In our technical analysis released last February 12th, we commented on the long-term sequence that NASDAQ 100 was developing. In our study, we observed that the US stock market moves in an incomplete wave (5) of Intermediate degree. This sequence is presented in the following chart.
We also noted that due to the price advance beyond the upper-line of the long-term ascending channel, it was likely a corrective move. On the other hand, the extreme bullish sentiment boosted by corporative earnings surpassing the analysts' expectations increased the probability of a correction.
Last Thursday, 20th, the NASDAQ 100 reached a record level of 9,756.1 pts, from where the price started a corrective move that led to the tech-heavy index to lose over 10%.
The following chart presents the NASDAQ 100 in its daily timeframe. From the figure, we observe that the price action unfolds in its fourth wave of Minor degree labeled in green.
The current bullish cycle that seems incomplete began at the Christmas rally of 2018 when the price found fresh buyers at 5,802.4 pts.
In the 4-hour chart, we distinguish a clear corrective sequence that was triggered by the bearish sentiment over concerns about a potential coronavirus pandemic.
At the same time, the chart illustrates a first sharp bearish leg that found support at 8,866.4 pts reached on Tuesday's 26th session, from where the price started to bounce.
In our analysis, the current upward movement corresponds to the development of the wave (b) of the Minuette degree in blue. According to the Alternation Rule, given that wave (a) was developed sharply, the current three-wave sequence should require more time than the first bearish leg for its completion.
In consequence, considering that the current sequence corresponds to the fourth wave of Minor degree, the end of this wave should give way to the beginning of a new bullish movement, which would correspond to the fifth wave of Minor degree, belonging to the fifth wave of Intermediate degree.
The fifth wave of Intermediate degree will likely be completed at the end of 2020 boosted by the presidential US election.
Elliott Wave Summary
Risk Warning: CFD and Spot Forex trading both come with a high degree of risk. You must be prepared to sustain a total loss of any funds deposited with us, as well as any additional losses, charges, or other costs we incur in recovering any payment from you. Given the possibility of losing more than your entire investment, speculation in certain investments should only be conducted with risk capital funds that if lost will not significantly affect your personal or institution’s financial well-being. Before deciding to trade the products offered by us, you should carefully consider your objectives, financial situation, needs and level of experience. You should also be aware of all the risks associated with trading on margin.
Recommended Content
Editors’ Picks
EUR/USD edges lower toward 1.0700 post-US PCE
EUR/USD stays under modest bearish pressure but manages to hold above 1.0700 in the American session on Friday. The US Dollar (USD) gathers strength against its rivals after the stronger-than-forecast PCE inflation data, not allowing the pair to gain traction.
GBP/USD retreats to 1.2500 on renewed USD strength
GBP/USD lost its traction and turned negative on the day near 1.2500. Following the stronger-than-expected PCE inflation readings from the US, the USD stays resilient and makes it difficult for the pair to gather recovery momentum.
Gold struggles to hold above $2,350 following US inflation
Gold turned south and declined toward $2,340, erasing a large portion of its daily gains, as the USD benefited from PCE inflation data. The benchmark 10-year US yield, however, stays in negative territory and helps XAU/USD limit its losses.
Bitcoin Weekly Forecast: BTC’s next breakout could propel it to $80,000 Premium
Bitcoin’s recent price consolidation could be nearing its end as technical indicators and on-chain metrics suggest a potential upward breakout. However, this move would not be straightforward and could punish impatient investors.
Week ahead – Hawkish risk as Fed and NFP on tap, Eurozone data eyed too
Fed meets on Wednesday as US inflation stays elevated. Will Friday’s jobs report bring relief or more angst for the markets? Eurozone flash GDP and CPI numbers in focus for the Euro.