IBEX: Reassessing The Long Term Elliott Wave Pattern

By: TheWaveTrading | Sun, Jun 15, 2014
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I maintain the idea that IBEX given the internal structure of the decline from the November 2007 is highly vulnerable of a major setback once the corrective advance from the July 2012 runs its course (Probably once Mr Draghi announces a massive QE or the FED is forced to raise interest rates).

So far I have been following the Double Zig Zag count. Today I introduce two additional scenarios.

Lets review the three scenarios.

  1. Double Zig Zag: From the July 2012 low pric e is unfolding the second wave (B), which should top in the range 11566-12240.Once the wave (B) is in place it should be followed by a "uber bearish" wave (Y) that would most likely fully retrace the advance from the July 2012 low and even establish a lower low. The new bear cycle could be confirmed with a monthly close below the 10 mma which today stands at 10147, although in addition price should breach the trend line support in force since the July 2012 low

IBEX Monthly Chart
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  1. Triangle wave (X): From the March 2009 low price is forming a Triangle wave (X). If this count is correct from the July 2012 low price is unfolding the wave (c) of the assumed Triangle, which must top beneath the January 2010 high. The Triangle will pan out if price maintain the sequence of higher lows-lower highs. The final outcome will be the "uber bearish" wave (Y).

IBEX Monthly Chart 2
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  1. On June 2012 price completed with a Double Zig Zag the wave (A) of a Flat or Zig Zag, hence the current advance is a wave (B) that could top either in the area of the 0.618 retracement 12204-12241 or at the next resistance level located at 14301. Once the wave (B) is in place it should be followed by an "uber bearish" wave (C) that would most likely fully retrace the advance from the July 2012 low and even establish a lower low. In order to consider viable that a new bear cycle has began price will have to breach the 10 mma and the rising trend line support in force since the July 2012 low.

IBEX Monthly Zig Zag Chart
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In the following monthly chart we can observe two distinctive aspects of the rally from the July 2012 low:

IBEX Monthly Zoom Chart
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At the same time since the monthly RSI is not displaying a negative divergence the probability that price is approaching a major top is low.

IBEX Monthly Momentum Chart
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The weekly chart adds more objective valuable information:

IBEX Weekly Zoom Chart
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Now lets analyse the pattern from the summer 2012 low.

  1. If the long term Elliott Wave Pattern is either the Double Zig Zag or the Triangle (X) scenarios then the advance from the July 2012 should be unfolding a Double Zig Zag or a Triple Zig Zag.

a) Double Zig Zag option (Weekly Chart): If this count is correct from a likely triangle completed on March 21 the impulsive wave (Y) is underway.

IBEX Weekly Double Zig Zag Chart
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In the daily chart we can see that from a potential triangle wave (B) the wave (Y) is unfolding an impulsive sequence. If this count is correct we are now in the wave (iv) of (3). The final wave (5) could top in the area of 11500. Once the pattern is completed IBEX should be vulnerable of a meaningful / major decline depending on if the 50 d / 10 mma / 200 dma hold or are breached, since the Double Zig Zag could morph into a Triple Zig Zag.

IBEX Daily Double Zig Zag Chart
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b) Triple Zig Zag option (Weekly chart): If this count is correct from a likely triangle completed on March 21 a Zig Zag is underway.

IBEX Weekly Chart
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In the daily chart we can see that if this count is correct from the April 14 low the last impulsive sequence is underway, we are now in the wave (iv). Once the wave (v) is in place in the area of 11300-11350 the odds would favour a meaningful decline probably towards the range of the 10 mma (10.147) - 200 dma (9953).

  1. If the long term Elliott Wave Pattern is a Zig Zag then the advance from the July 2012 should be unfolding a Triple Zig Zag similar to the one discussed above.

 


 

TheWaveTrading

Author: TheWaveTrading

TheWaveTrading

Contact: If you would like to contact the author, you can e-mail him at thewavetrading@gmail.com

The main objective of this project is to share my views on several markets and asset classes.

In the initial stage TWT website will be a free service.

My main focus will be the equity market with SPX being the leader but I will also follow US equity sectors, major European indices, fixed income, currencies and commodities markets.

My analysis is based upon traditional Technical Analysis, Elliot Wave guidelines and investor sentiment.

My goal is to establish the most likely path that the price of a particular asset will undertake and profit through ETF instruments both on the long and short side and mainly with leveraged ones (2 x & 3 x).

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