Elliott Wave Analysis of F&N (F99) – 29 April 2012 - The Bull Needs a Rest
This Elliott Wave Analysis is for Fraser and Neave Limited (F99) which is listed on the Singapore Stock Exchange (STI). A very clear five wave impulsive move can be labelled on the weekly chart as displayed below. Note that the wave 1 started at 1.85 but the data for this chart is for the past 3 years only and does not have that information. Wave 2 was a simple and quick correction. Wave 3 as usual created the biggest move on the chart and brought the stock price to 6.33 from 3.10. Wave 3 is about 1.7 times of wave 1 which is slightly higher than the 1.62 Fibonacci relationship. The volume for wave 3 was the largest and with this we have a volume confirmation for this wave.
Following wave 3, wave 4 kicked in and it panned out in an contracting triangle. Wave 4 corrected wave 3 by 40% which is close the Fibonacci relationship of 38.2%. The volume for wave 4 is relatively lesser than in wave 3 and again we have volume confirmation.
Finally, wave 5 started and it looks like it is near to completion. If wave 5 is equal to wave 1, then the expected target for wave 5 is 7.25. Another target level is derived from the widest part of the triangle of wave 4. That gives us a target of 7.32. The F&N is currently at 7.06 and this tells us that the bull run on F&N is likely coming to an end soon. Looking at the volume, it is clear that F&N is due for a correction as the volume is not anywhere near wave 3 or even wave 1.
The MACD is clearly showing a divergence between the top of wave 3 and the current level. The MACD is pointing down whereas the price action is upwards. This is again another bearish sign.
Using the Fibonacci retracement, we can derive three possible targets for the anticipated correction. The levels correspond to the 38.2%, 50% and 61.8% Fibonacci retracements. These targets are 5.16, 4.53 and 3.90. The 38.2% level looks like a likely region as it is at wave 4 of the previous move up and it is common for the retracement to end at the wave 4 level of the previous move. The 38.2% might be target or at least it will provide a good support at this level.
I am expecting the turn down to start either this week or next as there could be one more leg up to go.