Elliott Wave Principle Signals Potential Market Shifts
In a detailed analysis using the Elliott Wave Principle (EWP), financial experts had projected earlier in March the possible movement of market indices, particularly focusing on critical levels that could indicate significant shifts. The examination centered around whether the index could surpass its previous highs or succumb to bearish pressures by not maintaining essential support levels.
The forecast was precise in predicting the market’s direction, highlighting the need to break above specific thresholds to aim for higher targets. However, the failure to surpass the March 28 peak of $5264.85 and the subsequent drop below crucial warning levels at $5100 and $5056 this week confirmed the anticipation of a significant top around the $5260 target zone. This deviation from bullish trajectories suggests a potential shift towards a five-wave impulse move downwards, ideally targeting around $4800.
The significant top mentioned in the analysis is crucial as it could denote either the completion of a large ending diagonal from the March 2020 low or signify the end of a bull run that has been in motion since 1933, post the 1929 market crash. The implications of this pivotal point are vast, with possibilities ranging from a temporary bottom around $4600 followed by a rally, or a more grim outlook of entering a multi-year bear market, potentially lasting a decade and dragging the index down to approximately $1500.
Despite similarities in the weekly chart’s technical setup to the late 2017 action, which was followed by upward movements in 2018, the monthly technical indicators present a stark contrast with heavy negative divergence. This divergence suggests that any potential upside could be fleeting and minimal, casting a shadow of uncertainty on the long-term market direction.
At this juncture, the analysts remain cautious, indicating that while the exact future movements cannot be guaranteed, a developing impulse to the downside could tilt the scales towards a more bearish scenario. The market’s adherence to the EWP forecasts and critical levels will be pivotal in discerning the trajectory amidst these uncertain times. As the index maneuvers below the key warning levels, market watchers will be on high alert for signs that could confirm the onset of a bearish wave or, conversely, indicate resilience in the face of downward pressures.
Analyst comment
Negative news.
As an analyst, it is expected that the market will experience a potential shift towards a five-wave impulse move downwards, with a target around $4800. The significant top mentioned in the analysis could potentially mark the end of a bull run and lead to a multi-year bear market lasting a decade, potentially dragging the index down to approximately $1500. The technical indicators suggest minimal and fleeting upside, casting uncertainty on the long-term market direction. Market adherence to the Elliott Wave Principle forecasts and critical levels will be pivotal in determining the trajectory.
