The Elliott Wave Analysis Thread

OzWaveGuy said:

Wave iv overlaps into the price range of wave ii.

Somethings up. The evidence is suggesting a different count is unfolding - i suspect another push up is required to finish a more complex b wave correction. Will sit out for a bit until this wave clarifies.

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Hi OWG,

Granted. I was almost tempted to join the EW group who discount intraday spikes (the sound that you may be able to hear in the background is that of a severe wrist slap) but with the global markets reacting so strongly overnight it is obvious that we need to wait a bit longer for things to reveal themselves.

You never know we may even end up with my low probability expanding triangle scenario. https://www.aussiestockforums.com/forums/showpost.php?p=394102&postcount=360

Resource Sector

During the week there was some discussion about the difficulty in labelling BHP and the resources sector (XMJ).

I had previously posted my thoughts on the XMJ here ---> https://www.aussiestockforums.com/forums/showpost.php?p=389301&postcount=338

However, I no longer believe that the XMJ is currently unfolding in a wave (4) (as proposed in the above post)

CHART 1
Before I get into wave counts, the first chart below covers the XMJ bounce starting on the 21st Nov. Because it initially looks difficult to label - I try to find all the 5 wave moves first and then the 3 wave moves. When I get stuck with 'unexplainable' counts - I look for triangles and then see if there is a 5 wave move on the other side of the triangle (to complete a zig-zag).

So hopefully you'll have something similar to the chart below. I try to compartmentalize the obvious legs and not get too distracted by the rest.

CHART 2
Once this has been done, I just add the labels that represent higher and lower degrees as in the 2nd Chart (in this case large or small text). The next step is to try and understand what each wave is trying to say v's just copying down the 5 and 3 wave moves.

For example, the large B wave triangle in the larger A leg was a very good indicator that indicated an impulse move out of the triangle needed to occur. As a side note, the XMJ triangle tied very closely to the XAO double 3 that covered almost the same length of time and was discussed at length on this thread.

The next price of good info was after the large A leg - An impulse move downwards is not evident (which was suggested in the post above), but instead a double zig-zag with an intervening 'X' wave unfolded - a 3 wave move not 5 and therefore a key signal that the market is still correcting. One can now assume (with a reasonable level of safety) that this 3 wave move could be part of a larger flat correction (3-3-5). So the next short term move needs to be up in a 3 wave move before heading down in a 5 wave move to form wave B. These charts were taken on Thursday, so further upside has already occurred - and maybe a little more needs to occur. There are other interpretations - but the analysis seems logical to me and ties into where the XAO is heading.

SUMMARY
Once you can determine the most likely course of the market - you use your trading strategy for entry and exit points depending on the time scale to be traded. However, as the XMJ is correcting, it will be more difficult to trade these corrective moves v's entering at the start of a wave 3 impulse move.

If the market does not move in your favor or has invalidated your own count - you can exit as it's clear you have an incorrect count versus staying in and 'hoping' for it to turn.

As you can see, once the EW analyst labels the waves that have unfolded, then one needs to interpret what legal patterns are embedded in your chart and which pattern will most likely follow - flats (3-3-5), zig-zags (5-3-5) and triangles (3-3-3-3-3). Triangle being the best of course.

XMJ
I believe that the XMJ has completed 5 waves down from the high and is correcting. I am assuming that a flat or expanded flat could unfold and this could tie in well with the XAO that needs to complete wave (5) down and then correct back up.

Will take a look at BHP later. Enough work for Saturday night.

Cheers OWG

Hi OzWaveGuy. I don't know if you follow the AUD/USD, but if you have a moment, what do you think of it?

It seems to have just behaved a little odd for me using EW... to the point that as best I can figure it has just produced a stunted wave 5 on ther hourly to complete the larger degree wave 4 on the daily.

My charts are posted here: https://www.aussiestockforums.com/forums/showthread.php?p=395343#post395343

Whiskers said:

Hi OzWaveGuy. I don't know if you follow the AUD/USD, but if you have a moment, what do you think of it?

It seems to have just behaved a little odd for me using EW... to the point that as best I can figure it has just produced a stunted wave 5 on ther hourly to complete the larger degree wave 4 on the daily.

My charts are posted here: https://www.aussiestockforums.com/forums/showthread.php?p=395343#post395343

Click to expand...

Not sure what type of EW labeling your using there whiskers .

I took a very quick look at the AUDUSD weekly chart and it does appear that there's further to go on the downside - maybe back below 50c which would be about 61% of the first leg down. The logic is: 5 waves down from high is evident, a correction has formed (a-b-c) and maybe complete (although brief), and the next leg down is underway and currently executing wave 2 up.

Haven't looked at the details of the AUD, but there may be a good opportunity to go short and catch a 3rd wave move downwards. You were probably stopped out by this wave 2.

krk004 said:

Enjoy the contributions by all on this forum!

Very much an EW novice, myself.

Anyone want to give their EW thoughts on Gold, Silver or Platinum?

Thanks in advance,

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Kr

Gold appears to still be correcting down from the high. The latest move up appears corrective as well. I posted something on Gold a little while back and suggested it would hit around $600 (the apex of a 4th wave Triangle). With all the talk that gold is heading back above a $1000 implies a contrarian move will soon occur - so $600 could be a reasonable target.

Longer term - I believe gold will head to new highs (unless the Government/NWO take control of the gold price or make it illegal to hold physical gold). The US dollar is most likely going to be toast once the current correction completes and will add further woes to the financial crisis.

OzWaveGuy said:

Gold appears to still be correcting down from the high.

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Is this still the case if the Sep/Oct 08 highs are beaten? POG seems to have stalled around here, but you never know.

Can't recall you ever doing an EW gold chart, would love to see it again if you have the time. Can't see exactly where the $600 target comes from. If not, no worry.

when krk004 asked about an EW for Gold, I replied that "I don't think gold lends itself to EW analysis. one is more inclined to study its long & short term up & down channels."

alright then, there is indeed such a channel in existence. the lower line of it commencing at 850 last May, then 750 in September, next low point 720 in October & yes indeed if you project far enough ahead in the same direction, some time in April it should reach the 600 mark.

does this allow for the fact that the Pog is now in an uptrend? back to my channel! the July high of it was 980 ... from there to aforesaid low of 720 took a little over 3 months.

theoretically then, anything is possible. look at OWG's final Flat wave B projection (post #402) for the XMJ ... if you want to be contrarian as can be!

in largely practical terms, doesn't gold move more or less inverse to the USDollar? seems to me it would require a very firm dollar to drive gold down to 600.

but I would still be very interested in OWG's EW analysis for gold. especially, within a medium term range, like for a few months ahead.

posting this at an unearthly hour, so ... E&OE .... DYOR!

amory said:

in largely practical terms, doesn't gold move more or less inverse to the USDollar? seems to me it would require a very firm dollar to drive gold down to 600.

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In recent years - Yes, the USD and GOLD prices have tended to run inversely with each other. But it's not a rule. There have been periods in the last 35 years that sees USD (v's AUD) and GOLD strengthen at the same time. For example in 1976 - 1980 was one of the longest legs where positive strength in the USD and GOLD were in sync. There are other periods of 1 or 2 years where they have moved in the same direction together.

OzWaveGuy said:

In recent years - Yes, the USD and GOLD prices have tended to run inversely with each other. But it's not a rule. There have been periods in the last 35 years that sees USD (v's AUD) and GOLD strengthen at the same time. For example in 1976 - 1980 was one of the longest legs where positive strength in the USD and GOLD were in sync. There are other periods of 1 or 2 years where they have moved in the same direction together.

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that's true enough, OzWG, & I would not consider it to be a hard & fast rule. but quite often it works from extreme points, such as we are experiencing at present. the USDollar recovering from a recent low & the Pog struggling to maintain a recent high.

other confusing elements are the Dow ... firm but not yet very convincing, and the 10-y Bond, currently at a 10-year low ... goodbye the flight-into-security ... goldbugs take note!

all the more reason to look very closely at EW analysis. but must admit at this point I don't "see" at all clearly.

An initial assessment of the GOLD wave count. The unfolding Wave (4) could be a triangle or flat. It is also possible wave (4) has completed and an ending diagonal in underway for wave (5) (although unlikely, until a further assessment is conducted should the high be broken).

Wave 2 of (3) is a messy affair - but I would consider it a running flat.

I have included the MACD signal line to help identify the end of wave 3.

I should also add - that hitting $600 is a possibility but definitely not necessary considering that wave (4) has already penetrated into the price range of the previous wave 4.

Cheers

OWG

that's an amazing chart. thanks OzWG! within that long channel, it looks like its favoring a temporary downturn to about 750 at (4) possibly over quite a period of time, with an upmove before that, if I'm reading it correctly.

thanks again ...... amory

Thanks all for input since my original question.

Will continue to enjoy the informative contributions by all,

Gday ozwave

wanna have a look at BHP ST chart and give thought ?

direction thought even better

the bishop is all one eyed about this stock and i need to point him the way

thanks

a nun.

nunthewiser said:

Gday ozwave

wanna have a look at BHP ST chart and give thought ?

direction thought even better

the bishop is all one eyed about this stock and i need to point him the way

thanks

a nun.

Click to expand...

Right on. I'm really bearish on BHP - looking for an entry for PUTs atm. Very short term it's actually hard to tell as the wave counts are moving in 3 waves.

My summary is: I'm hoping for a pull back then one more shot at a short term high - it may get to $35 which is a 50% retracement from the all time high and a point of high resistance. Also, at $35.40 this current leg (wave 'b') up would be 138% of the down leg (Wave 'a') from 7/1 to 21/1.

This would imply that an expanded flat (inverted) is occurring for the larger wave 'B' down (and back down to around $20). There is risk in this assessment because since early Jan BHP has been unfolding in 3 waves at various degrees which makes it somewhat hard to pin down until the stock develops a clear trend with impulse moves. Either way, I'm watching it closely for a break away from it's current trend line.

Also the MACD signal line is currently at an extreme on the 60min chart which hints that another high needs to occur price wise, but with a lower MACD.

Let's see over the next few days.

cheers for your time

your opinion valued

chart from SyHarding's blog, this will illustrate what I posted yesterday morning about gold better measured in channels rather than by EW.
notice that the chartist here is using the logarithmic scale. by projecting to April as I was trying to do, a possible (not very realistic) target is around 650.
not saying this can or will happen, merely a projection based on channel high/lows.

a better comparison might be this: when Pog fell from its high ~1000 to 850 & then recovered quite strongly. at that time it was coming down from an up-channel.

what it would want to do now is maybe drop to 750 or 800 before its next upswing. because it must be admitted that it is again in an up-channel.

perhaps the key to the mystery lies with EW, after all

OzWaveGuy said:

Right on. I'm really bearish on BHP - looking for an entry for PUTs atm. Very short term it's actually hard to tell as the wave counts are moving in 3 waves.

My summary is: I'm hoping for a pull back then one more shot at a short term high - it may get to $35 which is a 50% retracement from the all time high and a point of high resistance. Also, at $35.40 this current leg (wave 'b') up would be 138% of the down leg (Wave 'a') from 7/1 to 21/1.

This would imply that an expanded flat (inverted) is occurring for the larger wave 'B' down (and back down to around $20). There is risk in this assessment because since early Jan BHP has been unfolding in 3 waves at various degrees which makes it somewhat hard to pin down until the stock develops a clear trend with impulse moves. Either way, I'm watching it closely for a break away from it's current trend line.

Also the MACD signal line is currently at an extreme on the 60min chart which hints that another high needs to occur price wise, but with a lower MACD.

Let's see over the next few days.

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A close above $35.82 (W.1 close) and this count off.
At the moment it looks like a W.4 playing out, until it closes convincingly above this "box" I am looking for a W.5 down to just below $20.

Just my amateur worth.

(click to enlarge)

BHP is the flavor of the week.

Note: BHP and the XMJ don't have the same wave counts which is not so unusual, but the mapping out the sector (not provided) first helps in establishing the count.

As mentioned in yesterday's post on BHP, i believe that 5 waves down on BHP and the XMJ have completed and they will most likely correct for some time.

There is a case to establish a flat for the much larger wave 'B' circle. However, this correction may certainly see it's fair share of volatility. Corrections will always be difficult to estimate, however we can do our best by analyzing the wave counts in this correction and matching a flat, zig-zag or triangle to the unfolding structures.

The Logic
Wave (A) up is a zig-zag - so this is a '3'. Therefore either a Flat (3-3-5) or Triangle (3-3-3-3-3) (or even a combination) needs to play out.

The next piece of evidence is the 'A' leg (down) after the larger (A) wave up. The 'A' leg is 3 waves also, and small enough to be considered a single wave in a larger (B) wave. The following 'B' wave up (and still underway) is a 3 wave move also (so far). If it stays a 3 and ends soon, then the evidence supports a 5 wave move down to complete the larger (B) wave as a flat (3-3-5).

Note: The BHP daily chart does not have the detail to adequately represent the counts down to wave (5). I used a 60min chart to map out the wave structure.

Boggo has posted a representation, that could also be considered valid. Although in my opinion wave 4 (red) appears a little too big in comparison with wave 2 (red) although not illegal under EW. Either way I believe we are both calling for BHP to move to the downside - perhaps very soon.

Cheers

OWG

There is some risk in assuming the XAO will head downwards as the very short term wave structure is open to interpretation. Either another upwards move needs to occur or the XAO will fall tomorrow and confirm the next leg down.

The upwards move could bring 3533 (50% retracement of wave 'a' circle) back to short term target area.

Cheers

OWG