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Elliott Wave Analysis: NASDAQ100 Higher After 3-3-5 Pattern

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Apr 07 2021

Hello everyone!

Today we’d like to present you the chart of the NASDAQ100 and how price unfolded based on Elliott Wave cylces.

First of all we need to take a step back from the chart and remind you that if you are trading markets then you may notice that US stocks moved nicely higher recently, after Biden unveils $2trl infrastructure plan and big corporate tax rises. Another reason for higher stocks are good US NFP report on Friday. Today, we will look how powerful Elliott Wave pattern can in some cases indicate a strong upcoming move before it actually happens. We will focus on NASDAQ100 in particular.

On March 26th we were analyzing the situation of the NASDAQ100. We noticed how a three-wave pullback started from the top on March 16th suggesting a correction was starting to unfold.

Eventually the consequential move up was yet in three waves, suggesting the correction was not finished yet. After the last leg down in 5 waves to complete a higher degree c) wave we could then assume the correction could have been completed.

NASDAQ100 March 26th chart:


We’d like to remind you that when we see a correction whose sub-waves are subdivided in 3-3-5, we as Elliott Wave Analyst like to identify it as a Flat correction.
In a flat correction the B wave is allowed to go past the starting point of the A wave(where the previous 5 is) and that would be called Irregular Flat. However this was not the case since we had a Regular Flat. Anyway we know that usually, a B wave of a flat correction will tend to have a deeper retracement than in a Zig-Zag pattern whose sub-waves are in the structure of 5-3-5.

Here’s a visual example of a Regular Flat:


With that theoretical piece of information being said, now it’s easier to understand that we took advantage of the Flat Correction to try and enter where the C wave ended which is usually around equality in length compared to wave A(as shown in the picture above).

At that point we were expecting a resumption of the overall bullish trend with a five waves up move. We also know that since we were predicting a wave 3, the move up should have been quite aggressive, as waves 3 are usually very steep as explained in the Elliott Wave Principle.
Well, as you can see, the move up was quite steep indeed.

Updated chart:


At this stage you could expect further upside to come. We believe that minuette wave iii) could come to an end soon and perhaps an entry in wave iv) could be taken into consideration if the opportunity presents itself.
We need to warn you that this move up could have not been a higher degree 123 but an ABC instead. So we may continue lower, especially if we are not able to break the old top at 13900.

 

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