In January, we suggested here that the iShares MSCI Australia ETF (symbol EWA) might be ready for a substantial bounce. The bounce appeared almost as forecast, although it started from a bit higher than our first targeted support area. In this post, we explain why we are revising our Elliott wave count slightly, and we offer parameters for the next possible downward move.
Our previous post showed that we were looking for a small five-wave move down from last October's high of 19.84. That type of move would have completed a larger five-wave structure down from the high of October 2014. However, the recent decline took a corrective form instead of an impulsive one, suggesting that it was merely the intermediate wave 'b' inside a larger corrective wave 'iv'. The revised labeling is shown on the chart below.
In the revised count, wave 'iv' now appears complete or nearly so. This implies that downward wave 'v' of (iii) should be due soon, perhaps from near the resistance areas marked at 19.72 and 20.34.
Prominent Fibonacci-based support might appear near 15.62, where wave 'v' of (iii) would equal wave 'i' of (iii). That area represents a possible floor for wave (iii) during the next few months, although there is additional geometric support and bigger-picture Fibonacci support slightly beneath that level.
Note that the present rally cannot be counted as wave 'iv' if it exceeds the low set by wave 'i' at 21.30. If price climbs that high, then we will have to reevaluate the count.
Our April newsletter will offer forecasts for gold and silver markets. Click here to request your copy!