The Elliott Wave Analysis Thread

Heya Rudy,

I have played around a bit with copying charts to paint and labeling them there but was a bit rushed this morning when I posted it so just went with what Bourse had to offer. It was enough to show what I wanted to show, although to see it you have to open the chart up in a new window

https://www.aussiestockforums.com/forums/showpost.php?p=376372&postcount=275 , wave d up, appears underway.

Merry XMAS for those who celebrate it.

OzWaveGuy said:

https://www.aussiestockforums.com/forums/showpost.php?p=376372&postcount=275 , wave d up, appears underway.

Merry XMAS for those who celebrate it.

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Hi OWG,

As wave circle 'a' was an impulse, would you expect wave circle 'c' to be another impulse or by the guideline of Alternation would it probably be an ending diagonal?

I read your article on the XAO where you gave your long, medium and short term forecast with huge interest. I think that my view of the 5 waves down is fairly similar to yours and would welcome your comments on it.



As can be seen from the chart I think that the 21st November was the end of the first 3 waves down and that we are currently in the formation of corrective wave (4). I was delighted at your labeling of the current highly complex wave circle 'b' and whole heartedly agree with it. I have called it wave (b) as I am not sure how to get the circle labeling. Completion of wave (c) would in my mind complete wave A which is the first of 3 waves (waves A, B & C) required to complete corrective wave (4) on my chart.

On my chart I have shown the ABC corrective wave as a 'flat' pattern but I am not suggesting that this will be the case as a Zigzag or Triangle pattern is possible. In fact as wave (2) was a sharp, the likelihood of wave (4) remaining in a frustrating sideways moving complex pattern like a triangle for a few months seems more likely. I think that the main point to come out of the pattern is that in spite of the extremely negative news articles that we are bombarded with on a daily basis, the market appears to be holding strong at the current levels. Perhaps the US market is holding fire for an 'Obama bounce' in January as his great oratory skills are used to light a fuse of hope into the American public. We can only watch how things reveal themselves in the coming weeks.

My current EW count has the XJO moving north over the next few week/months in a sideways pattern possibly completing somewhere between 4158 and 4350 at best before diving down into our looming dreaded wave (5) pattern.

from https://www.aussiestockforums.com/forums/showpost.php?p=376372&postcount=275

It appears (finally) that yesterday's trading completed the final leg of the double 3 that we have been monitoring for some weeks. A series of upwards thrusts should follow.

I've added some discussion of Fibonacci in the chart below. Fibonacci + EW make a good combination to help identify possible ending points for price and time. The Triangle portion in the chart took 2.58 times longer than the zig-zag. I was sorta hoping for 161% and this was initially implied, but instead, a 'sub-triangle' developed (labeled) and pushed the time frame further out to almost 261%.

For the keen EWers in the forum, this double three should have been interesting to see unfold as they are rarely seen at this scale.

ok i may have overstepped my welcome early on this thread --- but i have a serious question and i dont need the answer for myself cause im happy with my own system developement at this stage --- but i am interested with regard to the analysis which has been presented in the last few posts (which is bludy excellent by the way !!!) ---- at what point can we/do we take an entry/exit based on the analysis --- and on what TIME FRAME do we make that entry ??

ie do E/W's drop a time frame or two when the trigger phase is looming and what is that time frame??

my biggest turn off with Elliot stuff is the ambiguity of the 'pull the trigger' phase and the size of the stop loss required to stay in the position if yr not quite on the money --- clarification of this and how an E/W approaches it may be interesting from we uneducated E/W p.o.view

A short update on the next 'leg' of the XAO....

The chart below provides possible targets for the XAO - around 4000 points being a strong target at this stage - until the unfolding waves provide more clues. The 3950 target on the XAO is where wave 'c' circle would equal wave 'a' circle. It is also a point of reasonable resistance with several sub-waves within the previous wave 4 triangle bouncing off 3950.

Another target to watch for (not shown) is a 23.2% retracement of wave (3) at 3875 points. Although this level doesn't appear to be a main support/resistance level based on short term and long term historical touch points.

Sometime back I discussed the XAO being at a pivotal juncture - either it continues to climb from here (hence, 'Alt C' in the chart is the bottom of the zig-zag correction and the bulls have their way) or we are in another corrective phase (likely) before another leg down commences into wave (5).

If wave (4) finishes as shown on the chart, then this would be most unsatisfactory, as wave (4) and wave (2) (not shown) would be very similar in shape, time and price. The markets will always try to alternate - so just when you think you've 'got-it' the market does something very different. Hence a triangle is very plausible and usually appears in wave 4 positions.

If the triangle case is assumed (for the moment), then the completion of this leg up will form wave 'A' of a large triangle, wave 'B' down would probably drop to new lows - perhaps quite swiftly as wave 'A' is taking sometime to develop.

If the Triangle scenario is correct, then this implies a sideways market (perhaps within a 1000 point contracting range) for several months.

In an upcoming post I'll discuss more on a possible triangle scenario and the time taken for it to complete.

Rudy said:

Hi OWG,

As wave circle 'a' was an impulse, would you expect wave circle 'c' to be another impulse or by the guideline of Alternation would it probably be an ending diagonal?

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Hi Rudy. See my previous post as to some possibilities.

In terms of what this next small leg will look like, either 5 waves up to 'c' circle or even an ending diagonal is perfectly acceptable. Either way, this will form a zig-zag (5-3-5) correction if we are assuming that the market is correcting upwards.

Cartman said:

at what point can we/do we take an entry/exit based on the analysis --- and on what TIME FRAME do we make that entry ??

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This is a good question but is highly dependent on the type of trading one undertakes and the time scale of that trading.

For example, it would be conceivable to enter a long position at the completion of wave 'c' or 'e' (with stops at or near each of the wave end points). For those who are more risk adverse, one may consider entering a long position once a breakout has been confirmed and enter at the bottom of the first wave 2 position to trade wave 3+ upwards.

As an option trader, I would be hesitant to enter at wave 'c' as you have no way of telling how long 'd' and 'e' will take to develop - unless you want to trade individual legs of the correction. As an option writer, the whole double three is a bonus as the options you write will be affected by time decay.

Of course, these are not recommendations, just observations on some examples of using EW. There are many other ways one may choose to trade impulse moves and corrections.

OzWaveGuy said:

This is a good question but is highly dependent on the type of trading one undertakes and the time scale of that trading.

For example, it would be conceivable to enter a long position at the completion of wave 'c' or 'e' (with stops at or near each of the wave end points). For those who are more risk adverse, one may consider entering a long position once a breakout has been confirmed and enter at the bottom of the first wave 2 position to trade wave 3+ upwards.

As an option trader, I would be hesitant to enter at wave 'c' as you have no way of telling how long 'd' and 'e' will take to develop - unless you want to trade individual legs of the correction. As an option writer, the whole double three is a bonus as the options you write will be affected by time decay.

Of course, these are not recommendations, just observations on some examples of using EW. There are many other ways one may choose to trade impulse moves and corrections.

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thank u for the reply Oz--

if ur trading options i can see how this type of analysis could be useful --- longer term view looking for the bigger moves in a more flexible time frame --- nothing wrong with that --

Cartman said:

thank u for the reply Oz--

if ur trading options i can see how this type of analysis could be useful --- longer term view looking for the bigger moves in a more flexible time frame --- nothing wrong with that --

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Hi Cartman,

There are a number of trading strategies for trading EW. Naturally enough the best trades are the impulse waves. In bull markets the impulse waves are obvious for medium to longer term time frame investing/trading but I know of EW traders who trade short term and they like trading the 'c' wave in a corrective pattern as well when we have a 'Flat' or a 'Zigzag'. In each case the 'c' wave is an impulse and quite often provides the 'best trading ride' for a shorter term trader.

Cheers

Rudy said:

Hi Cartman,

There are a number of trading strategies for trading EW. Naturally enough the best trades are the impulse waves. In bull markets the impulse waves are obvious for medium to longer term time frame investing/trading but I know of EW traders who trade short term and they like trading the 'c' wave in a corrective pattern as well when we have a 'Flat' or a 'Zigzag'. In each case the 'c' wave is an impulse and quite often provides the 'best trading ride' for a shorter term trader.

Cheers

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yeah cheers Rudy --- i was a bit cheeky early on this thread ---- i see the merit in the quality and depth of the analysis u guys put in --- must be bludy exhausting though ---- i guess i just have a more simplistic way of dealing with the market cycles but funnily enuff my 'momentum' style trading actually mirrors the E/W concepts in a way --- i reckon i would just have a lot of trouble picking exact entries unless i addded a shorter time cycle into the equation ----- and E/W as a stand alone an. appears to need wider stops to function efficiently ----- but my view is very narrow and uneducated on this topic and should be treated that way ---- good luck with it

Cartman said:

yeah cheers Rudy --- i was a bit cheeky early on this thread ---- i see the merit in the quality and depth of the analysis u guys put in --- must be bludy exhausting though ---- i guess i just have a more simplistic way of dealing with the market cycles but funnily enuff my 'momentum' style trading actually mirrors the E/W concepts in a way --- i reckon i would just have a lot of trouble picking exact entries unless i addded a shorter time cycle into the equation ----- and E/W as a stand alone an. appears to need wider stops to function efficiently ----- but my view is very narrow and uneducated on this topic and should be treated that way ---- good luck with it

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Hi Cartman,

What I love about EW is that it does give you some idea about what is coming once you identify the correct pattern. The period that we have just been through where we were painfully moving through a very complex corrective pattern is quite rare. It is usually easier to determine where we are in a cycle. Thankfully we had OzWaveGuy doing such a great job giving us an excellent EW count through that period. The recent move in the XJO where it is forming the last wave of the A wave (wave circle c) is obviously an impulse wave as you can see from the chart below. I have labeled it wave (c) because I can't get the right symbol to label it a circle c but you will understand what I am saying on the chart.

As you can see we are about to move into wave 'v' (the 5th wave) of this impulse wave. Now this could mean that we are getting to the last sub wave in this particular impulse wave. We will have to see if wave 'v' has any extensions but at least it gives us a warning that we might have to keep our finger on the 'sell' button of our long positions.

Now as wave 'v' is often around the same range as wave 'i' and we know that wave 'i' was 164 points (3658 - 3494) therefore wave 'v' could top around 3839 (3675 + 164).

Another cross check is worked out by knowing that the first impulse wave of this Zigzag pattern had a range of 525 points. This was wave (a) and it started on the 21st November and completed on the 28th November. 61.8% of 525 points gives you around 324 points. If you add 324 to 3675 (termination of wave 'iv') you get a target of 3818.

So we have two different methods getting slightly different target levels namely 3818 and 3839. I would use these target levels as likely turning points for the current move.

I personally don't find the analysis exhausting but more 'interesting' as it is a passion of mine as it no doubt is for OWG.

When you have such a clear picture of what is happening it makes trading in any time frame much easier as potential entries and exits become rather obvious. As EW works in any time frame you can apply your analysis to the time frame that you are interested in.

Cheers

Rudi,
The move into your wave-i is a 3-wave...?

The recent complexity has been clear on the EOD charts. This is the chart we've been using for most of 2008. The major lows offered wave equality at the 3200 mark which also completed with a blow off low (wide range, high close). The move off that low point to wave-i or -a was clean and has been followed by choppy weakness since, indicative of a -ii or -b. This choppiness also tagged the 50.0% retracement which is the minimum expectation for that part of the pattern. The larger pattern suggests more upside is due, regardless of whether we've completed a wave-[C] low of the alternate wave-(3) low. The guide from here is how prices will rise and how prices react at the wave-a/-c equality point at 4000. If prices steam through 4000 without pause we can conclude we're seeing a minor degree wave-iii higher. If however, they pause and reverse at 4000, we're still on track for a corrective wave-(4) scenario. It all hinges at 4000.

From a trading perspective one should be long as this up wave traces out. I am personally long CEY, BSL, NAB, DOM, IRE, DJS and ASX.





This post may contain advice that has been prepared by Reef Capital Coaching ABN 24 092 309 978 (“RCC”) and is general advice and does not take account of your objectives, financial situation or needs. Before acting on this general advice you should therefore consider the appropriateness of the advice having regard to your situation. We recommend you obtain financial, legal and taxation advice before making any financial investment decision

nice chart. thanks.

Nick Radge said:

Rudi,
The move into your wave-i is a 3-wave...?

The recent complexity has been clear on the EOD charts. This is the chart we've been using for most of 2008. The major lows offered wave equality at the 3200 mark which also completed with a blow off low (wide range, high close). The move off that low point to wave-i or -a was clean and has been followed by choppy weakness since, indicative of a -ii or -b. This choppiness also tagged the 50.0% retracement which is the minimum expectation for that part of the pattern. The larger pattern suggests more upside is due, regardless of whether we've completed a wave-[C] low of the alternate wave-(3) low. The guide from here is how prices will rise and how prices react at the wave-a/-c equality point at 4000. If prices steam through 4000 without pause we can conclude we're seeing a minor degree wave-iii higher. If however, they pause and reverse at 4000, we're still on track for a corrective wave-(4) scenario. It all hinges at 4000.

From a trading perspective one should be long as this up wave traces out. I am personally long CEY, BSL, NAB, DOM, IRE, DJS and ASX.





This post may contain advice that has been prepared by Reef Capital Coaching ABN 24 092 309 978 (“RCC”) and is general advice and does not take account of your objectives, financial situation or needs. Before acting on this general advice you should therefore consider the appropriateness of the advice having regard to your situation. We recommend you obtain financial, legal and taxation advice before making any financial investment decision

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Hi Nick,

I believe that we are seeing much the same scenario. I agree with the labeling of your wave [3] and the expectation of a corrective wave [4] through an ABC corrective pattern. On my charts I label these as waves (3) and (4) but a rose is still a rose......

The move from the low of the 21st November 2008 I have labeled a wave (a), you have labeled a wave 'a'. I saw that move as an impulse wave terminating on the 28th November 2008. From there to the 23rd December we completed wave (b). The move from that date to the 2 January 2009 created the first 4 sub waves of my (c) wave. I labeled these sub waves i, ii, iii and iv. I do not believe that the action we saw today was an extension of sub wave iv. I could be wrong but it looks to me that we had a truncated wave v form thus completing wave (c) which in turn also completed wave A of the corrective wave (4).

I therefore believe that we have now commenced forming the first leg down of corrective wave B.




I too expect that wave [4] will terminate somewhere near the 4000 mark and definitely in the price range of sub wave 4 of wave [3].

Nick Radge said:

It all hinges at 4000

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Good discussion and it certainly does!

The 4000 resistance level appears in a number of analysis. The length of the impluse move from the 21st Nov to the 28th Nov can be added to the end of the recent double three and gives 3980points (based on wave equality).

In addition, looking at a 60min chart of the XAO from the 29th Dec @ 2pm onwards, the current wave 1 and 2 (where 2 appears to be a flat) one will obtain just on 4000 points based on the basic assumptions below in estimating end points of impulse waves using price alone.

This will usually provide a reasonable estimate when wave 3 is the extended wave.

Spot on I reckon OzWaveGuy :iagree:

OzWaveGuy said:

Good discussion and it certainly does!

The 4000 resistance level appears in a number of analysis. The length of the impluse move from the 21st Nov to the 28th Nov can be added to the end of the recent double three and gives 3980points (based on wave equality).

In addition, looking at a 60min chart of the XAO from the 29th Dec @ 2pm onwards, the current wave 1 and 2 (where 2 appears to be a flat) one will obtain just on 4000 points based on the basic assumptions below in estimating end points of impulse waves using price alone.

This will usually provide a reasonable estimate when wave 3 is the extended wave.

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Hi OWG,

Your post is brilliant!! Even though I look at the XJO and you look at the XAO they are obviously very closely aligned. My earlier post had wave i (equivalent to your wave 1) starting on the 23rd December which I can now see is incorrect. Keep up the good work.

Cheers

Rudy

Nzd/Usd

- Hey there Good Lookin ' .................
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Here's another look at the Nzd /Usd ..........

It appears that The Bulls are enjoying themselves .....

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Only a Probability ! ............................. Not Cast in Stone !

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