Elliott Wave and the XAO

[OzWaveGuy]

The XAO appears to be in the process of completing a small wave ii. Once complete, channel lines can be added for this last push upwards for waves iii - v. Dropping under the end of the last 4th wave triangle (wave 4) would indicate a top is in.

 

[OzWaveGuy]

The push towards the 6975 target area continues with the development of smaller waves that further define this last leg up. An approximation of what could unfold on the index is suggested below, however, what's important is to be on alert to a strong break downwards that drives below the series of previous 4th waves at ever larger degrees of scale.

XAO 30min

 

[OzWaveGuy]

With today's action, there's possibility that the XAO is moving upwards in waves of 3, suggesting an ending terminal pattern could be forming.

XAO 15min


The DOW appears to have 1 more push up to complete a 5 wave advance, although there are several interpretations for this wave structure including a bearish one. The good news is the ongoing consolidation of the DOW between the 27,060 and the 27,370 levels (shown as a wave 4 triangle) will break out shortly.

DOW 60min

 

[OzWaveGuy]

With the recent XAO action, the case for the anticipated 'top' of a 10yr upwards correction needs to be reviewed slightly earlier than previously documented. The 4th wave triangle is reviewed to have the 'e' wave ending sooner with following structure of waves i to v looking a lot better for this move (eg wave 'i' is almost equal to wave 'v' and wave 'i' is 61% of wave 'iii').

The push up from the wave 4 triangle is just over 161% of the triangle height, as anticipated, and is usually a good guide to follow. Validation of a larger decline is now required as previously discussed.

XAO 30min

 

[willoneau]

With today's action, there's possibility that the XAO is moving upwards in waves of 3, suggesting an ending terminal pattern could be forming.

XAO 15min
View attachment 96504

The DOW appears to have 1 more push up to complete a 5 wave advance, although there are several interpretations for this wave structure including a bearish one. The good news is the ongoing consolidation of the DOW between the 27,060 and the 27,370 levels (shown as a wave 4 triangle) will break out shortly.

DOW 60min
View attachment 96505

Hi OzWaveGuy , do you have any daily charts as I noticed that they seem like 30 min or 60 min?

 

[OzWaveGuy]

Hi OzWaveGuy , do you have any daily charts as I noticed that they seem like 30 min or 60 min?

Hi, will sometimes use a daily view, but I find the daily charts don't provide enough detail. If you want a longer term view you can check out this weekly view. The rationale on using 60, 30, 15min charts is for those critical junctures and esp identification of triangles since they are critical in pinpointing the end of trends at different levels of timescale.

 

[willoneau]

With your EW are you using it to trade in those smaller time frames?

 

[OzWaveGuy]

With your EW are you using it to trade in those smaller time frames?

Not in recent months. Options and CFDs are attractive to me for short term, long term I want to see where we are going

 

[OzWaveGuy]

As a side note on the DOW, the anticipated expanding 4th wave triangle is in a final leg down - wave 'e'. Expanding triangle 'e' waves are almost always the longest and can relate to wave 'a' by the Fibonacci relationship of 161 - 261% and they are also the most complex.

The upwards wave '5' thrust out of the triangle can also fail to reach new highs, regardless, there's going to be a 'bounce once wave 'e' approaches/reaches/drives below the target area. Wave 'e' can possibly drop below 20,000 to head down to 261% of wave 'a' (not shown). Also note the volume as each wave starts/finishes, eg the start of wave 'e' shows an increasing volume in the first several days.

The reason for this post is: the XAO and DOW often are in sync, and lately they have been. I anticipate the DOW will be hard to follow on the way down as it already appears to be declining in waves of 3. In contrast, the XAO 'should' decline in waves of 5 (currently underway) but, like the DOW, could also be hard to follow.

DOW Daily

 

[OzWaveGuy]

The XAO has broken thru the previous 4th wave triangle and is sitting in the middle of the 4th of 4th (wave iv) at the 6710 level, and it is usual to expect some consolidation in these areas.

Based on an initial view, I have temporarily labelled wave (i) and (ii) with wave (iii) underway. There could be further declines since the unfolding wave (iii) down is so far only approx 100% of wave (i) when the expectation is usually 138% or 161%.

The decline is yet to break thru the short term parallel channel lines (not shown), that will help confirm a bigger move is unfolding.

 

[willoneau]

Hi OzWaveGuy, just eye balling the XAO , my thoughts- with strong move up from beginning of year i suspect maybe a pull back to 6400 or 6200 max. If we are still in a bull run, i remember reading some were sep-oct not usually bullish months. That is if this is a pullback happening or just Monday nerves. Taking out previous top by quite a bit has me still bullish at moment anyway.

 

[OzWaveGuy]

Hi OzWaveGuy, just eye balling the XAO , my thoughts- with strong move up from beginning of year i suspect maybe a pull back to 6400 or 6200 max. If we are still in a bull run, i remember reading some were sep-oct not usually bullish months. That is if this is a pullback happening or just Monday nerves. Taking out previous top by quite a bit has me still bullish at moment anyway.

It's possible. Are you using ElliottWave for this analysis?

 

[OzWaveGuy]

Some further clues today as the XAO drives down below the two most recent triangles and breaking below the channel lines that encapsulated the most recent leg up to the top. In the chart below, the assumed wave (iii) is 261% of wave (i), a bit more than the expected 161%. As you can start to see, Fibonacci relationships exist in a multitude of ways in the waves.

This leg down forms a wave action at the next larger degree to the waves we've been reviewing in the recent hourly charts, hence, how this down leg develops will provide additional clues to a bigger picture - which I contend is down.

A small wave (v) down needs to develop, perhaps to bounce at the 6500 level to complete a first major leg down before correcting upwards.

XAO 15min.

 

[willoneau]

It's possible. Are you using ElliottWave for this analysis?

Nope but i did study it a few years ago.

 

[OzWaveGuy]

It's possible that wave (iv) is now complete as a flat correction (made up of a 3,3,5 internal wave structure). Also the 38% retrace has been met - common for wave 4's and the MACD is usually at an extreme at the end of wave 3's.

A drop down to complete wave (v) into the 6500 - 6450 levels would provide some useful clues to a potential corrective bounce. There are also other interpretations such as: the corrective bounce is already underway with wave (v) down already completed.

 

[OzWaveGuy]

Looking at the most recent corrective XAO action on the 15min chart, there is a possibility corrective wave '2' up is developing or has finished. This means the small waves (i)-(iv) are relabeled to show an extended wave (v). Corrective waves often retrace to the previous wave 4, in this case there could be further corrective action upwards into the vicinity of wave '(iv)' at the 6840 level.

Should the index break down and pass the end of wave '1' faster than the corrective push up took to develop, then this is a indicator that the next leg down is most likely underway.

 

[Boggo]

Not a very convincing pattern but, is ~7000 a possibility ?

(click to expand)

 

[OzWaveGuy]

Not a very convincing pattern but, is ~7000 a possibility ?

It's possible

 

[OzWaveGuy]

There is an expectation under the current EW count for a strong move downwards for the XAO. Wave 3's are usually powerful waves and will move to about 161% of a 1st wave - which could place the index at around the 5940 level before wave 4 forms.

Corrective wave 2 is made up of two a-b-c corrective patterns joined by an 'x' wave, making it hard to follow. Wave 2 only retraced 38%, showing weakness in the index. The expectation is for further declines over the next several weeks as wave 3 unfolds.

The alternative view is that the index has completed/almost completed an A-B-C correction down and there is always a possibility of a push up above the XAO high - unlikely, unless evidence comes into view that something else is unfolding.

 

[sptrawler]

It's possible

The fundamentals of the Australian market still appear pretty good, as usual we are being driven by overseas sentiment. IMO
The only good thing is, Donald can turn things around with a tweet, as he has done before. If that were to happen there is a lot of money to be made, not that anyone would take advantage of a scared herd mentality.