Elliott Wave and the XAO

[OzWaveGuy]

The XAO has laboured up to complete a 5 wave push to complete wave (C) up, thus possibly completing a long drawn out wave 2 correction (or possibly a B wave). Either way, this wave count will take the XAO lower should the key trend lines be broken with force to commence wave 3 down.

Caution is now needed.

 

[OzWaveGuy]

A short review of the DJI....the DJI has been consolidating over the past few months and has not declined aggressively as expected for wave 'E' of an expanding triangle (although the waves in an expanding triangle are always going to be hard to follow). Shown below are 2 potentials for a wave 'E' decline, the red labels show a '(b)' wave triangle that has completed with a push up to complete wave 'D' of the expanding triangle (maybe to the 28,000 level). Or, wave 'D' has finished and the decline is underway.

We will soon see which boundaries the DJI will break.

View attachment 98093

I suggest that the last leg down of the expanding triangle is now well underway, after some further sub-dividing of the last leg up. A possible target area is 19500, of which the DOW is half way there...so it may be time for some consolidation at the current levels.

 

[OzWaveGuy]

The DJI appears to be consolidating for the moment with a potential flat correction underway that is most likely only 1 leg of several (on the 15 min chart). Expanding triangles seem to attract triangles and flats in it's sub-waves, hence the (a)-(b) triangle halfway up wave D was a clear indicator that the end of wave D up was approaching. Whether it was Corona virus, a trade spat or a trump tweet, the mainstream media will always attribute a decline to something of convenience. Same for when wave E down completes (possibly at the 20,000 levels), there will be some machination to cling to. News still sells.

 

[Logique]

Thanks OWG, DJIA another -20% to 20,000 would certainly make headlines.
I notice you have been consistent in recent months with this Expanding Triangle prediction -you are not wrong so far.
Looking at the long term trend, 20,000 would not look out of place. And coincidentally, more or less an 11 year EMA:

 

[OzWaveGuy]

The DJI looks to be ready for a bounce soon, based on the strengthening MACD and a strong possibility of a small (4th wave?) expanding triangle (shown) that has formed on the 30min chart. There are several options that could unfold to create a 'mid wave' correction - which may already be underway as a flat correction. There's still room for more downside eg 161% of the expanding triangle height, down to 22900 or below.

 

[tinhat]

Ain't it funky?

 

[OzWaveGuy]

The longer term XAO has completed the corrective action commenced in 2009, being a 'B' wave up of a much larger correction (either a flat or possibly a triangle). The long awaited break (with force) of the support line has occurred and if a flat correction, the expectation is a 5 wave decline into the vicinity of the previous wave 4 of one lesser degree.

Compared with the Dow Jones, the XAO will fail to see new highs, whilst once the DJI completes wave E down of the expanding triangle, new highs should be achievable (assuming there isn't a 5th wave failure). Obviously more evidence is needed, however the high level wave pattern points to rough times ahead for the XAO.

If the XAO unfolds as a flat correct (likely), then it will be an expanding flat, where wave C down (currently underway) can regularly reach 138% of wave B up...making the target area around 1600.



For the shorter term, the XAO daily chart shows a long drawn out push up to complete the last 5th wave segment of corrective wave B up. The strong push down appears to have now completed the 1st wave down. Based on fibonacci relationships (and assuming wave C down is the last wave of a flat correction), the next target area for wave (iii) down should be around 2400. The ultimate target for this major leg down is to bounce on the XAO 120year long term trend line, that is long overdue.

If this is not a flat correction, but instead a triangle, then this leg down will be in 3 waves (not 5) and should reach the 4000 levels before turning up.

 

[kid hustlr]

The longer term XAO has completed the corrective action commenced in 2009, being a 'B' wave up of a much larger correction (either a flat or possibly a triangle). The long awaited break (with force) of the support line has occurred and if a flat correction, the expectation is a 5 wave decline into the vicinity of the previous wave 4 of one lesser degree.

Compared with the Dow Jones, the XAO will fail to see new highs, whilst once the DJI completes wave E down of the expanding triangle, new highs should be achievable (assuming there isn't a 5th wave failure). Obviously more evidence is needed, however the high level wave pattern points to rough times ahead for the XAO.

If the XAO unfolds as a flat correct (likely), then it will be an expanding flat, where wave C down (currently underway) can regularly reach 138% of wave B up...making the target area around 1600.

View attachment 101362

For the shorter term, the XAO daily chart shows a long drawn out push up to complete the last 5th wave segment of corrective wave B up. The strong push down appears to have now completed the 1st wave down. Based on fibonacci relationships (and assuming wave C down is the last wave of a flat correction), the next target area for wave (iii) down should be around 2400. The ultimate target for this major leg down is to bounce on the XAO 120year long term trend line, that is long overdue.

If this is not a flat correction, but instead a triangle, then this leg down will be in 3 waves (not 5) and should reach the 4000 levels before turning up.

View attachment 101363

Hi,

To confirm you are seeing the DJI to make new highs but the all ords will go to 1600?

 

[OzWaveGuy]

Hi,

To confirm you are seeing the DJI to make new highs but the all ords will go to 1600?

It means the DJI will complete the expanding triangle, head to new highs (wave 5) before turning down. The XAO should also move upwards, but as a corrective wave (eg a wave 2 up) and losing steam, whilst the remaining bulls in the DJI complete the last push up. Both the DOW and XAO should both head down in a powerful decline.

As the chart below shows, the XAO and DJI have moved very differently since 2009. The DJI has been moving in impulsive moves upwards (bull market), the XAO has been moving in corrective waves upwards (only just making a new high in a bear market correction).

 

[OzWaveGuy]

.

View attachment 101074

The DJI is approaching the 20,000 target levels, watch for a tweet, fewer Joe Biden gaffs, that will surely turn the market....

 

[Logique]

DJIA to 20,000 was a good call OWG, it could even hit that tonight.

I'm not sure it can't test the lower support zone at ~17,500 to be honest

 

[OzWaveGuy]

DJIA to 20,000 was a good call OWG, it could even hit that tonight.

I'm not sure it can't test the lower support zone at ~17,500 to be honest

I don't think 17,500 is achievable, maybe 19,100 as a low, before the DJI rallies. The MACD is building strength on the 15,30, and 60 min charts, so a bottom may not be far off.

It's little hard to read this leg down to know exactly where a bottom my lie. If I were to have a confident guess, then I suggest the bottom is in (or almost in) with an ending diagonal pattern to complete the (c) leg of the zig-zag correction for wave E down....the giveaway is the small expanding triangle pattern in the wave 4 position that indicates an end to this leg down is close at hand. The ending diagonal pattern is hard to read any other way atm.

 

[OzWaveGuy]

The DJI has made the low target level down to just under 19,000 and has formed an almost perfect wave 4 expanding triangle. Wave E is almost 138% of wave D (which is a little over 138% of wave C), so there are Fibonacci relationships between triangle waves.

The question is, has the market turned with a rally ready to go? Caution is now needed....for the bears. Futures are pointing slightly lower, but the next trump tweet could be a big one ;-)

 

[Joules MM1]

The DJI has made the low target level down to just under 19,000 and has formed an almost perfect wave 4 expanding triangle. Wave E is almost 138% of wave D (which is a little over 138% of wave C), so there are Fibonacci relationships between triangle waves.

The question is, has the market turned with a rally ready to go? Caution is now needed....for the bears. Futures are pointing slightly lower, but the next trump tweet could be a big one ;-)

View attachment 101478

the $dax and $spx are both within the exptremes of prior lower degree 4th wave lows

so, you maybe right, with the words
" Therefore, I shall resign the Presidency effective at noon tomorrow. "

that'd do it

 

[OzWaveGuy]

The XAO continues to decline, but uncovers more clues.

Wave 'i' is 61.8% of 'iii' - a common Fibonacci relationship. It's possible that wave 'v' will also be roughly the same as wave 'i', making a possible bottom at 4320 for wave 1 down.

The MACD is at an extreme in the wave 'iii' position and is very common with impulsive moves, and helps to confirm that an end to the current wave structure is approaching. A divergent MACD is also additional confirmation that the index could soon turn.

 

[satanoperca]

Just out of curiosity, did Mr Elliot ever back test black swan events?
Or, given all things follow a usual behavior, this current turn of events, is just normal in a timeline of (xxxx).

 

[OzWaveGuy]

Just out of curiosity, did Mr Elliot ever back test black swan events?
Or, given all things follow a usual behavior, this current turn of events, is just normal in a timeline of (xxxx).

Was the current correction really a surprise? Not sure what back testing is needed....you'll need to read his notes. Either the wave count interpretation is right or its wrong.

 

[satanoperca]

Interesting, so how do you validate a system, was the count right or wrong?
I only ask, I have studied it, think it has some merit, but when a black swan event happens, cannot see how the theory applies, please don't take this response as dismissive.

 

[OzWaveGuy]

The XAO may have reached a bottom.

Wave 'v' may have already reached a bottom and is 38.2% of wave 'iii'. A correction is expected to take the index higher.

The wave count still looks a little awkward in the last leg, but is viable. MACD has been strengthening and there is a breakout of the channel. Based on this wave count expect the index to retrace 50% or 61.8% higher.

 

[gartley]

The DJI has made the low target level down to just under 19,000 and has formed an almost perfect wave 4 expanding triangle. Wave E is almost 138% of wave D (which is a little over 138% of wave C), so there are Fibonacci relationships between triangle waves.

The question is, has the market turned with a rally ready to go? Caution is now needed....for the bears. Futures are pointing slightly lower, but the next trump tweet could be a big one ;-)

View attachment 101478

Are you using any alternates for the DJIA? It seems pretty strange and not very likely that the DJIA would make a new wave 5 ATH and and All Ords a bear market rally? Not that I am an expert in any way but the wave 4 expanding triangle count probably does not have the "right look" within the advance from 2009 and more than likely wave 5 is complete, considering ofcourse that the larger patterns control the smaller patterns in wave structure. But also this is the problem with EW, quite often practioners have differing wavecounts and see different structures. Such was the case in the March 2009 low when the bulk of EW practitioners where waiting for a W5 low and lower levels that didn't come to pass.