Hello fellow traders. In this technical blog we’re going to take a quick look at the Elliott Wave charts of ASX. As our members know ASX is another Index that is showing incomplete bullish sequences in the cycle from the December 2018 low. Rally from the 5413.6 low is showing incomplete impulsive structure, calling for further extension higher. Consequently we recommended members to avoid selling the Index and keep favoring the long side. We have been calling for extension higher within 2018 cycle after pull back completed as Elliott Wave Zig Zag Pattern.
In the further text we are going to explain the Elliott Wave Pattern and the Forecast.
Before we take a look at the real market example, let’s explain Elliott Wave Zigzag pattern.
Elliott Wave Zig Zag Pattern
Elliott Wave Zigzag is the most popular corrective pattern in Elliott Wave theory . It’s made of 3 swings which have 5-3-5 inner structure. Inner swings are labeled as A,B,C where A =5 waves, B=3 waves and C=5 waves. That means A and C can be either impulsive waves or diagonals. (Leading Diagonal in case of wave A or Ending in case of wave C) . Waves A and C must meet all conditions of being 5 wave structure, such as: having RSI divergency between wave subdivisions, ideal Fibonacci extensions and ideal retracements.
At the graphic below, we can see what Elliott Wave Zigzag structure looks like. 5 waves down in A, 3 waves bounce in B and another 5 waves down in C.
Now, lets’ take a look what Elliott Wave Zigzag looks like in the real market.
$ASX 1 Hour Elliott Wave Chart 7.21.2019
As we can see on the chart, we got 3 waves down in wave 2 red pull back. Pull back has unfolded as ((a))((b))((c)) Elliott Wave Zig Zag pattern. First leg ((a)) has made a very sharp decline, which is obviously impulsive structure. ( 5 waves are not labeled on this chart but they’re vissible on lower time frames) . Then we got 3 wave bounces in wave ((b)) that ended as truncation. And finally another leg down ((c)) that also have 5 waves structure. At this moment we are calling Zig Zag completed at 6626.7 low. As far as the price stays above that level, we expect further rally in the index. Otherwise break below that level will open extension down in 7 swings structure.
You can learn more about Zig Zag Elliott Wave Patterns at our Free Elliott Wave Educational Web Page.
$ASX 1 Hour Elliott Wave Chart 7.24.2019
6627.2 low held well and we got proposed rally as expected. Eventually the price has broken above 1 red peak, confirming next leg up is in progress. Now, the index is bullish against the 6627.2 low in first degree. We don’t recommend selling ASX in any proposed pull back and expect it to keep finding buyers in 3,7,11 swings as far as 6627.2 pivot holds.
Keep in mind that market is dynamic and presented view could have changed in the mean time. You can check most recent charts in the membership area of the site. Best instruments to trade are those having incomplete bullish or bearish swings sequences. We put them in Sequence Report and best among them are shown in the Live Trading Room.
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