Its time for some wave counts of the past and today, we take an in depth look at the 2009-2013 consolidation in the Indian markets, which took the form of a running triangle. In the context of which I am counting long term waves, this wave was of intermediate degree and is wave (B) of a three wave advance. For exactness, wave (B) started on 12-6-2009 at 4693 and ended on 28-8-2013 at 5119.
Below is a close up of minor waves A and B of the triangle. Wave A was a simple zigzag and was completed in 31 days. Too most wavers, thus wave looks like a blip on the long term charts, but out of observation, running/expanding triangles can have insignificant looking 'A' waves.
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| (The label (X) in August 2013 in the chart should actually read (B). Too many labels.) |
Below is a close up of minor waves A and B of the triangle. Wave A was a simple zigzag and was completed in 31 days. Too most wavers, thus wave looks like a blip on the long term charts, but out of observation, running/expanding triangles can have insignificant looking 'A' waves.
(Wave A was one of those classic zigzags which had almost equal impulse components at 550 points vs 561 points as wave[a] and wave [c] and in which the wave [b] retraced exactly .618 of wave [a]. Thought such textbook zigzag waves weren't supposed to exist.)
Wave B was a double zigzag with a five wave corrective wave [X] which was either a skewed triangle (triangle in which wave D exceeds wave B, without the triangle being expanding in nature) or a B-centric three wave structure (a three wave move in which the B wave subdivides significantly.)
(Wave B's starting point was 3919 which multiplied with 1.618 gives 6340 which
was
2 points of the 6338 unorthodox wave B high. Also the percentage gain
made by the two individual zigzags of B was 3919 - 5182 i.e. 32.22% and
4786 - 6338 i.e. 32.42%, so the gains by the two impulsive portions of
minor wave B are pretty much equal.
Now consider the impulse from March 09 to June 09 which is the first impulsive portion of primary wave B i.e. two degrees larger than the wave B under consideration. It moved from 2539 - 4693 i. e. a 84.8% gain. This number is an almost exact 2.618 multiple of the above calculated 32.2-32.4% gains, waves of exact same nature, two degrees smaller. If the second impulsive portion of primary wave B was to adhere to this then it should peak at about 9350 9440.)
Wave C manifested in the form of the 2011 bear market and was a double three, an expanded flat (wave W) with a running triangle as wave X followed by a zigzag (wave Y). The orthodox top of the previous wave B happened on 14th October 2010 at 6284 and the 5th November unorthodox high at 6338 turned out to be a wave 'b' high of an expanded flat.
The triangle was again classic Elliott, a heavily retraced wave (C), a complex wave (D), a scary wave (E) (for the bears). Wave (E) topped at 5700 just within the bottom of wave W at 5690. This is however not mandatory as I have so cruelly learnt(later). Wave Y was the meat of the bear market, a classic zigzag whose wave C formed an ending diagonal with a truncated fifth wave.
This now brings us to wave D, a huge simple zigzag. The rally from 4588 on 2nd Jan 2012 to 5629 on 22 Feb 2012 constituted wave A of D. This is followed by a three wave move to 4770 in June as a retest of the former lows thereby forming a heavily retraced wave. Wave C was a long ending diagonal which lasted a year. Wave 1 of the diagonal served as the crux of the bull market with the rest of the waves forming the distribution phase as is in an ending diagonal. Note that waves 1,3,5 of the diagonal were all clear and simple zigzags (Note a of 1 is a leading diagonal and hence c of 1 was an extended wave) while wave 2 was a double zigzag and wave 4 appears to be a triple zigzag.
And finally, wave E. Wave E's are likely to be scary affairs, and undoubtedly it was as the rupee collapsed from 61 to 68. It was here that I expected the wave to terminate some point below 4693 the starting point of the triangle in 2009, the notion being, ending of corrective waves have to lie some point within the wave being corrected as illustrated above in the triangle of wave C. A lesson hard learnt and remembered as the nifty reversed quickly without any accumulation. In running triangles wave E's don't need to end within the starting point of the triangle. Wave E was a double zigzag.
And thus formed intermediate wave B. Wave A a simple zigzag, C a double three with a complex wave (B), E a quick double zigzag, B a double zigzag also with a complex wave (B), D a simple zigzag with a heavy retracing wave (B), the basic characteristics of an Elliott triangle, all zigzag natured waves with distinct alternations.
The stage was set for intermediate wave C. The triangle target was around 7600, various other log calculations gave 8300 to 8500. Log equality to wave A gave targets in excess of 9400. So far nifty has peaked at 9117 and reversed.
