It has been a while since we published our last update on the ASX 200 index, where we were expecting a wave (2) correction to the upside soon. We thought so, because there was a complete impulsive decline and the Elliott Wave Principle postulates, that every impulse is followed by a three-wave correction in the opposite direction. On the next chart you can see how the Australian ASX 200 looked like on September 26th.
The chart below shows, that the correction we were expecting seems to be taking the form of the rarest of retracements so far – a running flat.
The only difference between the expanding flat correction and the running one is the fact that wave C of a running flat does not reach the extreme of wave A. Everything else remains the same – three waves, labeled A-B-C with a 3-3-5 wave structure and a new extreme in wave B. Let’s take a closer look at the supposed running flat in the ASX 200.
The 1-hour chart allows us to see the details. Wave A consists of three waves, labeled a-b-c. Then there is the large extended wave B, constructed of a double zig-zag marked with w-x-y. Then comes the final wave C to the upside, which, in this case, takes the form of an ending diagonal with a huge throw-over in its fifth wave.
If this is the correct count, we should prepare for a big bear show in wave (3). However, we should be very careful, because 9 times out of 10 the running flat would evolve into an expanding one. Is this the tenth time?