The 01/16/23 blog illustrated that the Shanghai Stock Exchange Composite could be forming a multi-year Elliot wave Horizontal Triangle. The 02/08/23 blog noted that the Dow Jones Industrial Average could be forming a Horizontal Triangle from its January 2022 top. Now it appears the Philippines Stock Exchange Index (PSEI) could be forming a Horizontal Triangle from its all-time high in January 2018.
The weekly PSEI chart courtesy of Trading View illustrates the long- term pattern.
Elliott wave – Horizontal Triangles are net sideways corrective patterns. In motive waves they appear only in the fourth wave position. Horizontal Triangles are composed of five – sub waves each of which subdivide into three wave patterns or a combination of three wave pattens. After completion of a Horizontal Triangle there’s usually a thrust in the direction of the main trend, in this case up.
Typically, there are Fibonacci relationships among the sub waves.
In this presumed Horizontal Triangle, there are so far two Fibonacci relationships.
Wave ( C ) is 1,852.90 points.
Wave ( A ) is 5,039.22 points.
The ratio of 1,852.90/5039.22 is .367 close to the Fibonacci ratio of .382.
Wave ( D ) is 1,438.32 points.
Wave ( B ) is 3,513.05 points.
The ratio is 1,438.32/3,513.05 is .409 close to .382.
So far the decline from the 01/24/23 top has not subdivided into a clear three wave pattern. If the decline does develop into a three-wave pattern it could bottom near 6,429 which is where wave ( E ) would be .382 of wave ( C ).
Sometimes wave “E” retracements within a Horizontal Triangle are relatively shallow and may not have a clear three wave subdivision. Its possible wave ( E ) and the Horizontal Triangle completed at the bottom made on 02/27/23.
If the presumed Horizontal Triangle is complete or near completion, it implies a multi-week or multi- month rally that could bring the PSEI to a new all-time high. It also means that other national stock indices could also have at least muti- week rallies.