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Elliott Wave Financial Price Forecasting

Eurostoxx Banks Index – Banks Set For Another Swift Decline

by WaveTrack International| June 14, 2018 | No Comments

Counter-Trend Rally Completed – Banks Set For Another Swift Decline


The late-May counter-trend rally from 109.30 is completing now to 115.91, max. 116.91+/-. The index is poised to resume its five wave impulse downtrend that began from April’s high of 131.98. 5th wave downside targets to complete primary wave A are towards 106.56-103.15+/-.

Winding the clock back to end-April when price levels were trading at 129.64. At the time downside forecasts for the Eurostoxx Banks index were measured towards 112.15+/-. Since then, prices have accelerated lower as a five wave impulse pattern that originated from the April high of 131.98, but this remains incomplete – see fig #1.

EuroStoxx Banks - 60 mins. - Elliott Wave forecast by WaveTrack InternationalEuroStoxx Banks - 60 mins. - Elliott Wave forecast by WaveTrack International

EuroStoxx Banks – 60 mins. – Elliott Wave forecast by WaveTrack International

This is primary wave A subdividing into an intermediate degree ‘expanding-impulse’ pattern, (1)-(2)-(3)-(4)-(5). At the very least, wave (3) ended into the late-May low of 109.30 with wave (4) approaching completion at 115.91. Or perhaps extending just a little higher to 116.91+/-. The downside risk-skew is evident. Downside targets for wave (5) vary, at either 106.56+/- or max. 103.15+/-. The higher number is derived by extending the origin of this impulse pattern, from 131.98 to the point which began ‘price-expansion’ at 121.62 by a fib. 161.8% ratio. The lower is simply where wave (5) unfolds by a fib. 61.8% correlative ratio of waves (1)-(3).

Conclusion

There is certainly some short-term downside risk over the next few weeks basis June’s counter-trend rally coming to an end now. That will ensure a break below the late-May low of 109.30 towards 106.56+/-, max. 103.15+/-, a decline of min. -6.5% per cent, max. -11.75+/-. But further out, it seems the Eurostoxx Banks index will seek even lower numbers sometime towards year-end before completing this year’s correction.

India Nifty 50 – Set to Begin Declines

by WaveTrack International| June 11, 2018 | 2 Comments

India-CNX Nifty 50 – January’s Zig Zag Pattern Set to Begin Wave [c] Declines

January’s decline began a zig zag correction from 11191.00 as minute wave 4. Subdividing into an [a]-[b]-[c] pattern. First of all wave [a] completed an initial decline into the February low of 10250.00. Wave [b] has since unfolded higher as an expanding flat pattern, (a)-(b)-(c), 3-3-5 ending into the mid-May high of 10957.00. Wave [c] declines are now in the early stages of accelerating lower. Ultimate targets to 9795.00+/-.

Nifty 50 - Elliott Wave Price Forecast by WaveTrack International

Nifty 50 – Elliott Wave Price Forecast by WaveTrack International

Nifty 50 – [wave [c] description so far]

Short-term upside targets to complete sub-minuette wave (ii) towards 10855.00+/- were hit into last Thursday’s trading session at 10857.00. The following decline to 10692.50 has now begun wave (iii) declines. These declines can be expected to accelerate lower during the coming week. Downside targets for wave (iii) are towards the March lows of 10057.00+/- and 9895.00+/-. Wave (v) downside targets remain unchanged towards 9795.00+/-. This also ends wave [c] of the zig zag pattern that began this correction from January’s high of 11191.00.

Nifty 50 – Fibonacci Price Ratios for alternate lower targets

However, take note that India’s Nifty 50 could still hit lower targets. The following Fibonacci Price Ratios can be used as a pointer. The 9795.00+/- level is the fib. 38.2% ret. of minute wave 3’s advance from 7896.00. However, a lower target is derived if wave [a] including the March lower-low is extended by a fib. 38.2% ratio to 9451.00+/-. Even, slightly higher targets should be considered at 9708.00+/- if wave [a] to its orthodox low at 10250.00 is extended by a fib. 61.8% ratio.

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EuroStoxx June Rally Finds Secondary Support!

by WaveTrack International| June 8, 2018 | 4 Comments

EuroStoxx and Xetra Dax – June Rally Finds Secondary Support! [title for twitter]

The May corrective zig zag declines for both the Eurostoxx 50 and Xetra Dax remain incomplete targeting 3315.75+/- and 12145.00+/- respectively, but the interim June rally labelled wave ‘b’ hit important support levels this morning, slightly above last week’s low which now has the ability of stretching wave ‘b’ higher towards 3529.00+/- and 12992.00+/- prior to wave ‘c’ declines.

European Indices

European indices were marked lower overnight and into Friday’s trading session but this week’s decline has been identified as ending a corrective three wave zig zag pattern from 3497.32 (EuroStoxx 50, see left) and from 12925.00 (Xetra Dax, see right). This means another push higher can begin from Friday morning’s lows, prolonging wave ‘b’ rallies to higher levels.

EuroStoxx - Xetra Dax - Elliott Wave Forecast by www.wavetrack.com

EuroStoxx – Xetra Dax – Elliott Wave Forecast by www.wavetrack.com

An equality ratio, i.e. fib. 100% of the late-May/early-June upswing added to Friday morning’s lows projects wave ‘b’ upside targets towards 3529.00+/- and 12992.00+/-. This would still allow wave ‘c’ declines to resume afterwards, to original downside targets of 3315.75+/- and 12145.00+/- which then completes the larger zig zag decline that began from May’s highs.

Conclusion

Some interim rallies from the end-May lows are extending higher as wave ‘b’ and this conforms to the U.S. stock index rhythm we also track in the Nasdaq 100 – the Nasdaq 100 is poised to overturn Thursday/Friday’s downswing because this is simply a 4th wave approaching completion within the five wave impulse upswing that began from May 23rd low – watch for support at 7046.00 (Nasdaq 100 futures).

Are you trading the SPX 500, EuroStoxx, Nasdaq 100, Russell 2000, Dow Jones 30, Dax, FTSE100 or ASX200? Don’t miss WaveTrack’s regular updates in our bi-weekly EW-Compass Report! Ensure you’re tracking our Forex forecasts – subscribe online for the EW-COMPASS REPORT.

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SP500 EuroStoxx Dax – Upside Levels Are Being Tested Now

by WaveTrack International| June 4, 2018 | 1 Comment

SP500 – Interim Upside Resistance Levels Are Being Tested Now!

  • Interim upside resistance levels are being tested for the SP500 at 2744.25-2751.00+/- and for Eurostoxx 50 at 3485.00-90.00+/-, Xetra Dax at 12843.00-68.00+/-. Price-rejection would confirm shorter-term declines to 2690.00-85.00+/-, 3315.75+/- and 12145.00+/-.
  • Overall uptrends that began from the late-March/early-April lows remain on-course. However, shorter-term, interim upside resistance levels are being tested for the S&P 500, Eurostoxx 50 and Xetra Dax indices. These resistance levels were quoted in last Friday’s detailed report. Nevertheless, there is an increasing risk that price-rejection will confirm a temporary retracement decline unfolding over the next week or two.

    SP500 - Elliott Wave Forecast by WaveTrack International

    SP500 – Elliott Wave Forecast by WaveTrack International

    The reason for this is because the SP500 has so far, unfolded higher from the recent low of 2675.00 as a three wave zig zag to current levels of 2744.25 – see fig #1. This means it is prolonging wave < b > as either a running flat or a triangle pattern. This would allow a decline from between 2744.25-2751.00+/- to test downside levels towards 2690.00-85.00+/- before the larger uptrend resumes as wave < c >.

    EuroStoxx 50 and Dax 30 - Elliott Wave Forecast by WaveTrack International

    EuroStoxx 50 and Dax 30 – Fibonacci Trading Forecast by www.wavetrack.com

    A short-term downswing for the SP500 would corroborate last Friday’s forecast for another downswing for the Eurostoxx 50 and Xetra Dax indices – see fig #2. The mid-May peaks ended 1st waves within prevailing uptrends – the following declines have since begun a three wave zig zag corrective pattern for 2nd waves, a-b-c labelled in minor degree for the Eurostoxx 50 (see left) and in minuette degree for the Xetra Dax (see right). Both have completed upside targets for wave ‘b’ today, opening downside risk for wave ‘c’ declines – towards 3315.75+/- for the Eurostoxx 50 and 12145.00+/- for the Xetra Dax.

    Conclusion

    Larger uptrends remain bullish but this short-term analysis indicates a temporary pause, a corrective downswing prior to a resumption higher later.

    Are you trading the SPX 500, EuroStoxx, Nasdaq 100, Russell 2000, Dow Jones 30, Dax, FTSE100 or ASX200? Don’t miss WaveTrack’s regular updates in our bi-weekly EW-Compass Report! Ensure you’re tracking our Forex forecasts – subscribe online for the EW-COMPASS REPORT.

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    SPX 500 and Nasdaq 100 – Uptrends set to Resume!

    by WaveTrack International| May 30, 2018 | No Comments

    SPX 500 and Nasdaq 100 - 120 mins Elliott Wave Forecast

    SPX 500 and Nasdaq 100 – 120 mins Elliott Wave Forecast – www.wavetrack.com

    SPX 500 and Nasdaq 100 – Synopsis

    Both the SPX 500 and the Nasdaq 100 have ended recent counter-trend declines that began from the mid-May highs of 2741.25 and 7013.50. At yesterday’s low of 2675.00 for the SPX 500 but at the earlier low of 6829.75 for the Nasdaq 100. Prevailing uptrends are now set to resume.

    SPX 500 and Nasdaq 100 and the Italian Crisis!

    This week’s trading activity has been dominated by the Italian political crisis. Following the appointment of former International Monetary Fund official Carlo Cottarelli as interim prime minister, with the task of planning for snap polls and passing a budget. The appointment made by President Sergio Mattarella was seen as controversial. Mainly, because the Five Star Movement (M5S) has proposed Euro-sceptic Paolo Savona for the office. Italian short and long-dated interest rates have doubled in just the last few trading sessions. Especially, at the short-end of the curve. And there is talk of the new political parties attempting to renegotiate the country’s debt pile. That in itself has sent fund managers scurrying to liquidate risk-assets rebalancing with safe-havens.

    European Indices

    European stock indices have been trading sharply lower. However, still in-line with recent Elliott Wave forecasts. Interim lows have been hit into Monday’s trading. Tuesday’s nudge away from these lows in indices like the Xetra Dax have triggered a ‘reversal-signature’ confirming near-term upside potential.

    SPX 500 U.S. Stock Indices

    Meanwhile, U.S. indices have undergone more modest retracements within the diagonal patterns update recently in the bi-weekly reports. The SPX 500 and the Nasdaq 100 have each ended these short-term corrections, the SPX into yesterday’s low at 2675.00 and the Nasdaq 100 earlier at 6829.75 – both are now forecast to resume their 3rd wave uptrends within the diagonal patterns. Upside targets for the SPX 500 remain towards the 2800.00+/- area whilst the Nasdaq 100 upside targets are minimum 7130.00+/- but could stretch as high as 7242.00+/.

    Conclusion

    More in tonight’s in-depth report, but the SPX 500 and the Nasdaq 100 are now set to resume their 3rd wave uptrends.

    Are you trading the SPX 500, EuroStoxx, Nasdaq 100, Russell 2000, Dow Jones 30, Dax, FTSE100 or ASX200? Don’t miss WaveTrack’s regular updates in our bi-weekly EW-Compass Report! Ensure you’re tracking our Forex forecasts – subscribe online for the EW-COMPASS REPORT.

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    SP500 Update – Impulse Patterns Ending Now!

    by WaveTrack International| May 15, 2018 | No Comments

    SP500 Update

  • SP500’s impulse upswing from May 3rd low includes 5th wave ‘extension’, ending at 2741.25 – Nasdaq 100’s equivalent impulse advance has unfolded with fib. 100% equality ratio in 3rd and 5th waves – both have now begun a corrective downswing
  • SP500 - Futures  vs. Nasdaq 100 - Futures - 60 mins. Elliott Wave Forecast by WaveTrack International

    SP500 – Futures vs. Nasdaq 100 – Futures – 60 mins. Elliott Wave Forecast by WaveTrack International

    Last week’s update forecast the upside completion of the SP500’s impulse pattern towards 2708.75+/- where the 5th wave unfolds by a common fib. 61.8% ratio of the 1st-3rd wave advance. But the SP500 pushed even higher, to an extent at which it developed as a 5th wave ‘extension’, where the 5th wave measures greater than either the 1st or 3rd wave sequence (see fig #1, left). The final high ended at 2741.25. This is an uncommon recurrence of only 5-7% per cent and it usually manifests at times of intense short-covering.

    Sentiment in the lead-up to this advance was predominantly bearish. Especially, because the preceding advance during April unfolded into a discernible corrective/counter-trend pattern. And for investors/traders that weren’t familiar with this pattern, bearishness prevailed in previous polls simply because of the impact on rising interest rates. But the April 18th high was exceeded last week, causing the ‘extension’ in a flurry of hectic buying.

    By comparison, the Nasdaq 100’s equivalent advance from the early-May low ‘looks’ more like a conventional five wave ‘expanding-impulse’ pattern where the 3rd wave is commonly the largest sequence, around 85% per cent probability (see fig #1, right). But looking closer, the 5th wave sequence is actually the same amplitude as the 3rd wave, they measure equally at a fib. 100% equality ratio. That in itself is an uncommon event. The high at 7013.50 was just a shave shorter than the 3rd, but technically, we would say these are equal.

    SP500 and the latest Corrections

    A short-term correction/counter-trend decline can be expected to unfold over the next several trading days. The fib. 38.2% and fib. 50% retracement areas are prime candidates to aim for, although they could be deeper. Once an initial downswing has unfolded, the pattern can be examined to determine the completion of the correction in its entirety. But until that happens, these two downside levels become the provisional downside target levels. Both adhere to Elliott’s guideline of a return to ‘fourth wave preceding degree’.

    Conclusion

    These short-term five wave impulse patterns are part of much larger advances underway within April’s uptrend. Once these corrections have completed, both the SP500 and Nasdaq 100 are forecast even higher, for a revisit of the February highs, and in the Nasdaq 100’s specific case, a break to new record highs.

    Are you trading the SP500, EuroStoxx, Nasdaq100, Russell 2000, Dow Jones 30, Dax, FTSE100, Shanghai Composite, Hang Seng or ASX200? Don’t miss WaveTrack’s regular updates in our bi-weekly EW-Compass Report! Ensure you’re tracking our Forex forecasts – subscribe online for the EW-COMPASS REPORT.

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    SP500 – CORRECTION DUE!

    by WaveTrack International| May 10, 2018 | 4 Comments

    SP500 – 5 Wave Expanding-Impulse Pattern Ending Now – Correction Due!

  • SP500 is in the process of ending a short-term five wave uptrend that began from the early-may low of 2591.25 towards 2708.75+/-. A corrective downswing is measured towards 2649.50+/-
  • Tuesday’s update in our latest report stated ‘…The current intra-hourly advance from the early-May low of 2594.62 (2591.25 futures)…is developing into a five wave expanding-impulse pattern – upside targets are measured towards the 2708.00-18.00+/- area. Upon completion, this ends wave < a > within a developing zig zag pattern…’.

    That five wave pattern can be seen approaching upside completion now – see fig #1. Labelled 1-2-3-4-5, note that wave 5’s upside targets at 2708.75+/- are derived where this fifth wave unfolds by a fib. 61.8% ratio of waves 1-3.

    SP500 Index - Futures - 30 mins. - by WaveTrack International

    SP500 Index – Futures – 30 mins. – by WaveTrack International

    A counter-trend decline is perfect timing to begin wave < b > within this developing, larger uptrend. Idealised retracement levels are towards the fib. 50% retracement area at 2649.50+/-.

    Conclusion

    Current forecasts are ticking all the right boxes with pattern development following the precepts of the Elliott Wave Principle. What does this tell us? – it tells us that once a short-term correction has ended, the SP500 along with the other major U.S. indices will trend higher again. A re-test and even a slight break above the February highs seem inevitable.

    Are you trading the SP500, EuroStoxx, Nasdaq100, Russell 2000, Dow Jones 30, Dax, FTSE100, Shanghai Composite, Hang Seng or ASX200? Don’t miss WaveTrack’s regular updates in our bi-weekly EW-Compass Report! Ensure you’re tracking our Forex forecasts – subscribe online for the EW-COMPASS REPORT.

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    Elliott Wave Tutorial | Wave Structure – Pattern Dimension & Fib-Price-Ratios

    by WaveTrack International| May 3, 2018 | No Comments

    Q. I have a query about [WaveTrack’s] Elliott Wave EuroStoxx50/European indices analysis – could the entire decline from the Nov.’17 peak be labelled as a W-X-Y corrective pattern ending into the late-March ’18 low? – and a new uptrend beginning from that point ending the 1st wave now within a progressive five wave advance?

    A. Thanks for your question. Your labelling of the 4th wave decline from the Nov.’17 high as a W-X-Y is actually a double zig zag, a-b-c-x-a-b-c, or 5-3-5-X-5-3-5. Re-labelling this helps to focus the correct subdivision for each wave sequence.

    Pattern Dimension

    Fib-price-ratio and proportion is evenly weighted in the assessment. This reveals the ‘dimension’ for each pattern which is very important. The reason why we developed proportional/dimensional guidelines for each of Elliott’s 13 patterns is to ensure correct counting. Your labelling raises the perfect example. For example, we’ve added your count in fig #1 (see below). You’ve suggested an (A)-(B)-(C) zig zag decline from the Nov.’17 high ending into the Jan. 2nd low. But wave (C) doesn’t subdivide into the necessary five wave sequence. Nor does it fit the profile of wave (C) because it is far too short relative to wave (A).

    Fib-Price-Ratios

    Short ‘C’ waves within zig zags often lead to incorrect counting. But unfortunately, this is too often seen in the Elliott Wave community. Yes, they can be short but -in our experience- rarely so. More common measurements are where waves ‘A’ & ‘C’ measure equally by a fib. 100% correlative ratio or when extending wave ‘A’ by a fib. 38.2% or 61.8% ratio projects the terminal level of wave ‘C’. However, only use the 38.2% ratio extension if wave ‘B’ is a 50% retracement or more. Otherwise, use 61.8% – this guideline prevents wave ‘C’ being too short.

    Elliott Wave Tutorial Count - EuroStoxx 50 Index - 180 mins.

    Client Analyis – Question – Elliott Wave Tutorial Count – EuroStoxx 50 Index – 180 mins.

    Wave Structure

    You’ll notice we’ve added some text to the charts. Wave (X) must be a three/seven/eleven wave sequence in your labelling to evoke a correction. For example a zig zag/single/double/triple, but it is clearly a five. And finally, wave (C) within the secondary zig zag is undoubtedly a three wave sequence but basis you count, this would have to be a five.

    So now let’s take a look at our existing count in fig #2 . Wave (B) within the first zig zag fits perfectly to an expanding flat. The pattern subdivides 3-3-5 and it measures like an expanding flat where wave ‘a’ is extended by a fib. 38.2% or 61.8% ratio – extending wave (A) but including the ‘b’ wave low by a fib. 61.8% ratio projects in close proximity to wave (C)’s low…a little overshoot, but only by a single daily bar-spike.

    Elliott Wave Tutorial Count - EuroStoxx 50 Index - 180 mins.

    WaveTrack’s analysis – Answer – Elliott Wave Tutorial Count – EuroStoxx 50 Index – 180 mins.

    Elliott Wave – Consistency and Success

    The February-March decline measures as a zig zag…no short ‘c’ wave here, so perfect…and so, this count complies with both form, subdivision and proportionality. If this method and approach is used consistently, it will produce consistent results because the markets unfold in regular recurrence to these guidelines…and it eliminates a large part of subjectivity which as you know, is the Elliott Wave ‘curse’!

    Yes, sometimes, counts slip through the net, but this will be small in comparison to the victories! Let’s see how the Eurostoxx 50 pans out – at the very least, you’ve constructed a good ‘alternate Elliott Wave count’!

    All the very best,
    Peter & the Elliott Wave Analysis Team @ WaveTrack International

    Are you trading the EuroStoxx, Nasdaq100, S&P 500, Russell 2000, Dow Jones 30, Dax, FTSE100, Shanghai Composite, Hang Seng or ASX200? Don’t miss WaveTrack’s regular updates in our bi-weekly EW-Compass Report! Ensure you’re tracking our Forex forecasts – subscribe online for the EW-COMPASS REPORT.

    Visit us @ www.wavetrack.com and subsribe to our latest EW-COMPASS report!

    Deutsche Bank – Elliott Wave Buy Signal!

    by WaveTrack International| April 26, 2018 | 2 Comments

    Deutsche Bank - Buy Signal!  by WaveTrack International

    Deutsche Bank – Buy Signal! Elliott Wave Forecast by WaveTrack International

    Deutsche Bank Profit Down -79%! Elliott Wave Buy Signal!

    Deutsche Bank AG announced its first-quarter earnings today (Thursday). Profits are down by a massive -79% per cent and trading revenue down by -17% per cent. The bank said it was scaling-back certain trading and lending activities in the U.S. and Asia whilst it undergoes a complete reorganisation of priorities. This includes focusing on business lending to its corporate clients in Europe.

    We already know about DB’s restructuring following the departure of its former Chief Executive John Cryan and the appointment of Christian Sewing. Over recent months, analysts have marked-down Deutsche Bank’s growth potential. And now, S&P Global Ratings recently announced that DB’s ‘A’ rating is on review for a downgrade. But are these latest quarterly earnings a guide to the future performance of the share price?

    Elliott Wave Analysis – Setting the Scene

    It’s easy to get carried away with the bearish sentiment for Deutsche Bank. However, from an Elliott Wave perspective, the outlook for its share price is bullish.

    On the 10th October 2016, our equity update of Deutsche Bank issued the last buy signal at 12.035. This followed the completion of a major low at 8.837 the week before (9.898 pre-share-split of March ’17) for primary wave B. The culmination of declines that originated from the April ’10 peak of 60.55. Primary wave C upside targets were also published in that report targeting 42.23+/-, max. 73.94+/- over the next several years.

    Primary wave C must ultimately develop higher into a five wave impulse sequence. Naturally, labelled in intermediate degree, (1)-(2)-(3)-(4)-(5). Wave (1) has since developed higher from that September ’16 low of 8.837 (9.898). This pattern subdivided into a smaller five wave impulse sequence which affirms its medium-term uptrend. This initial stage of the uptrend ended in May ’17 at 17.690 as wave (1) with following counter-trend declines as wave (2).

    Shorter-term

    The five wave impulse uptrend as wave (1) can be seen ending at 17.690 – see fig #1. Note that by extending the initial 1-2-1 sequence by a fib. 61.8% ratio projects into the final high.

    Deutsche Bank - Buy Signal! - Daily - Elliott Wave Forecast by www.wavetrack.com

    Deutsche Bank – Buy Signal! – Daily – Elliott Wave Forecast by www.wavetrack.com

    The subsequent decline as wave (2) has unfolded into a rather uncommon pattern, something R.N. Elliott himself described as a ‘slanting flat’. It is labelled in minor degree, a-b-c and subdivides 3-3-5 like any of the ‘flat’ variations, except this one ends measurably below the initial decline of wave a. For example, extending wave a. by a fib. 61.8% ratio pinpoints the low for wave c. into the early-April ’18 low traded last week at 10.824. So this means the entire counter-trend decline has completed wave (2) at this low.

    Conclusion

    Despite the bearish sentiment of Deutsche Bank, this Elliott Wave analysis indicates a very bullish outlook and an opportunity to add to long positioning. This is, of course, a ‘contrarian’ signal but this fits the current sentiment extremes which occur at important turning points like this. Remember what it felt like back in October ’16?

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    SP500 and Nasdaq 100 – Two Different Corrective Patterns – Same Message!

    by WaveTrack International| April 20, 2018 | 10 Comments

    SP500 – Nasdaq 100 – 1st Wave Of Ending-Diagonal!

    The April 2nd / April 4th lows ended expanding flat corrective patterns that began from the February 27th highs. These lows formed at 2552.00 for the SP500 futures contract and at 6306.75 for the Nasdaq 100 futures. These patterns were labelled as ending sub-minuette wave (b) within February’s larger degree zig zag upswing – see fig #1. Following advances begin wave (c) which itself must develop higher whilst unfolding into a five wave impulse pattern, extending above the Feb. 27th highs of 2789.75 and 7009.00 respectively. So far, so good!

    SP500 and Nasdaq 100 - Comparison!

    SP500 and Nasdaq 100 – Comparison!

    SP500 and Nasdaq 100 – Two Different Patterns?!

    But taking a closer look at wave (c)’s upside progress from those April 2nd lows reveals two different corrective patterns ending into last Wednesday’s highs. A double zig zag for the SP500 (see left) and a single zig zag for the Nasdaq 100 (see right). How can that be? Surely, the advance must unfold as a developing five wave impulse pattern, i.e. 1-2-3-4-5? Perhaps this is a series of 1-2’s, you know, a five wave ‘expanding-impulse’ pattern which begins 1-2-1-2 etc. And then expands the price action with a 3rd-of-3rd wave surge to the upside. That could still happen. But if so, why have these indices dropped away from Wednesday’s highs? A 3rd-of-3rd wave should be propelling price action higher, not lower.

    Furthermore, look at how these overlapping price-swings have adhered to fib-price-ratios that depict corrective sequences. For example, if the S&P has developed into a double zig zag, then extending the first from 2552.00 to 2672.25 by a fib. 38.2% ratio projects a terminal high for the secondary zig zag exactly into Wednesday’s high at 2718.50. Extending wave ‘a’ of the Nasdaq 100’s initial upswing from 6306.75 to 6654.50 by a fib. 61.8% ratio projects a terminal high for wave ‘c’ to 6878.75 – the actual high was 6867.00.

    SP500 and Nasdaq 100 – The Puzzle Solved

    The only obvious answer to this rather intricate puzzle is that wave (c) is unfolding higher, not as an expanding-impulse pattern, but as a diagonal-impulse pattern, specifically, and ‘ending’ type diagonal. The wave labelling of the two impulse patterns remain the same, [1]-[2]-[3]-[4]-[5], but in an ending-diagonal, waves [1]-[3]-[5] have a tendency to subdivide into ‘threes’, zig zags or multiples, i.e. double zig zags or even triples. This explains why the advances have unfolded into a double zig zag and single zig zag for these two indices.

    What Next?

    Firstly, with wave [1] ending into last Wednesday’s highs, wave [2] is now underway as a corrective decline. Second wave retracements are usually sharp and steep affairs, so watch for a sudden sell-off over the next few trading days. But ultimately, wave [2] will end above the April 2nd / April 4th lows, then resume higher afterwards to begin wave [3].

    Conclusion

    We already know that market watchers are mystified over recent price-swings and can only stand aside with expectations of more volatility. But from an Elliott Wave perspective, we gain an intimate view of price-progression in a way no other financial system can operate – that’s because it is completely suited to non-linear dynamics, the DNA and the heartbeat of the markets’ character.

    If you haven’t already subscribed to our bi-weekly Elliott Wave Compass report and are actively watching or trading the markets, then do join our growing community – we have the answers you seek!

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    About WTI

    WaveTrack International is a financial price forecasting company dedicated to the Elliott Wave principle and work of the R.N. Elliott. Clients include Investment Banks, Pension Funds, Total/Absolute-Return/Hedge Funds, Sovereign Wealth Funds, Corporate and Market-Making/Trading institutions and informed individuals -- & just about anyone who is affected by directional price change.

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