Elliott Wave and the XAO

Porper · 18 November 2009

White_Knight said:
Haha...i agree EW is generally crap

Would you like to explain why you think Elliott is crap ?

If you have studied it and know all of its rules and guidelines, have also traded it as part of your methodology and found it to be of no use then you have every right to make that statement.

Unfotunately like many sceptics on here I doubt that will be the case. Apologies if you have.

Timmy · 18 November 2009

Porper said:
Would you like to explain why you think Elliott is crap ?

There is a thread available for debate on EW, and it is best to direct the debate over there if needed. The Elliott Wave debate

This thread here was started so that EWers could talk about the XAO without the distractions on the merits or otherwise of EW.

Porper · 18 November 2009

Timmy said:
There is a thread available for debate on EW, and it is best to direct the debate over there if needed. The Elliott Wave debate

This thread here was started so that EWers could talk about the XAO without the distractions on the merits or otherwise of EW.

Sorry my mistake got the wrong thread somehow.

Maybe a mod can transfer it across.

OzWaveGuy · 24 November 2009

Not sure what the last dozen or so posts have to do with the EW and the XAO....but lets see if that can be changed whilst people look for the correct threads to debate in.

From the last post the very short term still had further to go to complete wave 2 (and was swiftly dealt with when wave 2 glanced above 76.8% retrace at 4808)

The wave shapes in the last 5 days or so are not ideal and lends itself to further interpretation - mainly because wave 'ii' up is considered an expanded flat (3-3-5). However, it's quite possible the sell off today is the start of a series of wave 3's or further sub-divisions down.

As mentioned in the previous post, some solid force downwards would help validate the start of wave 3's.

An additional point to mention: Each wave has certain characteristics that can help validate or invalidate a position. In this case, looking at the time the market took to retrace wave (c) of 2 isn't necessarily a supportive sign for the wave count as labeled. In many cases (not all), if wave c's are retraced in less time they take to form, then this can be a useful indicator to suggest the correction is complete. Hence in this case, further time is required to validate the current wave count.

nunthewiser · 24 November 2009

Thanks Oz wave

Any other EW users would like to give some analysis other than " it may go up and it may go down " ? Will the analysis still be valid if it goes sideways also?

sinner · 24 November 2009

nunthewiser said:
Thanks Oz wave

Any other EW users would like to give some analysis other than " it may go up and it may go down " ? Will the analysis still be valid if it goes sideways also?

My rudimentary count is wave 5 impulsive is over, followed by wave A down wave B up (continue or close to completion) we are waiting final corrective wave C down before next market trend is decided.

OzWaveGuy · 1 December 2009

In the last post here the characteristics of waves were briefly discussed, the net result was there was a good chance that corrective wave '2' had still to complete. As of today, this seems to be the case.

A wave '2' flat with an internal 3-3-5 structure now appears to be almost complete. One last push upwards to around the 4817 level would deliver a textbook flat with a 'B' wave failure. Looking at Fibonacci, the 'B' wave is almost spot on 76.8% retrace of 'A'

OzWaveGuy · 11 December 2009

Updating the last post here wave '2' is complete as a flat (3-3-5 wave structure).

The aggressive downside thrust that one would expect under the commencement of a wave 3 has still not unfolded. The downside since the completion of wave '2' has been labored, leading to caution.

From the end of wave '2', the wave count so far has been unfolding in waves of 5 within a reasonably tight channel, but an aggressive break down thru the 4600 level is really needed. However, a retracement upwards would be ideal soon, breaking out of the channel and heading up to the 4700 level, before resuming the downtrend.

Also, the upcoming holiday season may certainly be slowing the XAO down.

I have included an insert of the larger daily picture so the larger downside potential can be seen.

nulla nulla · 11 December 2009

Re: XAO Analysis

I'm curious to know how the Elliot Wavers explain the 4 days of rises on the xao followed by 5 days of falls as at close of business 10/12/2009? I would be interested to hear where they see the market going from here, given the XAO has been in what appears to be a down trending channel since late September early October 2009, while the dow has broken through 10,000 and is now challenging 10,500 during the same peiod of time?

Whiskers · 11 December 2009

I have an interest in cycles generally, although I think EW is probably more to do with pattern analysis than true cycles.

Anyway, based on my secret cycle analysis, :cautious:

translated into EW terms, here's one for a suggestion... on the weekly XAO chart, if the July low is bottom... looking for the break up. It looks good to me.

I'd be interested in any good arguement for or against.

OzWaveGuy · 11 December 2009

Whiskers said:
I have an interest in cycles generally, although I think EW is probably more to do with pattern analysis than true cycles.

Anyway, based on my secret cycle analysis, translated into EW terms, here's one for a suggestion... on the weekly XAO chart, if the July low is bottom... looking for the break up. It looks good to me.

I'd be interested in any good arguement for or against.

Whiskers, any reason your using a weekly chart for your analysis over such a short time frame? A lot of the 'detail' is lost, thus reducing accuracy of your primary and secondary counts.

From what you have presented, it's hard to provide any significant input :2twocents

Whiskers · 11 December 2009

Hi OzWaveGuy, basically I'm a fundamental, cyclist (sic?) :cautious:

... but keep an eye on the weekly chart for a feel for the bigger picture trend... especially when the daily news and charts are a bit wishy washy and choppy.

To that extent I think I'm trying to do the same as Elliott when he first developed his EW system. I believe I read somewhere that he essentially got his general trend (direction) from fundamental analysis and noticed the patterns that we know as EW as a means of measuring the likely run of each leg and when a reversal of the cycle is likely.

Now you are clearly more versed in the finite workings of the detail than me and that is handy information to learn especially for the short term movements... but essentially I'm just not convinced of the big picture EW count that suggests that we are still in a down trend.

Having said that, I initially didn't expect the correction to go as low as it did, but I think there was a fundamental reason for that, not so much the Financial Crisis per se, but that the Bush administration had flaged general measures to fix the system, stabalising confidence and the markets a bit but then failed to instigate the right measures (well hardly any measures) quickly enough. The same to be said for why the crisis developed in the first place... hence the extended collapse.

So, essentially what I'm querying is how certain you are of your EW analysis (macro count) that the trend is still down... and is my proposition a viable count in EW terms.

Just to sum up fundamentally, I'm expecting the AUD to fall back... the POG in USD has already corrected back significantially as I expected and should range around the recent lows and highs for some time while the USD appreciates a bit in light of a better outlook in the US economy. The net result would be better AUD export prices for Aus business especially our large resource sector flowing through to a stronger local market. That's essentially the fundamentials that I am currently factoring in to give my EW count some broad (macro count) direction.

OzWaveGuy · 12 December 2009

Whiskers said:
...So, essentially what I'm querying is how certain you are of your EW analysis (macro count) that the trend is still down... and is my proposition a viable count in EW terms....

Five waves down from the high in 2007 to march 09. This is a significant signal as another 5 waves down needs to occur.

As I mentioned earlier - the timeframe your using is too short for the weekly chart for any input from me, detail is lost and so is the count. Others may be able to provide input on what you have offered.

nomore4s · 12 December 2009

Whiskers said:
I have an interest in cycles generally, although I think EW is probably more to do with pattern analysis than true cycles.

Anyway, based on my secret cycle analysis, translated into EW terms, here's one for a suggestion... on the weekly XAO chart, if the July low is bottom... looking for the break up. It looks good to me.

I'd be interested in any good arguement for or against.

lol, talk about forcing a count. There has been a clear 3 wave move up from the March bottom on the weekly chart and there is now a triangle forming under resistance. If you use a weekly chart the idea is to look at more then 6 months of the chart.

Whiskers said:
I'm still leaning to a break up, which seems to be supported by my fundamentals and translated into this macro (weekly) EW count.

You've used a weekly chart to get a "macro" view but then you only use about 6 months of the chart

to confirm your bias and fit a count that is at best laughable. You aren't going to get much of a macro view looking at a weekly chart on a 6 month time frame :2twocents

Edit: The 3 wave move looks like a standard 3 wave corrective move from the bottom after a 5 wave decline and has retraced to nearly spot on 50% of the move down from 2007 but I'm just guessing as I have no real interest in EW.

Porper · 12 December 2009

nomore4s said:
talk about forcing a count. confirm your bias and fit a count that is at best laughable.

There is no reason to get personal, Whiskers has said that he is no Elliott expert Nomore.

nomore4s said:
Edit: The 3 wave move looks like a standard 3 wave corrective move from the bottom after a 5 wave decline

The trouble is most three wave moves can look like a correction. The thing here is whether we will see five waves up to complete only the first leg of the correction higher or whether we break down now and continue the larger degree trend down.

The formation of the triangle would suggest the prior (if it breaks the upper trend line).

One Elliott guideline contradicting this scenario is that if wave 2 is a flat pattern(which it is) then wave 4 should be deep...which it isn't if the triangle triggers.

So the count is by no means clear.

I favour a rally into January then a decent correction.

Trading the triangle as a standalone pattern gives a target of around 5070. A true wave 5 should complete higher.

Whiskers · 12 December 2009

nomore4s said:
lol, talk about forcing a count.

On the contrary... I'm simply playing devils advocate to test different theories.

There has been a clear 3 wave move up from the March bottom on the weekly chart and there is now a triangle forming under resistance. If you use a weekly chart the idea is to look at more then 6 months of the chart.

Well, I just posted the last six months for clarity of the current move... but I did say assuming that July was the bottom as my fundamental analysis suggests...

Whiskers said:
I have an interest in cycles generally, although I think EW is probably more to do with pattern analysis than true cycles.

Anyway, based on my secret cycle analysis, translated into EW terms, here's one for a suggestion... on the weekly XAO chart, if the July low is bottom... looking for the break up. It looks good to me.

I'd be interested in any good arguement for or against.

...and from my discussion on other threads especially re Uncle Festivus... my big picture forcast was that there would be expediant political measures to relieve the crisis followed by a recovery and the hard reality of fixing the US debt problems would sink in again later. The reason I mention that is because it is consistant with a Flat EW correction something like I have scribbled on your chart.

Is there any Definite EW that rules out a Flat correction like this.

Again, just the devils advocate position in my process of ruling possibilities in or out.

nomore4s · 12 December 2009

Porper said:
There is no reason to get personal, Whiskers has said that he is no Elliott expert Nomore.

I'm sorry if it came across as a personal dig at Whiskers but it is a count that I do find laughable. Whiskers asked for arguments for or against and I gave mine.

Porper · 12 December 2009

Whiskers said:
Is there any Definite EW that rules out a Flat correction like this.

No rule Whiskers but as my post above points out if wave 2 is a flat then the law of alternation states that wave 4 should be a sharp correction (a zigzgag) not a triangle.It isn't always adhered to, and in this case I don't think it will be.

OzWaveGuy · 12 December 2009

Just some additional info on alternation:

Alternation between waves can include one or more of the following characteristics:

Different Wave Pattern
Different Time To Complete
Different Price action
Different Level of Complexity

Hence, Wave 4 may not necessarily be a Sharp Correction if wave 2 is a flat. It may in fact have other characteristics mentioned above, but in most cases won't be the exact pattern of Wave 2.

Often I see wave 2's correct more than 38%, where wave 4's will regularly correct to 38% - Hence, Different Price Action is present.

Triangles can be very tough to get right early in the development process. Hence looking at the internals of each wave within the triangle is key - using a weekly chart as submitted above is not an optimum choice in understanding the internal facts that are embedded in the charts. It is these very facts we need to understand to construct a count.

Whiskers · 12 December 2009

Whiskers said:
The reason I mention that is because it is consistant with a Flat EW correction something like I have scribbled on your chart.

Oops... forgot to attach the chart above... showing roughly what I'm thinking is most likely.

The problem I have with the count as ozwaveguy and others are working with, is that if we have just started wave C down I'm finding it difficult from a fundamental basis to imagine wave C equalling wave A. I can imagine going lower than present sometime later to near the last low. But surely the damage going down near 1000 would be exponentially considerably worse than wave A. That would virtually be armageddon.

As I mentioned earlier, I believe Elliott based his analysis in fundamentals and I'm having some trouble trying to marry up some fundamentals for the worst case EW scenerio.

Elliott Wave and the XAO

Ralph Nelson Elliott

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