After a long consolidation, our market decided to continue its descent. I already began to doubt that this scenario is being implemented and today I want to share with you my vision of the situation using the example of the RTS index.
So, from August 17 to September 8 (130740-116320 points) a five-wave took place in it, which may be the first descending wave at the beginning of a new downward cycle, or wave A. After that, there was a corrective growth of the market by 50%.
At the moment, it does not matter what it was, since for any of these options there will be either wave 3 or wave C, which are also five-wave and impulse waves. We will talk about them in more detail.
Both wave 3 and wave C depend on either wave 1 or A. Their characteristics are similar, as wave 3 is often 1.618 or 2.618 at wave 1, but not shorter than 1. Wave C often also gives an extension of 1.618.
So let’s figure out the options.
Option 1: 3 = 1 or C = A, the target of descent is 109910 points. We are counting from the level of 124330 points.
Sub-option A: Presumably wave 124330-115840 points is subwave 1 inside 3 or C, 115840-120480 points – wave 2, 120480-112080 points – wave 3, rebound to 117880 points – wave 4, followed by drawing a “triangle”.
Then you can estimate the options for subwave 5 within 3 or C.
- 5 = 0.618 of 1, the target is 112635 points (not suitable, since there is no break at 112080 points)
- 5 = 1, the target is 109,390 points. The “triangle” was broken approximately in the region of 114,500-114600 points, the height of the model is 5800 points, the target for this measurement is 108,800 points.
- 5 = 161.8 from 1, the target is 104145 points.
Sub-option B: I told my subscribers that the wave of 117250-113550 points itself can also be decomposed into 5 sub-waves, from which I believe that this was the starting wave within the 5th. And then you can also try to make calculations. In this case, the 3rd inside the 5th began from 116840 points. By the way, the presence of a news catalyst is usually typical for such waves. The driver, albeit quite expected, was the news that the EU leaders at a meeting in Brussels on Thursday introduced a package of sanctions for the poisoning of Alexei Navalny.
We count the targets of subwave 3 within 5:
3 = 1, target – 113140 points, not enough, since usually acceleration occurs after the breakdown of the low of wave 1, in our case, when leaving the mark of 113550 points.
3 = 161.8 from 1, target – 110855 points
- 3 = 261.8% of 1, the target is 107155 points.
Do not forget that whichever option comes out here, then there will be more waves 4 and 5.
Option 2: 3 = 161.8% of 1, C = 161.8% of A, it is worth waiting for a deepening at least to the level of 101,000 points.
Summary: Returning to the fact that we have a “triangle” figure, it makes sense to consider goals that are closer to its realization, that is, the range of possible plunge varies within 107155-109910 points, and this is in the case of not entirely negative developments.
The picture is much worse if the option with lengthening works. So we carefully check everything, estimate the options and adhere to the idea of ”playing with the trend”, which remains downtrend.
Scavo (Ignatenko) Anastasia