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Elliot Wave Analysis for Nikkei 225
Nikkei is the Japanese stock exchange average price-weighted index and is calculated since 1950. It consists of 225 best companies from a wide range of industries, like pharmaceuticals, shipbuilding, automotive, banking, construction, steel, real estate, etc. Mentioning the real estate sector, was the one, which provoked Japan’s economic bubble between 1986 – 1991, when the uncontrolled credit expansion made up an overheated economy, which resulted was to burst and create a stagflation spiral, from 1992 till 2009.
Monthly Range: Higher in wave (V)
Looking at the monthly trading chart (log scale), we can observe, how from the early 90’s to the late 2010s, the Nikkei was in a downtrend. The all-time high at 39260 points, has never been broken since then. The logical measurement is, to consider that high as a III Cycle wave, since after the end of the decline of the IV Cycle wave, ((A)) – ((B)) – ((C)) zig-zag, the market has broken the ((B)) upwards.
So, as the title says, we are within the last V Cycle wave, which has already divided into the ((1)) and ((2)), and now the ((3)) has unfolded into a 5-wave mode, where the 2 of them have already on the run, as shown below at the weekly trading chart.
Weekly Range: Higher in wave (3) of ((3)) of wave V
The (1) Intermediate of ((3)) Primary wave, has made a sharp slope, and we know from Physics that, where we have an action, we shall surely have a reaction. So far, we see a pattern of higher highs and higher lows, which the last one, (2) of ((3)), was supported at the 24681,74 points. But, there, is the .382 Fibonacci retracement level, which for a second wave is a very narrow level. Usually, the support is, between the .5 and .618 Fibonacci retracement level, the 23576,99 and the 21873,35 respectively, which is indeed the level of ending the ((1)).
Almost always, the third of the third wave, like here, the (3) of the ((3)), is a very strong wave. Thus, if the corrective (2) wave has ended, then the (3) of the ((3)) will move higher, exceeding the all-time high. Regarding the Fibonacci extensions of 1.618 times the first wave, for the third waves, the (3) is expected to go beyond the 1:1 price equality between (1) and (3), at 39,119 points, which shall be a new all-time high. Inaccuracy, the 1.618 level of the (1) for constructing the (3), will be at the 48,041 points.
See Also The Pervious Analysis Of Nikkei 225: http://tradezign.com/nikkei-225
