ASX – Mid Term Forecast
When major markets fall into a conundrum, clarity often comes from looking sideways rather than straight ahead. While many indices are sending mixed and conflicting signals, ASX is standing out with a remarkably clear technical message. In this Mid-Term Forecast, we explore why the Australian market may be offering an early signal—and what its structure could be foreshadowing for global markets next.
ELLIOTT WAVE
When I looked at ASX, I was genuinely impressed. The index formed one of the most classical impulsive waves off the April 2025 low, with textbook Fibonacci ratios not only for wave lengths but also for timing. The final wave 5 of (1) appears to have completed as an expanding Ending Diagonal, which then triggered a sharp and very classical return to the origin level, labeled as wave A. Wave B followed in the form of a clean bearish flag.
From here, two clear target zones emerge for wave C. The red rectangle represents a 0.382–0.5 retracement of wave (1), while the blue zone marks the most typical measured move following a flag. Assuming ideal timing for an ABC flag, wave C would likely complete toward the last week of February. The expected drawdown from the recent top falls in the 8–10% range.
Given the reasonable historical correlation between ASX and the major U.S. indices, this structure adds further weight to the downside scenarios already discussed for U.S. markets. In that sense, ASX may once again be offering a cleaner and earlier signal of what could unfold elsewhere.
