What Odds A Correction For ANZ?

This story features ANZ GROUP HOLDINGS LIMITED. For more info SHARE ANALYSIS: ANZ

Bottom Line 23/10/13

Daily Trend: Up
Weekly Trend: Up
Monthly Trend: Up

Technical Discussion

Although ANZ Bank ((ANZ)) is well behind Commonwealth Bank (CBA) in terms of relative strength, all-time highs were penetrated a few days ago which means and if we are to see a decent leg lower it needs to kick into gear pretty much immediately.  That said, apart from the fact that technically the stock is in a position to see a retracement there is no evidence of distribution whatsoever at this stage.  And until it transpires we simply have to go with the flow and see where it takes us.  There is likely to be some resistance in this general area though the key will be in how any retracement unfolds.  Should we see price action similar to that seen from the May high then there is every chance that price could head back down toward the zone of support as annotated.  However, I’m not quite sure what the trigger for such a movement is going to be though that’s not to say something can’t come out of left field.  One thing’s for sure, should momentum continue then there is every chance that the pull-back we are looking for is going to evade us.  Not ideal from a pure pattern perspective although it would be a bullish proposition nonetheless.

Our wave count is now coming under severe pressure for two reasons.  First of all the prior pivot high made a few months ago has been exceeded by a small margin which in this instance also means the much larger degree wave equality projection made off the 2009 lows has also been overcome.  This alone adds weight to a more bullish case.  The other interesting fact is that symmetry from a time perspective is waning.  And by that I mean the time taken down to the low of wave-(a) has taken substantially longer than the bounce from those lows.  In fact the current rally has taken more then 2.618x the time taken by the prior leg which is almost unheard of unless a complex combination pattern is unfolding.  That’s always a possibility though extended corrective patterns are extremely difficult to decipher so hopefully one won’t transpire here.  The only slight positive for the bears is that the stock is looking overbought on both the daily and weekly time frames although at this stage no bearish divergence is in position.  However, a stock oversold and sitting at all-time highs or resistance is a little more significant and can’t be ignored.

Trading Strategy

Despite the trend continuing unabated there is no reason to jump on, especially as all-time highs are being tested.  Should price get up toward the $34.00 level and be followed by a consolidation pattern or even a smaller degree a-b-c correction that would be a different story.  The one thing we can’t get away from here is that an impulsive 5-wave movement completes wave-(a) which theoretically should not be the full extent of the larger corrective pattern.  Not that any form of analysis is 100.0% accurate though from an Elliott Wave point of view there should be another retracement to come lasting several months before the larger degree trend continues.  Time will tell.

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