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Additionally, we can observe that the index has formed three larger waves since its all-time high in July 2024: waves a, b, and c (black). The August low marked W-a, and the January high represented a very complex W-b, while W-c is now nearing completion. Furthermore, the ideal target zone for W-c (the black square) has been reached, but the optimal red W-v target zone, at $3864-$4040, has not yet been met.
While it would be favorable, the market is not obligated to comply; it owes us nothing and has already done enough to present a five-wave sequence. This is also why we consistently state that we are 70% reliable and 95% accurate: two out of three target zones have been achieved.
The Anatomy of a Counter-trend Rally
Since our EWP count indicates a more significant Cycle-3 wave, as shown in Figure 2 below, we are currently experiencing a Cycle-4 wave. Fourth waves are typically described in Elliott Wave (EW) terminology as flat corrections. Additionally, EW theory includes a rule of alternation: Wave 4 differs from Wave 2. In this context, Cycle W-2 was an extended zigzag; therefore, Cycle W-4 is likely to be a flat and possibly a triangle.
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