In early May, the Semiconductor Index (SOX) was at $4,430, with expectations to rise to between $4,550 and $5,090, as long as it stayed above $3,963. Recently, the index reached $4,996, and it’s currently at $4,865, showing a 10% increase. This analysis is based on the Elliott Wave Principle, which observes patterns to understand financial trends over time. Current estimates suggest the SOX could climb to $5,150 if it stays above last week’s low of $4,700 and especially above $4,430. This scenario fits with the completion of specific wave phases and the ongoing wave sequence. The index is currently in a Cycle-4 wave, which in Elliott Wave terms is known for flat corrections.

Wave Pattern Insights

The wave pattern implies that the SOX could return to the $5,000s, possibly reaching $5,700, based on the flat correction indicating a 3-3-5 structure. In the short term, the trend is expected to continue upwards, with targets set between $5,090 and $5,450, provided it stays above $4,500. Future evaluations will focus on these target zones for further developments. This forecast depends on market behavior and is not a guarantee of what will happen. What we’ve seen in the Semiconductor Index (SOX) so far follows typical Elliott Wave characteristics, particularly regarding wave formations in the larger Cycle-4 structure. For those unfamiliar, Cycle-4 in Elliott analysis often has what’s called a ‘flat correction.’ This involves three phases — typically two sideways moves with a brief dip in between. It suggests a certain order, as long as the lower thresholds hold. The recent high of $4,996 was very close to the target zone’s upper region mentioned in early May. This movement supports the idea that Wave B (within the flat correction) is nearing completion, particularly since last week’s low was $4,700, keeping the wave sequence intact. The key levels to watch now are $4,700 first, then $4,430. If these levels hold, the current movement indicates an upward push — termed Wave C in the flat structure. Market Strategy and Considerations Flat corrections typically conclude with an impulsive five-wave climb. If we are in this phase, then a move toward $5,150 or even $5,450 is probable. Prices are currently just below $5,000 and may enter a brief consolidation before another upward move begins. However, if the index drops below $4,500, especially below $4,430, it would necessitate a reevaluation of strategy. For derivatives traders, plans should be closely tied to reactions around $4,700 and $4,500. If the SOX dips into that range but rebounds without breaking below, then short-dated long positions could still make sense, provided the risk aligns with support levels. The deeper the pullback without breaking structure, the stronger the chance for a clean five-wave rise toward targets in the $5,200–$5,450 range. Given the nature of Wave C moves, they can speed up quickly, often catching traders off guard. Timing tools around re-tests of recent highs can help refine entry points. At the moment, the trend looks steady, indicating that the technical foundations are solid. If, over the next two weeks, the index stays above $4,700 and ideally maintains the $4,850–$4,900 area on dips, then the likelihood of continued upside increases. We will keep an eye on the SOX’s behavior concerning these levels. Each dip is more than just noise — it helps define the price potential to move forward. Create your live VT Markets account and start trading now.

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