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The NASDAQ has recently undergone a phase of correction which culminated at the .382 retracement level of the 3 of 3. This was a strategic point, with a target of 13,335, precisely where the 1-week low was observed. The unfolding of this scenario can be interpreted through the lens of the Elliott Wave Theory.
1. Understanding the Elliott Wave Theory
The Elliott Wave Theory was developed by R.N. Elliott during the 1930s. It proposes that market trends unfold in recurring patterns known as waves. These waves can be broken down into smaller waves, providing investors with a roadmap to predict market trends.
2. NASDAQ’s Recent Correction
The recent NASDAQ correction halted at the .382 retracement level of the 3 of 3. This point was significant, with a target of 13,335, which aligned with the 1-week low. This behavior of the market can be aptly captured using the Elliott Wave Theory.
3. The 5 Wave Impulse
In the aftermath of the correction, the NASDAQ exhibited a 5 wave impulse to the .618 retracement of the entire corrective wave over the past 10 days. This was followed by a shift into a sideways Wave 2.
4. The Sideways Wave 2
After the 5 wave impulse, the NASDAQ transitioned into a sideways Wave 2. This phase is characterized by largely horizontal movement, with minor fluctuations in price. It often serves as a period of consolidation before the onset of Wave 3.
5. The Arrival of Wave 3
In the context of the Elliott Wave Theory, Wave 3 is often the longest and most powerful wave. For the NASDAQ, the arrival of Wave 3 was marked by a perfect inverse head and shoulders on the chart.
6. The Inverse Head and Shoulders Pattern
The inverse head and shoulders pattern is a bullish reversal pattern. It indicates a change in trend from a downward movement to a new upward trend. The pattern was clearly visible on the NASDAQ and NASDAQ 100 chart.
7. The 5 of 3 Target
According to the Elliott Wave Theory, the 5 of 3 wave could potentially target as high as 14,300 NASDAQ if it can break the 13,770 barrier in the upcoming days.
8. The NASDAQ 100 Chart
The NASDAQ 100 chart showed a similar pattern as the NASDAQ chart, with a clear inverse head and shoulders pattern. This pattern further strengthens the potential for a bullish reversal.
9. The Upcoming Days
In the upcoming days, the NASDAQ will need to break the 13,770 barrier to reach its 5 of 3 target of 14,300. This could be a significant milestone for the market and investors alike.
10. Conclusion
The patterns unfolding in the NASDAQ can be aptly interpreted through the lens of the Elliott Wave Theory. The recent correction, the ensuing 5 wave impulse and sideways Wave 2, and the anticipated arrival of Wave 3 all align with the predictions of the theory. As investors and market-watchers await the break of the 13,770 barrier, the upcoming days could bring significant developments for the NASDAQ.
Remember: Market predictions are not guarantees. They are educated guesses based on analysis and theory. Always do your own research and due diligence before investing.
“The stock market is filled with individuals who know the price of everything, but the value of nothing.” – Philip Fisher
Key Takeaways:
The NASDAQ recently underwent a correction, culminating at the .382 retracement level of the 3 of 3.
The Elliott Wave Theory can be used to interpret the patterns unfolding in the NASDAQ.
The arrival of Wave 3 is often a significant event in the market cycle.
