3P3 from Primary Degree calculation is 4756.85 while from Intermediate Degree it is 4718.05 (with w1 : w3 : w5 = 1 : 1.618 : 1.618 model). That is a difference of only 38.8, another small enough value to be considered both value being converged.
S3C3P5 from Primary Degree calculation is 5869.98 (using w1 : w3 : w5 = 1 : 1.618 : 1.618 model) while from top-down Cycle Degree calculation is 5917.15. The difference is 47.17, another small enough value to be considered both value being converged.
As from the above statistical analysis it can be seen values are being converged from both top-down to bottom-up analysis. Though some variants of the Elliott wave model are being used instead of just a simple one throughout, this doesn't mean the analysis is inaccurate. In fact Elliott wave operates in various model according to different Fibonacci ratio so using various models is not any violation.
Does that mean the current wave count is valid ? It is not a definite answer but a high possibility and this possibility shall remain valid until rules are being violated. Meanwhile, the option of correction still no yet over remains open as long as 3338 level yet to breakout.
For those familiar with Technical Analysis indicator GMMA should now realize the famous GMMA 1-2-3 breakout pattern as shown in the above chart.
Added 10th Dec 2018
With no surprise STI fell further today reaching an intra-day low of 3064.02 and closed 3072.44, hitting the 61.8% Fibonacci level for m2 wave at 3078.20. Another rebound from there subsequently should affirm m2 wave completed. However, further drop to below 3047 could be an early signal that current wave count is invalid. Of course the confirmation for invalid will be STI fall below 3007.31. An interesting statistic was recorded today.w0 = 3192.88
wA = 3105.63
wB = 3149.71 (50.52% wA)
wC = 3062.46 (calculated 100% wA vs actual 3064.02)
The guideline for m2 wave following a ABC pattern (wA - wC) all fitted in well. wB with a guideline of between 38% - 79% was done at 50.52%. wC = wA = 3062.46 was very near to today intra-day low of 3064.02. If wC = 123.6% wA = 3041.87, that will be near the m2 78.6% Fibonacci level at 3047, a possibility for m2. So far statistically, all the levels are within the projected Elliott wave count.
