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Elliott Wave Pattern Precedes ECB Announcement

by WaveTrack International| December 4, 2015 | 8 Comments

Perfect Reaction Following ECB

Perfect Reaction Following ECB

Perfect Reaction Following ECB

Yesterday’s market reaction following the European Central Bank announcement was entirely predictable – no guessing required. Wednesday night’s update from the mid-week EW-Navigator supplement ahead of Thursday’s ECB meeting concluded…

‘…we expect the Eurostoxx 50 benchmark to decline by -5.4% per cent before resuming higher later. This probably suggests the ECB will either dilute its plan to extend its bond-buying programme or the market will be in some way disappointed with its tone’.

Contrary to consensus, this statement was made because a THREE WAVE ZIG ZAG pattern had just completed its advance from the mid-November low for the Eurostoxx 50 benchmark index. In this location, it is designated the SECOND sequence within a corrective EXPANDING FLAT decline, labelled intermediate wave (X). To complete the THIRD sequence, a decline of at least -5.4% was required. See original forecast from Wednesday’s report – fig #1. Downside targets are forecast to 3290.43-86.17+/-. These are derived where minor wave a. of the expanding flat is extended by a fib. 23.6% ratio and where the decline ends at the fib. 38.2% retracement level of the preceding advance.

EuroStoxx - 360 mins. chart

fig #1 – EuroStoxx – 360 mins.

This next chart illustrates a close-up view of the expanding flat and what happened after the ECB announcement – see fig #2. The decline represents the THIRD sequence of the EXPANDING FLAT, labelled minor wave c. It must unfold into a five wave pattern – original downside targets remain valid, but we’ve added to additional Fibonacci levels using a fib. 38.2% extension ratio, and 61.8% to 3267.27+/- and 3231.39+/- respectively. The 3231.39+/- level is also the fib. 50% retracement level of the preceding advance from the September low.

 fig #2 - EuroStoxx - 30 mins.

fig #2 – EuroStoxx – 30 mins.

In order to find the exact low point, the fourth wave within minor wave c.’s decline must unfold prior to taking additional measurements.

Looking at the implications of this EXPANDING FLAT, we know that such a pattern is a counter-trend sequence within a prevailing, dominant, directional UPTREND. So once completed, the uptrend is expected to resume.

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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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