Thursday, September 15, 2016

Elliott wave analysis of Coca Cola - Important top seen at 47.13

Coca Cola - Monthly

Coca Cola - Weekly

Coca Cola - Daily 

Coca Cola - Important top seen at 47.13 

From time to time, I look at stocks I normally don't follow and I have had an eye on Coca Cola for a little while now and feel pretty confident in saying that a long term important top was seen at 47.13. 
I have prepare a chart-pack containing the monthly, weekly and daily charts, showing the case for a long term top being in place at 47.13 and that a major correction towards 18.29 should be expected. 
Starting with the monthly chart, we can see Coca Cola bottomed way back in October 1974 at 0.46 and has since rallied nicely to the peak of 47.13 in five waves. The ideal wave V target was seen at 45.26, where wave V was 61.8% of the length from the bottom of wave I to the top of wave III added to the bottom of wave IV. Well this target was exceeded slightly, but the price-action since the 47.13 high suggests that the long term corrective decline to the low of wave IV now is unfolding. 
Once a five wave move is complete, the first corrective target to look for the low or high of wave four, which is the case of Coca Cola comes in at 18.29, this also happens to be where this correction will have corrected 61.8% of the rally from 0.46 to 47.13 - Coincident you think?
If we zoom into the weekly time-frame, we can see the rally in wave V from 18.29 to 47.13. Again a nice five wave rally can be counted and wave 5 would have been 38.2% of the length from the bottom of wave 1 to the top of wave 3 added to the bottom of wave 4 at 46.00 pretty close to the monthly target of 45.26.
The important low to break on this time-frame is seen at 40.75, but once broken there should be no looking back for a long time.
Zooming in on the daily time-frame and the final rally in wave 5, we would like to see another five wave rally, which is exactly what has been seen from 36.56 to 47.13. However, the series of higher highs and higher lows is now being revers to a series of lower highs and lower lows, which the break below 42.87 has confirmed. As just said, the next important support to look for is seen at 40.75, but a break below this support will leave no more doubt, that a long term corrective decline towards 18.29 is unfolding.

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