Wave 4 is yet to be confirmed

Looking at the bigger picture, from October of 2001 we saw our index hit below 1,000 but raised to almost 3,900 after 6 years or on October of 2007. The price then retraces to as low as 1,684. This retracement is within the 61.8% from the top of 3,900 and it lasted for one year. From October 2007 to October 2008. PSEi again move up and hit 7403.65 last May 2013. That is almost 5 years of going up. From May 2013 up to this month, we have seen our index moving downward and currently at 6014.94.

The movement of PSEi since 2001 to present seem to depict the Elliott Wave where Wave 1 is represented by the rise from Oct 2001 – Oct 2007 and Wave 2 is from 2007 to 2008 while the rise from 2008 – May of 2013 could be considered Wave 3. If we will follow this argument then maybe Wave 4 is on development. But how do we know and how deep will be the retrace?

The waves in relation to Ichimoku system

If you notice during the waves 1 and 3 we have bullish signals from all Ichimoku elements while on wave 2 we have seen weak bearish signals. First was the Kijun Sen cross when price crossed the Kijun Sen from above on April 2008 and then Tenkan Sen crossed the Kijun Sen from above on August 2008. And before bouncing we have the Kumo breakout.

Currently all Ichimoku elements are still showing bullish signals. I think for us to say that we are on Wave 4, we need to see some weak bearish signals from Ichimoku which we haven’t seen yet. So in case index will bounce from where it is now and continue to go up then maybe its not yet wave 4 after all.

If we are on Wave 4, how deep will be the retrace?

Based on Elliott Wave principle, wave 4 typically retraces less than 38.2% of wave three. If we will draw Fibonacci Retracement on our chart we will see that 38.2% is at 5219.03 so it means it will not hit that low.

It is very important for us to identify wave 4 because after this wave we will have our last climb to the summit and somehow be able to get big gains as much as possible before the sun sets.


Wave 1 and 2 of Elliott Wave on PSEi


Wave 3 and 4(?) of Elliott Wave PSEi

Leave a Reply