Counting the waves…
Counting the waves…
Commercial Banking Index: Bullish Breakout or One More Correction? Elliott Wave Analysis
The Commercial Banking Index remains at a crucial juncture. Our preferred count suggests a complex Wave (2) correction before a larger bullish move, while the alternative count points to an ongoing 5th wave rally. A breakout above key resistance will determine the next major trend.
Signal: neutral
Current Elliott Wave count: Wave 2nd running or 4th
Based on our preferred count for the COMMERCIAL BANKING index, it appears that we are likely navigating a complex correction within the second wave. This could potentially drive the BANKING index towards the 1160-70 area in the near future. Although the index has corrected deeply towards the 61.8% area, the upward pattern lacks a clear motive structure, leading us to conclude that it remains within a correction wave, specifically the ((x)) wave under the 2nd wave. In the short term, we may see a slight further push for the ((x)) wave, followed by a potentially choppy and deep correction. Alternatively, we are also considering a count where the current sideways pattern is part of a 4th wave triangle pattern's consolidation under the 1st wave, which aligns with the broader NEPSE trend. The validity of these counts will become clearer in the near future, and if the index breaks above the 1st wave high, it would suggest that the consolidation pattern is indeed a 4th wave triangle pattern. From a bigger picture perspective, the BANKING index has undergone a significant correction over the past 8 years, characterized as a Running Flat correction. The recent all-time high was not a bullish move according to Elliott Wave corrective patterns, but rather part of the correction as a B wave. The subsequent sharp impulsive decline confirms this view. Until the index breaks above the (B) wave high, we cannot rule out an alternative count, potentially a ((2))nd wave Flat correction. As patterns unfold, they will reveal the true story, and we must remain patient and respectful of the market's direction.
Based on the alternative pattern, it appears that we are currently in the midst of a ((5))th wave rally within the larger 1st wave. The preceding 4th wave seems to have unfolded as a lengthy consolidation pattern, taking the form of a Triangle Pattern. It's essential to note that the Triangle Pattern will be invalidated if the price drops below 1308.52. For a more immediate stop-loss (SL) point, we should consider 1397.72. If this marks the bottom and we are indeed heading into the 5th wave, our target zone would be between 1770-1860, where the 5th wave could potentially complete as a triangular thrust. To confirm this scenario, we first need to see a breakout above 1576.33, without violating our designated SL point. The pattern's progression in the coming days will ultimately reveal the true story, providing clarity on the market's direction.
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