Here in this post (and in the next part) I would like to show the accuracy of the target setting technique using Elliot waves and Fibo retracements. It was described in earlier posts, so here I'll make some back testing of the method. As it appears market peaks could be easily spotted by projecting waves 1 and 3. Keep in mind that there is certain error as the actual peak usually does not coincide exactly with the projected level. The suggested wave 5 target is indicative, suggesting the end of the bull phase.
Quite good market peak projection could be seen in 1987. The method sets the market peak at 319.98. The actual was at 336.06 followed by one of the most severe downturns on Wall street.
Next cycle (started 1988) shows that wave 5 target sometimes could be surpassed as there is extension to the initial target. The stronger the extension, the milder the bear market.
To be continued...
Quite good market peak projection could be seen in 1987. The method sets the market peak at 319.98. The actual was at 336.06 followed by one of the most severe downturns on Wall street.
Next cycle (started 1988) shows that wave 5 target sometimes could be surpassed as there is extension to the initial target. The stronger the extension, the milder the bear market.
To be continued...