The NASDAQ (NQ_F) remains bullish from the all-time low despite the pullback from December 2024. The pullback could present a perfect opportunity for buyers in the coming days. This blog post will address key price areas for the buyers to anticipate the next opportunity.
NASDAQ (NQ) is in an all-time bullish trend. Within this all-time bullish cycle, the index started the current bullish cycle from the low of October 2022 where it completed wave (II) and began wave (III). We reckon, as the chart below shows, that the peak of December 2024 marked the end of wave III of (III). Thus, the pullback from that high should be wave IV of (III).
Wave IV started from the peak of December 2024. In an ideal market condition, buyers anticipate going long from the extreme of pullbacks within an established bullish sequence. On the other hand, traders tend to sell at the extreme of corrective bounces within a bearish sequence. Thus, the corrective pullback from December could be another ideal setup for buyers. One of the easiest and most profitable structures to trade in this regard is the Zigzag or Double Zigzag corrective sequences.
Double Zigzag Structure in Elliott Wave Theory
WXY Structure: Complex Correction with Two Zigzag Phases
In Elliott Wave Theory, a double zigzag is a complex corrective pattern that consists of two zigzags (labeled W and Y) connected by an intervening corrective wave (labeled X). It is denoted as W-X-Y and serves to extend the duration and depth of a correction beyond a single zigzag.
Structure of a Double Zigzag (W-X-Y):
- Wave W – The first zigzag (A-B-C).
- Wave X – A corrective wave that connects W and Y. It can take various forms (flat, triangle, or another zigzag).
- Wave Y – The second zigzag (A-B-C), which typically follows the same direction as wave W.
Rules & Guidelines:
- Both W and Y are zigzags (A-B-C structures), meaning wave A is impulsive or leading diagonal, wave B is corrective, and wave C is impulsive or ending diagonal.
- Wave X is typically smaller than W and Y but can sometimes be complex.
- A double zigzag extends the correction compared to a single zigzag, often forming a deeper retracement.
- It usually appears in corrective waves (wave 2, wave 4, or within a larger complex correction).
NASDAQ Elliott Wave Analysis: Double Zigzag Pullback for Wave IV?
NQ_F Wave Count: Potential Double Zigzag Completing Wave IV
The wave IV pullback from December is close to finishing a W-X-Y double zigzag structure. Wave ((W)) and ((X)) of IV finished on 13th January 2025 and 18th February 2025. The fast decline that follows is identified as wave (A) of ((Y)). The price might correct the decline from the February high in wave (B) of ((Y)) before dropping again in wave (C) of ((Y)) and finishing the structure.
In Fibonacci ratios, wave Y often ends within 100%-123.6% of wave W but sometimes reaches close to 161.8%. 161.8% extension within a double zigzag is very rare and in most cases will be considered an impulse or triple zigzag instead. Thus, at the blue box (20571.75-19490.64), we will expect wave (V) to begin or at least a 3-swing bounce to a risk-free area. The blue box prices should be watched. It could attract fresh bids if the price gets there.
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