Mondi PLC: 5 Waves Up, 3 Down… What’s Next?

Identifying Elliott waves may seem quite theoretical, but you can have a lightbulb moment when you see a real-world example.

Let us take a look at a beautiful chart of an impulse wave.

Mondi PLC is a paper and packaging company listed on the London Stock Exchange.

From a low in 2009, Mondi rallied in five waves into August 2011 and then had a corrective decline into November. We label those waves Intermediate degree (in the brackets) Waves 1 and 2.

When, after a significant downtrend, the price rallies in five waves like this, we can be pretty sure that another advance is coming.

From November 2011, Mondi advanced in Intermediate degree Wave (3). Notice how neatly it subdivides into five waves and how Wave 3 of (3) also subdivides into five waves.

With a triangle for Wave 4, this is a good example of the guideline of alternation. Wave 2 is a sharp correction and Wave 4 is shallow.

Note also that Wave 4 ended at the 0.236 retracement of Wave 3, a classic Fibonacci ratio for shallow waves.

As for Intermediate degree Wave (4) — bracketed – note that Wave C of (4) equaled 1.618 times the length of Wave A. This is a ratio often seen in flat corrections.

From March 2016, Mondi then advanced in Wave (5), again subdividing in a textbook fashion.

When Wave 5 was complete, in September 2018, the share price then started a corrective decline.

So, is the correction over and what would that mean?

This is a fine example of an Elliott wave which obeys rules of wave formation and adheres to certain guidelines.

If you want to know what’s going to happen to Mondi and many other cool chants like this, stay tuned to EWI’s European Short Term Update.

So, you’ve explained why the market did what it did… 

Great. Now what?

It’s easy to find some news that “explains” a price move. Two problems, though: 

  1. You’ve missed the move
  2. You still don’t know where prices are going next

Here’s how to fix both problems: Watch Elliott wave patterns instead of the news. 

All through the month, our European Financial Forecast Service gives you a confident look ahead for Europe’s biggest markets.