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ASML Elliott Wave Update — October 24, 2024
ASML, a key player in the semiconductor equipment industry, recently faced significant selling pressure following an earnings disappointment. The stock dropped sharply, and many believed that it had broken enough support to signal much lower levels. However, a closer look at the technical structure using Elliott Wave analysis reveals that ASML may still be within a healthy corrective phase, specifically an ABC zigzag pattern.
ABC Zigzag Pattern in Play
The current correction in ASML looks to be unfolding as a classic ABC zigzag, where the recent lows have likely completed the C wave of the structure:
Wave A initially dragged the stock lower from its highs, triggering the start of the correction.
Wave B saw a short-lived bounce, but the stock couldn’t sustain upward momentum, and it was followed by a deeper decline in Wave C.
The key technical level to watch here is 680, which corresponds to Wave A = Wave C. The stock successfully held at this level, indicating that the ABC zigzag may have run its course.
Support Levels Holding Firm
Two important support levels have held up well during this correction, suggesting that ASML might be setting up for a potential rally:
680, the equality of A = C in the ABC zigzag, acted as a critical support level that has not been breached.
More importantly, the stock has also maintained support at the 0.618 Fibonacci retracement level, which lies at 650. This retracement level is a key marker of whether the stock is simply correcting or is in a more significant downtrend. The fact that 650 held is a strong indication that the correction may be over and that ASML could be gearing up for a new bullish impulse wave.
What to Watch Next — Wave 3 Potential
For ASML to truly shake off the recent earnings disappointment and begin a new bullish cycle, it will need to clear significant overhead resistance. The critical level to watch in the coming months is 1000. A decisive break above 1000 would not only mark a recovery but could also signal the start of a powerful Wave 3 in the Elliott Wave structure.
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Based on Elliott Wave theory, if ASML can break above 1000, the next major target would be in the range of 1500 to 1700, which is calculated using the 1.618 Fibonacci extension of Wave 1. Wave 3 tends to be the longest and most powerful in the Elliott Wave sequence, and ASML could potentially rally sharply once it clears this psychological resistance level.
RSI Signals More Room to Run
One of the most compelling technical indicators supporting the case for a potential rally is the Relative Strength Index (RSI). Currently, ASML’s RSI is extremely low, sitting in the 20–25 range, which indicates that the stock is heavily oversold. In technical analysis, RSI readings below 30 often suggest that a stock is due for a bounce, and ASML’s low RSI implies that there is significant room for upside before the stock becomes overbought.
Conclusion
Despite the recent earnings-driven selloff, ASML appears to be holding up well from a technical perspective. The stock is currently in an ABC zigzag correction, with 680 and 650 acting as critical support levels. If ASML can clear 1000 in the coming months, it would confirm the beginning of a Wave 3, which could target as high as 1500 to 1700.
With the RSI in oversold territory, the stock has plenty of room to run, making it an intriguing setup for traders and investors who believe in ASML’s long-term prospects. All eyes will be on whether ASML can break through the 1000 level to kick off a major new bullish wave.