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The Elliott Wave Theory provides a comprehensive solution to understanding market trends and forecasting future price movements. This article will delve into the Elliott Wave forecast for NASDAQ on August 14, 2023, providing an in-depth examination of the possible scenarios and the critical points to look out for.
Elliott Wave Theory: A Brief Overview
Originally proposed by Ralph Nelson Elliott in the late 1920s, the Elliott Wave Theory postulates that collective investor psychology shifts from optimism to pessimism and back in a natural sequence. This results in specific and measurable patterns in the price movements of markets. These patterns, or ‘waves,’ can be analyzed to predict future price changes.
NASDAQ and Elliott Wave
The NASDAQ Composite Index, often referred to as NASDAQ, is a market-capitalization-weighted index of over 2,500 common equities listed on the NASDAQ stock exchange. The performance of the NASDAQ is often seen as an indicator of the health of the technology and internet sectors. As such, it’s a favorite among Elliott Wave practitioners for analysis.
NASDAQ and Elliott Wave
NASDAQ Elliott Wave Forecast: Scenario Analysis
There are several scenarios that could play out according to the Elliott Wave forecast for NASDAQ. We’ll be examining three major possibilities in the following sections.
Scenario 1: The Fourth Wave of the Third
If NASDAQ is in the fourth wave of the third wave (also known as 4 of 3), it should hold the support level of 13,435. This number is calculated as 0.382 of the move from 11,800 to 14,446.
Support Level = 0.382 * (14,446 – 11,800) + 11,800 = 13,435
Scenario 2: Touching the Previous W4
If NASDAQ touches the previous W4, the downside target and support would be at the level of 13,320.
Scenario 3: Pure W4 after a Completed W3
But if NASDAQ is in a pure fourth wave (W4) after completing a third wave (W3), the 0.382 support could drop to as low as 13,110.
Key Technicals for a Bottom
For the case of a bottom, there are several key technicals to consider:
The Relative Strength Index (RSI) is currently under 40, indicating a potential oversold condition.
There are five waves down from the recent high, suggesting the possibility of a trend reversal.
However, the Volatility Index (VIX) is currently too low to suggest a bottom at 14.80.
The DOW and SPX indices have held up for too long, indicating a possible continuation of the current trend.
Conclusion
The Elliott Wave forecast for NASDAQ provides valuable insights into potential market movements. Whether we’re in the fourth wave of the third, touching the previous W4, or in a pure W4 after a completed W3, understanding these scenarios can help investors make informed decisions. However, it’s essential to consider other key technicals, as the Elliott Wave forecast is just one tool among many in the toolbox of a seasoned trader.
