On October 2015, I had presented a scenario which depicts an ongoing correction since the top in 2014. During that post, I indicated that the DFMGI is undergoing what is known under Elliott Wave terms as a double Zig Zag. The count, I present today does maintain the same view, with the count now near completion.
The duration of the correction has gone beyond what was expected, considering the expectations for Oil and commodities in general was to start a rally by 2016, I refer to the posts on my blog on 26th October, 2015 "Long Term Outlook on USD", and subsequent posts on metals in Q2 2016 calling for early phase of a new uptrend in metals.
The DMFGI did join the start of the Oil rally in 2016, however it turned out to be just a continuation of the Zig Zag correction forecasted. Today, we are at the very last stages of that correction and we should be soon in accumulation phase for a new uptrend that is at least equal to the rally that took place between 2012 and 2014. That said, there is an alternate scenario which I am not presenting today, that would see the correction prolonged for at least another year or two. In this alternate scenario the index would still rally in 2019 but fails to break 3740 and and reverts lower in one last leg of of decline. This short term scenario would be looked into, judging how the rally in 2019 will look like. Should the rally in 2019 break 3740 to the upside then below count will be confirmed.
On short term, we can yet expect for one more small push lower which would then conclude the pattern or alternatively we would get a small correction upwards to 2900-3000 levels over next months extending into January 2019 when prices would then revert lower for one last push into lows of 2400 +/-, which is the scenario considered below. In either case we are looking at a sizable move upwards to start in Q1 2019.
For the time present, I would be looking for confirmations to indicate that an uptrend has started. We have early soft confirmation with the MACD divergence, but we would also require confirming price action which so far is absent.
The duration of the correction has gone beyond what was expected, considering the expectations for Oil and commodities in general was to start a rally by 2016, I refer to the posts on my blog on 26th October, 2015 "Long Term Outlook on USD", and subsequent posts on metals in Q2 2016 calling for early phase of a new uptrend in metals.
The DMFGI did join the start of the Oil rally in 2016, however it turned out to be just a continuation of the Zig Zag correction forecasted. Today, we are at the very last stages of that correction and we should be soon in accumulation phase for a new uptrend that is at least equal to the rally that took place between 2012 and 2014. That said, there is an alternate scenario which I am not presenting today, that would see the correction prolonged for at least another year or two. In this alternate scenario the index would still rally in 2019 but fails to break 3740 and and reverts lower in one last leg of of decline. This short term scenario would be looked into, judging how the rally in 2019 will look like. Should the rally in 2019 break 3740 to the upside then below count will be confirmed.
On short term, we can yet expect for one more small push lower which would then conclude the pattern or alternatively we would get a small correction upwards to 2900-3000 levels over next months extending into January 2019 when prices would then revert lower for one last push into lows of 2400 +/-, which is the scenario considered below. In either case we are looking at a sizable move upwards to start in Q1 2019.
For the time present, I would be looking for confirmations to indicate that an uptrend has started. We have early soft confirmation with the MACD divergence, but we would also require confirming price action which so far is absent.
Should we however see a break above 2634 this could already announce a truncated wave 5 and recovery should be then well under way. Should update on further market developments. Key message we should be very close to a reversal to the upside. Nevertheless, we cannot call for a definite reversal before we get market confirmations, so far we only have indications for a reversal.