Elliott Wave and the XAO

[Boggo]

Beware of the bounce !

(click to expand)

 

[OzWaveGuy]

A very interesting picture that's recently developed on the XAO, which may be a key pattern to the long climb from the 2009 low....

 

[gartley]

A very interesting picture that's recently developed on the XAO, which may be a key pattern to the long climb from the 2009 low....

Completed impulse wave down and now wave a of an abc up?

 

[OzWaveGuy]

A very interesting picture that's recently developed on the XAO, which may be a key pattern to the long climb from the 2009 low....

The first leg of an upwards correction should be near completion.... assuming for an a-b-c flat or zigzag correction that takes the XAO to a 50% or 61.8% retrace before continuing downwards...

 

[OzWaveGuy]

The first leg of an upwards correction should be near completion.... assuming for an a-b-c flat or zigzag correction that takes the XAO to a 50% or 61.8% retrace before continuing downwards...

The XAO hit a 78.6% retrace before breaking to the downside of the long channel. The significance of this move should reveal itself quickly if the upwards corrective pattern has come to an end.
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[OzWaveGuy]

There is an expectation of a decline on the XAO with the break of the upward trending channel. If the decline is aggressive and breaks below the 5500 level in less time than the upwards corrective push took to form, then this will strongly signal that the bears are back in control. Looking now for a 5 wave decline with an initial trend channel drawn until a clear short term trend develops.

 

[OzWaveGuy]

With a break above the high set in August, the larger picture needs to be assessed even though a 5 wave decline was clearly visible (most likely a 'c' leg of a expanded flat). For the short term, further upside looks likely with a 5 wave push upwards underway to finish the C leg of the 2nd A-B-C zig-zag correction. As the XAO approaches (or even breaks) the high set in 2007 it should bring an end to the long running/slow developing upwards complex correction to complete a large double zig-zag corrective wave on the weekly chart.

 

[OzWaveGuy]

On the short term wave count, there is a possibility for an ending diagonal for the last push up towards the XAO high on the hourly chart that would finish off the larger C wave. The MACD and RSI have been divergent on the daily chart since late Feb, these momentum indicators typically peak at the top of a 3rd wave (and esp wave 3 of 3) and provide clues that a corrective 4th wave is forming. A push up from here is needed to complete the ending diagonal, a 5th wave, else a more bearish scenario could be unfolding.

 

[OzWaveGuy]

The push up should be close to completion, however, I suspect that this last lingering wave, a 5th of a 5th, might take more time to finish. Hence, an ending diagonal for this wave is also a possibility too. The reason more time is required for completion is the evidence that the DOW is completing wave D of an expanded triangle which needs to push up a little further to also complete before a large wave E decline. Hence, the markets (actually, the social mood) appear to be somewhat in sync at the moment.

The hourly chart below approximates what could unfold...

 

[OzWaveGuy]

The XAO continues to exhibit a 'terminal impulse' pattern (aka ending diagonal) with wave (i) of the 5th wave complete and wave (ii) down underway, maybe to around the 6500-6533 range. This zoomed in hourly chart shows the details of the smaller waves within the larger wave 5 (from June 3rd) with approximations of what this terminal impulse could look like. Obviously a significant departure from the stated pattern would reduce the priority of this final terminal impulse pattern (eg if significant top is already in).

It should be noted that there are x2 terminal impulse patterns underway, a 'assumed' smaller 5th wave terminal impulse as waves (i)-(v), which makes up wave v of the larger waves i-v, also a terminal impulse. The smaller terminal impulse could also trend sideways and overlap the lower ii-iv trend line, thus a new high would fail to materialise.

 

[Joules MM1]

The XAO continues to exhibit a 'terminal impulse' pattern (aka ending diagonal) with wave (i) of the 5th wave complete and wave (ii) down underway, maybe to around the 6500-6533 range. This zoomed in hourly chart shows the details of the smaller waves within the larger wave 5 (from June 3rd) with approximations of what this terminal impulse could look like. Obviously a significant departure from the stated pattern would reduce the priority of this final terminal impulse pattern (eg if significant top is already in).

It should be noted that there are x2 terminal impulse patterns underway, a 'assumed' smaller 5th wave terminal impulse as waves (i)-(v), which makes up wave v of the larger waves i-v, also a terminal impulse. The smaller terminal impulse could also trend sideways and overlap the lower ii-iv trend line, thus a new high would fail to materialise.

View attachment 95516

please show us your "alternate" labelling

todate, specifically where you have annotated "iii" does not conform to a simple up-down-up sequence typical of an ending diagonal wedge, the fib grid is as valid for the pullback in a standard impulse leg so it does not validate either way - an alternate way to count the price action, we can call it in 1's and 2's, in other words, at this juncture, the pattern could be calling for an acceleration to the upside, given that all degrees of trend are active at all times the alternate count you decide on could also give you an insight into the next level of probability

thanks

 

[OzWaveGuy]

The latest XAO push up has touched the upper bounds of a 10yr trendline and has most likely invalidated the small terminal impulse pattern on the hourly chart discussed previously. Instead, the XAO moved a little quicker that anticipated and has now reached the critical point as discussed on 21st May. The larger terminal impulse pattern, wave 5, from Jun 11th looks complete with some potential to 'throw over' the long term trendline. The DOW is also approaching critical levels for the ending of a wave D up in a large expanded triangle, another 50-200 point push up would be all that's needed. Wave E down would need to kick in and could take the DOW to the sub 20,000 levels.

XAO weekly

 

[OzWaveGuy]

please show us your "alternate" labelling

let's see what happens in the next week or so, now that some critical levels are in play

 

[OzWaveGuy]

... the XAO moved a little quicker that anticipated and has now reached the critical point as discussed on 21st May. The larger terminal impulse pattern, wave 5, from Jun 11th looks complete with some potential to 'throw over' the long term trendline.

Looking at the short term structures, I wouldn't be surprised if the XAO and DOW both push higher for the short term and the XAO 'throws over' the long term upper channel trend line

 

[OzWaveGuy]

The XAO continues to push higher, commencing the 'throw over' of the long term trend line as discussed in the last post, approaching the all time high at 6863. The latest a-b triangle wave structure on the hourly chart implies that an end to the current short term trend is at hand. The 4 waves (1-4 labelled) look close to completion with a push up to complete wave 5.

Once complete in the next few days, be alert for sudden moves to the downside that break the supporting short and medium term trend lines. A powerful push to the downside is needed to confirm a top may be at hand to unwind the index.

The DOW also needs to push up above the high set in Oct 2018 to complete wave D of an expanding triangle. It too has a completed 4th wave triangle on the hourly chart that implies a change in trend is at hand at least for the the short term - both indexes remain in sync for the short term trend.

XAO Hourly

 

[OzWaveGuy]

....The DOW also needs to push up above the high set in Oct 2018 to complete wave D of an expanding triangle. It too has a completed 4th wave triangle on the hourly chart that implies a change in trend is at hand at least for the the short term - both indexes remain in sync for the short term trend.

The Dow has pushed an all time high (barely), so technically wave D could be considered complete (see image below). However, the short term wave structure on the 15min chart seems unclear leading me to believe there is still some gas left in the tank for a couple of days of cruising in the desert.

As for the XAO, the decade long corrective push upwards looks complete, so the guidance in the last post remains...watch the your supporting trendlines at multiple timescales (eg channel lines as shown) - should each fail to hold then this is a good sign that a trend change at an increasing level of wave scale is occurring. Same can be done with individual stocks.

XAO Hourly


Expanding Triangle.

 

[OzWaveGuy]

The XAO should push up close to the 6850 level before a reversing under the current Wave scenario discussed previously. There is confidence that a push up needs to reverse since there is a triangle formation on the 30min chart (shown), triangles indicate a change in trend for that specific wave scale. Breaking above 6850 could imply that the XAO has further to go (not by much) and a larger alternate count 4th wave triangle may be forming.

XAO 30min

The expanding triangle on the DJI that started at the beginning of last year looks a lot neater with the recent DJI push up into blue sky territory. I can also see 5 small waves complete on the hourly chart.
Next week could be interesting.

The XAO and DJI need to fall with strength to help confirm that a change in trend is commencing.

DJI Weekly

 

[OzWaveGuy]

The XAO is moving without strong conviction at the moment, possibly due to a corrective flat pattern currently unfolding ( a 3-3-5 wave ) with wave c (a 5 wave pattern) yet to complete. The short term low at 6727 has yet to be broken in less time that the 'a' wave took to form, hence there is supporting evidence that there is still more to go for this a-b-c corrective wave.

The alternative count still supports a 4th wave triangle, and we should know very soon if this is the case. If the c wave completes as shown and the 6727 level is then broken, this would give supporting evidence for the primary wave count and further declines.

XAO 15min

 

[OzWaveGuy]

The XAO action this week gives a growing emphasis to an almost complete 4th wave triangle shown on the 30min chart. The lack of conviction of downside action and the inability of the index to drive below the 6727 level in less time than the 'a-wave' took to form (covered in the last post) implied corrective action was still underway (for the bearish view) or a bigger correction was unfolding (for the bullish view). The bullish view is a 4th wave triangle that needs to complete the 'E' wave and then to push up above the 6850 level to complete a wave 5.

 

[OzWaveGuy]

With a 4th wave triangle looking complete and a small set of 4 waves up and the 6850 level broken, the XAO is heading upwards to potentially test the upper channel line. Under EW, the 5th wave has some limits since the 1st wave was the extended wave and the 3rd wave can never be the shortest wave, hence wave 5 cannot travel more than wave 3.

Again, triangles represent an ending of the current trend and there are guidelines on what usually follows a triangle, eg, wave 5 may be 100 - 161% the height of the triangle. So a 161% push after the end of the triangle E wave would place the index on 6975 and about where the upper channel line is.

Since there is a lot more clarity, this whole segment is labelled to show wave 1 as an extended wave, wave 3 is shorter and is segmented like wave 1 and wave 5 yet to complete with a potential top around the 6975 area. I should also add, at the 6975 level, wave 5 would be 38.2% of wave 3,so this area could be an area of strong resistance.

XAO Hourly