NASDAQ Elliot Wave Count - Finally time to short?
Updated
Okay, I have been calling a top for the last week or so. I posted an idea earlier about a double top in the NDX with lots of charts. Here is a more detailed version of my Elliot Wave analysis and why I think this is the end for the NASDAQ. Sure I could be wrong and feel free to poke holes in it. It is the best guess I have right now and tomorrow something could completely alter this idea, because those pesky hedge funds like to screw us over in the after hour sessions.
I use a standard set of fib levels for wave, which is 1.0, 1.618, and 2.0 (waves 1, 3, 5). I make adjustments to wave 5 based on wave 3 ending.
Here is the 1M. Note that Wave 4 typically retraces less than 0.382, which is exactly true for the 2020 March low. If wave 3 ended around 2.0, then wave 5 should be around (2.0/1.618)*2.0=2.47. NDX is above that at 2.854. Also note the almost vertical slope since last year.
Lets move into the 1W. You can see the NDX starting to roll over in the last several candles.
Now the all important 1D. Here I use my handy-dandy cRSI+Wave indicator to help determine the waves. I see nice 3 step up to the June peak. Note how the cRSI shows a "strong" wave followed by an "A", a "B" (in this case the indicator shows a "weak" peak), and followed by a "C" (here we see another "A"). This is typical for very strong rallies. One day I will get around to fixing this in the indicator. When you pick a Wave 1, you should see a nice alignment with a 0.618 fib and another clear peak, which we have on April 17th. Should also find a nice peak around 0.382 or 0.236, which we have. I am 100% confident that June 10th is the end of Wave 1.
On the 1D chart I exclude the wicks and shadows for aligning the fib levels. Now we need to look for a Wave 3 around the 1.618 level. Sure enough the big rally in August gives us a nice candle wick to 1.786, which is normal for a very bullish rally. I also see a really nice peak at the 1.382 fib level. The alignment to fib levels is looking spot on to me. We get a nice correction following this rally, which is another good indicator that a major wave was just finished.
Now comes Wave 5 and is showing a clear impulse pattern to give us an ending diagonal pattern. The rebound in Oct serves as sub-wave 1. Lining up the fib levels like before (note the nice alignment to the 0.618 fib) we see a nice wave 3 ending around Jan 4th. This time we see a perfect ABC pattern in the cRSI+Wave indicator (NDX not quite as bullish as before). You can also see the tell tale signs of a rising wedge pattern that defines the ending diagonal. Since we tagged 1.618 perfectly, we should be looking for wave 5 to end around 2.0, and I see a 2.146 (green fib). Looking back at the fib levels off the March low (black) we see the NDX touching the 2.146 level also. That is two wave counts converging in the exact same location and both at 2.146. In addition, to me it looks like a double-top pattern forming after last weak's sell off.
What's more, the NDX is also just touching a 2.854 fib level based on the dot com as wave 1. You can also see that major orange resistance line I drew off the dot com bubble high. That is an amazing amount of lines all meeting in the same location. Maybe the NDX will see that as a challenge and break it just to screw us all one more time. I think more than likely it will churn around for a few more days trying to break through and eventually make a sizable pull back to gain more support before trying again.
Hope it helps and good luck.
I use a standard set of fib levels for wave, which is 1.0, 1.618, and 2.0 (waves 1, 3, 5). I make adjustments to wave 5 based on wave 3 ending.
Here is the 1M. Note that Wave 4 typically retraces less than 0.382, which is exactly true for the 2020 March low. If wave 3 ended around 2.0, then wave 5 should be around (2.0/1.618)*2.0=2.47. NDX is above that at 2.854. Also note the almost vertical slope since last year.
Lets move into the 1W. You can see the NDX starting to roll over in the last several candles.
Now the all important 1D. Here I use my handy-dandy cRSI+Wave indicator to help determine the waves. I see nice 3 step up to the June peak. Note how the cRSI shows a "strong" wave followed by an "A", a "B" (in this case the indicator shows a "weak" peak), and followed by a "C" (here we see another "A"). This is typical for very strong rallies. One day I will get around to fixing this in the indicator. When you pick a Wave 1, you should see a nice alignment with a 0.618 fib and another clear peak, which we have on April 17th. Should also find a nice peak around 0.382 or 0.236, which we have. I am 100% confident that June 10th is the end of Wave 1.
On the 1D chart I exclude the wicks and shadows for aligning the fib levels. Now we need to look for a Wave 3 around the 1.618 level. Sure enough the big rally in August gives us a nice candle wick to 1.786, which is normal for a very bullish rally. I also see a really nice peak at the 1.382 fib level. The alignment to fib levels is looking spot on to me. We get a nice correction following this rally, which is another good indicator that a major wave was just finished.
Now comes Wave 5 and is showing a clear impulse pattern to give us an ending diagonal pattern. The rebound in Oct serves as sub-wave 1. Lining up the fib levels like before (note the nice alignment to the 0.618 fib) we see a nice wave 3 ending around Jan 4th. This time we see a perfect ABC pattern in the cRSI+Wave indicator (NDX not quite as bullish as before). You can also see the tell tale signs of a rising wedge pattern that defines the ending diagonal. Since we tagged 1.618 perfectly, we should be looking for wave 5 to end around 2.0, and I see a 2.146 (green fib). Looking back at the fib levels off the March low (black) we see the NDX touching the 2.146 level also. That is two wave counts converging in the exact same location and both at 2.146. In addition, to me it looks like a double-top pattern forming after last weak's sell off.
What's more, the NDX is also just touching a 2.854 fib level based on the dot com as wave 1. You can also see that major orange resistance line I drew off the dot com bubble high. That is an amazing amount of lines all meeting in the same location. Maybe the NDX will see that as a challenge and break it just to screw us all one more time. I think more than likely it will churn around for a few more days trying to break through and eventually make a sizable pull back to gain more support before trying again.
Hope it helps and good luck.
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Let's see if the pattern repeatsNote
I still believe this is the right model. I tweaked it to stretch the high and lows and not just the close.Note
Wednesday Feb 10 3:00pm update. NASDAQ still running hot after that pull back the other week, but still respecting the resistance line of the wedge. Notice the strong rejection off of it today.Note
Wow, still powering higher, but the rising wedge is getting really tight.Note
Thursday 1:15pm and it has dropped out of the wedge. Lets see where it goes next.Note
Feb 22, 1:20pm So far my idea is working out pretty well. Note the gap down after breaking the wedge pattern.Note
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