Summary: Currently, there is a high risk of either a deeper pullback or a large time consuming consolidation. Conditions are extreme and there is some weakness.

However, there is an upwards trend that should be assumed to remain intact while the last swing low at 6,181.10 remains intact. If price makes a new low below this point, then this analysis would shift from tentatively bearish to fully bearish.

ELLIOTT WAVE COUNTS

FIRST WAVE COUNT

MONTHLY CHART

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The basic Elliott wave structure (in a bull market) is five waves up followed by three waves back.

The Elliott wave corrective structure here is a zigzag, which subdivides 5-3-5 and is the most common type of Elliott wave correction. Within the zigzag, cycle wave b may not move beyond the start of cycle wave a above 6,873.

SECOND WAVE COUNT

MONTHLY CHART

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This wave count also sees price currently in a three wave corrective structure, but the structure is different. This wave count considers the possibility of a large flat correction unfolding.

When wave b is complete, then wave c would be very likely to make at least a slight new low below the end of wave a at 3,091 to avoid a truncation.

THIRD WAVE COUNT

MONTHLY CHART

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This wave count moves the degree of labelling all up one degree within the large fall in price from October 2007 to March 2009, and considers the possibility that it was a completed three steps back.

The channel is drawn using Elliott’s technique. If cycle wave IV continues sideways, then it may find support about the lower edge of the channel.

TECHNICAL ANALYSIS

VOLUME – DAILY CHART

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The short-term volume profile is bearish.

DAILY CHART

Click chart to enlarge. Chart courtesy of et=”_blank”>StockCharts.com.

From the low on 24th December 2018, price has made a series of higher highs and higher lows. This upwards trend may be assumed to remain intact until a lower low is seen. The last swing low that would need to be exceeded in this view would be the low at 6,181.10 on the 27th of March 2019.

This view could fit either Elliott wave count: It could fit the first two very bearish wave counts, or extreme conditions may be relieved by a large consolidation which may last several months for the third wave count.

Published @ 4:48 a.m. EST.

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New updates to this analysis are in bold.