General Electric (GE) lost its historic place in Dow Jones Industrial Average on June 19, 2018. After its departure, GE made a new lower low on December 11, when the price found its bottom at $6.41.
Testing the 200-days EMA
Once GE attained this bottom, it started to move bullish until its 200-days EMA reaching the $11.29 level. Then, after this ascending move, it moved back to the 50% Fibonacci level.
A second exciting clue was a high-volume gap in January 31st (within highlighted ellipses). According to Elliott’s notes “the volume traded increases on the first wave.”
To define the target area, we will apply the concepts discussed in our post “How to Use Channels to Identify Waves.“ If the price completed waves 1, and 2, the target of wave 3 for GE should be above the upper line of the channel. Using the Fibonacci Expansion tool, the target area for wave 3 is between $13.68 to $15.01. The invalidation level for this scenario is below $7.87.
Remember that the price is not compelled to move as our scenario suggests. The charts presented correspond to the Elliott Wave Theory application.