$ASX200 = Possible Major Correction = 19.08.2021 $ASX #ASX

It has been recent interest to our services from Australia and I decided to have a look at the health of the market down under from the candlesticks perspective. Hmmm, I said to myself, and I hope I am terribly mistaken.

CANDLES

Daily
The formation of daily candles is strongly bearish. Started with Bearish Engulfing, continued with almost the Three Black Crows. The price has fallen below 20 EMA line and does not seem ready to recover. The indicators suggest a continued decline.
Odds: Bearish

Weekly
The weekly is likely to form a very strong Bearish Engulfing, just following the daily. The candle odds are enforced by the RSI drop from the overbought territory. Bearish odds – 85-90%.
Odds: Strong Bearish

Monthly
There were 11 green monthly candles in a row. Candles say that after 8-10 a reversal is, first, imminent and, second, possibly deep. Looking at the weekly a daily, I would not be surprised if the monthly closes as a Shooting Star/Inverted Hammer or, worse, an Engulfing. The latter would be terrible.
The technical indicators show their readiness to fall. How deep, that would be for the EW to guide.

ELLIOTT WAVES

I consider two possible counts for the formation.

Red Count
The wave off the March 2020 low is corrective. It splits almost perfectly into a-b-c, wave a = wave c. Wave c is just a tad longer.
If this is the case, the most probable length for wave C would be 0.786 of wave A. In our case, the index would drop to 5443, or 29% off the top. The retraces to 0.618 or 1.0 of wave A would also be possible. I put the red rectangle on the chart for 0.618-0.786 retraces.

Blue Count
If the yearly advance was a motive wave, there is a chance that it is wrapping up. Wave 3 a little longer than wave 1, though I would prefer it to be at least 1.414-1.618 of the length of wave 1.
Waves 3 are known for retrace of 0.236-0.382 (sometimes 0.5) of their length. Minimal retrace – 0.236.
If this is the case, we should expect a pullback into the area of $7188-6696, or 6-12% off the top.

By examining the already formed micro waves, I could tell that the pullback started as a motive wave (leaning towards red, rather than blue) and a possible target for this wave is in $7100-7000 area. This would likely be just the first wave of the correction.
As at this point, I have no clear target for the whole correction and will be using candles as the guiding light for the turns while measuring waves.

It looks like fun is about to begin. I hope this will be the blue count.

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I would be able to add the ASX200 analysis to the list of regular monthly forecasts if I see a request from a large group of subscribers.





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