STI Analysis -- the next peak and trough ? (61)

Continued from STI Analysis -- the next peak and trough ? (60)

STI-2
Finally, with STI at intra-day low of 2772.70 on 9th Mar 2020, 2955.68 broke and that will invalidate this scenario due to EW rule violation.

STI-N

The overall wave count for this scenario has not changed with STI firmly on its way to complete Cycle wave (Y) thereby ending SuperCycle wave ((2)).  The 2 sub-level wave count (Red, Purple) at this moment still remain valid.

Red Wave Count

The margin of correctness has narrowed down to either the 150% or 161.8% Fibonacci ratio as shown above.  Present situation is not just about Covid-19 but also concern of crude oil crash (again!).  While crude oil crash can be attributed to human error in which the market should be able to eliminate said risk once the mistake is acknowledged and rectified but this is not the case for Covid-19.  Thus, at current STI level, the possibility of the wave count being the Red case has diminished.  Once STI breaks below the 161.8% Fibonacci ratio of 2723.269, this wave count can be considered as invalid.  Though there isn't any EW rule in stating wave C cannot be more than 161.8% of wave A, so far no such incident has happened before.  Hence, a break at that level is considered invalidation of this wave count.

Purple Wave Count

With Cycle wave (C) likely to be this case, this wave count still remain some trickiness.  The above shows the generated values for a normal 5-wave impulse as normally seen in the uptrend.  However, for the 5-wave in the corrective phase (wave 2 or 4), it is not so straight forward.  The 5-wave can move in normal impulse or diagonal pattern.  The Fibonacci ratio guideline that governs this 5-wave (typically wave 3 = 1.61x wave 1) so far has not been consistently observed during the corrective phase.  Hence, the guideline for wave 3 = 1.61x wave 1 is just a rough estimation.  However, one EW rule does apply, wave 3 cannot be the shortest among the 3.  Unless wave 5 is going to be shorter than wave 3 else wave 3 must be at least the same length of wave 1.  In this case, wave 1 is 685.97 (3641.65 - 2955.68) and if wave 3 going to be of the same length as wave 1, wave 3 will have to drop to 2700.68.  This level is very achievable given the current STI value.  Any rebound at that level or even present level (if wave 5 going to be shorter than wave 3) will commence the wave 4 follows by the last drop wave 5 to complete the SuperCycle wave ((2)) correction.

Whether it is the Red or Purple wave count that eventually plays out, the Cycle degree wave count has not changed with the values being generated back in September 2019 as shown above.

Above is the pattern mapping that was done in January 2018 (STI Analysis -- the next peak and trough ? (II)).  So far, the peak in 2018 (3641.65) has followed the pattern and the question now is the trough which states it should be in 2020.  Based on current situation (Covid-19), this looks highly the case for it to be correct.  However, STI must break below 2528.44 (the low in 2016) for this overall pattern to be valid.  The correctness for this pattern can be used as a basis for future analysis of the next peak and trough.  If STI bottoms out above 2528.44, the above pattern mapping is no longer considered valid.  Another implication for the above pattern mapping to be true is that this will lead to the STI-N wave count to be very true.

As mentioned previously bargain hunting is still too early at the moment.  EW does not have the concept of bull or bear market, neither will it have the concept of support lines.  Bargain hunting based on support lines at this moment is highly dangerous as EW has not shown the whole correction is near is full course yet.