In a late March article, we used the Elliott Wave Principle (EWP) to assess where the Nasdaq 100 (NDX) would ideally top out, and at the time hypothesized that:
“…If we evaluate the daily chart with reference to Figure 2 above, we can see that the typical W-5 = W-1 relationship targets ~$18615.…The colored dotted line is , is a warning level that indicates whether or not it is in an uptrend. below the warning level (green W-4 low) means black W-4? Ideally on the way to NDX15900+/-200.”
Fast forward: The index peaked at $18,464 on March 21st, just 0.81% below the ideal target of ~$18,615, and has fallen since then. The index is currently trading at $17,980, below two of the four bullish warning levels we have identified: $18,300, $18,000, $17,750, and $17,300.
Additionally, it has lost its 20-day simple moving average (d SMA) (in green), but it is just sitting at the 50-day SMA. Additionally, all technical indicators (TI) are pointing down, making it a sell signal, adding further weight to the bearish evidence. However, it is still above the Ichimoku cloud and the 200d SMA. See Figure 1 below. Therefore, although the weight of evidence is bearish, the index has not fallen below $17,750 yet. Would that increase your odds of outperforming a potential Black W-3 in March and moving you toward your ideal Black W-4? Target zone is $15900+/-200.
Figure 1. NDX daily chart with detailed EWP numbers and technical indicators
Therefore, our recommended EWP counts are conditional on larger tops forming below the colored warning levels shown in Figure 1 above.
However, in a 5-wave exit diagonal, the wave structure becomes a 3-3-3-3-3 count because all 5 waves of the exit diagonal break down to only 3 waves each, indicating trend exhaustion. Most of the time. . Also, the third wave will not be the shortest, and the first and fourth waves may overlap. Most ending diagonals are wedge-shaped, falling within two converging lines. In Figure 2 below, the previous possible Wi, ii, iii, and iv are all composed of three waves, and W-iv overlaps with Wi, whereas the previous two gray We can see that the trend line includes price changes. Therefore, the alternative EWP count is that the price action is checking all the boxes on the exit diagonal, provided that it remains above the colored dotted warning level. Since these levels are so close to current prices, the Bulls are walking a tightrope while playing with fire, which is why I think that's the alternative right now.
Figure 2. Daily NDX chart with detailed EWP numbers and technical indicators
Plus, even if the last gray Wv ideally hits $18,615, what about the black W-4? Still chasing it. So you'll get a reward of 640p for a risk of 2000p, which is something to consider. Finally, a break below the October 2023 low will signal the end of the bull market.
