Most would say the correction that peg STI for almost whole of 2018 has ended at 2955.68 now. Well, technically, STI still waiting to breakout from 3338 level to confirm that but from Elliott wave analysis perspective, early signals could be pick from here and there to affirm that before the confirmation.
The only way to qualify that is to analyze the wave count from both the top-down and bottom-up approach and if both converge, there is no reason not to qualify the case. Have done this analysis last year before and with new levels and development, going to re-do to ensure the convergence. What going to use this time is slightly different from last time. Previously, was using the Elliott wave basic model of w1 : w3 : w5 = 1 : 1.618 : 1 but now will be using the software app that I develop for Elliott wave calculation -- Elliott Wave Calculator. The algorithm is very much linked to Fibonacci ratio but the only difference is there is an addition condition added in which was overlooked previously. This additional condition is not something new, it is being stated in the book -- Elliott Wave Principle and believe majority of the Elliott wave practitioners have overlook that distinct and critical point as I have yet to come across any mentioning of that key condition in any blog or analysis. That key condition was inserted into my software app and tested to very pretty true for majority of the cases that I have analyzed so far.
Top-down
Firstly, is the top-down approach of Elliott wave count. This has to focus on the SuperCycle degree of Elliott wave count. As mentioned previously, the bottom of 1455.47 in 2009 for the 2008 GFC was the SuperCycle degree wave 2 (S2) and now STI is in SuperCycle degree wave 3 (S3). The peak at 3549.85 in 2015 was the Cycle degree wave 1 of the S3. The bottom of 2528.44 in 2016 was the Cycle degree wave 2 of S3. With that, the Cycle degree wave 3 of S3 value was calculated using my software app.
The Wave 5 value in the above is the Cycle degree wave 5 calculated value and also the end of S3. However, putting that aside as STI still far away from there. Beside, from the bottom-up approach, STI has yet to gather enough data to calculate until that stretch. What's focusing now is the Cycle degree wave 3 of S3 value. 5917.15 was the calculated value for that and this is the top-down approach calculation.
Bottom-up
Next, we will do a bottom-up wave count approach to determine can a convergence being observed for the C3 value. The starting point of the bottom-up approach is 2528.44, the bottom of C2 also the starting point of Primary degree wave count (the sub-level of Cycle degree).
The data collected so far for bottom-up approach Primary degree wave count were P0 = 2528.44, P1 = 3611.69 (the peak of early last year before STI went into almost a year of correction) and P2 = 2955.68 (the bottom of the correction). This gives a P5 value which is C3 of 4972.47, very way out from 5917.15. However, do remember that Elliott wave is possible to have extended wave (in wave 1 which is very rare, in wave 3 which is almost most of the time and in wave 5). Apply the wave 3 extension condition, the re-calculation is as followed.
With wave 3 extension applied, the calculated value for P5 which is C3 is 6055.72, that is like only 138.57 point or 2.34% off 5917.15. This is pretty much acceptable as wave 2, wave 3, wave 4 and wave 5 ratios can vary in term of Fibonacci ratio to what is being used for the computation.
To further confirm the above possible convergence, another top-down approach is being calculated. This time, the wave 5 value is fixed at 5917.15 with the starting point at 2528.44. My software app is able to compute the in between wave 1 to 4 if just given the starting and ending point (W0 and W5).
From the above result, the left side is the bottom-up calculation as mentioned above, the right side is the top-down calculation using the end value of 5917.15 as C3 with wave 3 extension condition applied. Can see the in between wave 1 to 4 values all coming very close to the bottom-up calculation.
wave 1 -- 3611.69 vs 3575.63 (diff 36.06 points or 1%)
wave 2 -- 2955.68 vs 2928.47 (diff 27.21 points or 0.92%)
wave 3 -- 5791.63 vs 5670.01 (diff 121.62 points or 2.1%)
wave 4 -- 4708.30 vs 4622.74 (diff 85.56 points or 1.82%)
All these are less than 2.5% differences, a margin small enough to be ignored. Moreover, 3611.69, 2955.68 were already happened values and they are just 1% off the theoretical number.
Summing up, look like we do have evidences to suggest that the early signals are there to conclude the correction has ended and STI is on track for the uptrend.
