Asian stocks set for ‘multi-month’ rally: Technical analysis

Tuesday, 07 April 2009 09:25
Asian stocks may gain at least 15% during a “multi-month” rally, based on chart formations that predicted this year’s rebound for Chinese shares, Elliott Wave International Inc. said, reported Bloomberg.
The MSCI Asia-Pacific Index has broken above its upper trend line after completing the final leg in a “five-wave decline,” Elliott Wave International said in its April Asian-Pacific Financial Forecast report. The index may rebound at least 38% from its March lows to around 100, based on a so-called Fibonacci chart, and rise to as high as 122, it said.
“Such a breakout helped to identify the start of a bull market in China back in December,” Elliott Wave International said. “Prices in the rest of the region should now advance in a similar fashion.”
The MSCI Asian index has rallied 22% since tumbling to 70.60 on March 9, the lowest in five and a half years, on speculation that governments worldwide will step up efforts to bolster global economic growth. The measure is still 52% lower than its November 2007 peak.
Elliott Wave Theory, created by US market analyst Ralph Elliott in 1938, attempts to predict future price moves by dividing past trends into sections, or waves, and calculating changes in value.
The ratios used in Fibonacci analysis are based on the sequence identified by Italian mathematician Leonardo Fibonacci in the 13th century and used to predict support and resistance levels for prices.