The Elliott Wave Analysis Thread

[OzWaveGuy]

I thought I'd post a couple of charts of the current Wave counts on the XAO.

These are from 2days back. The daily chart has pretty much being playing out as described back in early October with wave counts unfolding in 5 waves down.

From here I believe we need to enter a period of consolidation as a wave (4) countertrend move. Wave 4 could play out in several ways including heading to a new low for wave B of a triangle scenario.

The short term wave count does imply further upside potential into the target areas in the 2nd chart. If the minimum target area (3900) isn't breached and the index reverses and heads lower - then I would look at the possibility of a B wave in a triangle.

Ideally I'd like to see a 38.2% correction of wave (3) which is around 4300 points, but it's unclear based on the short term wave count if this will eventuate.

As a tip, keep an eye out for triangles as wave 4's or B waves. They can help guide you on market trend changes. For example the small (b) wave on the b circle correction on chart 2 is a triangle. 5 very small waves followed, before a change in trend occurred.

Cheers

OWG

 

[OzWaveGuy]

The sideways direction of the XAO should shortly come to an end.

The push up from the 5th has been rather sluggish and the wave counts can still be read in several ways.

It is possible that the move down from the 28th Nov high could be wave 'a' of a triangle, and the move up from the 5th Dec an unfolding 'b' wave - so I'm watching for further sideways movement and overlapping waves in the near term. This would be disappointing as a lead into Christmas as the holiday season lead up tends to have a positive effect on the markets

5 waves up from the 5th Dec (wave b circle) can be counted, and we are currently correcting in wave (ii). Alternation between waves ii and iv is very evident in terms of shape and price. There's a high probability that there's more downside to complete wave (ii) tomorrow to around 3465 (76.8% retracement of wave (i) up) before turning up.

However, remain cautious and look for a small 5 wave decline that could mark completion of wave (ii)

 

[wavepicker]

Great charts and analysis Oz,

A pleasure to read and follow.

Cheers

 

[OzWaveGuy]

Great charts and analysis Oz,

A pleasure to read and follow.

Cheers

Thanks for the feedback WP. Would be good to get another EWer more active in this forum

Fixed up your inbox yet? Seems it was full a couple of weeks back and was rejecting PMs

 

[OzWaveGuy]

The sideways direction of the XAO should shortly come to an end.

The push up from the 5th has been rather sluggish and the wave counts can still be read in several ways.....

.....5 waves up from the 5th Dec (wave b circle) can be counted, and we are currently correcting in wave (ii). Alternation between waves ii and iv is very evident in terms of shape and price. There's a high probability that there's more downside to complete wave (ii) tomorrow to around 3465 (76.8% retracement of wave (i) up) before turning up.

However, remain cautious and look for a small 5 wave decline that could mark completion of wave (ii)

Friday was a right and wrong day. The market hit the sighted levels and bounced, then fell further. This overly long correction from the wave 'a' circle high needs to end very soon. Once a temporary bottom is in place, the key question is: How long and high will the current correction go? I believe, the limited number of trading days before XMAS should be fairly positive and will possibly provide some insights.

I also regularly analyze BHP and XMJ and both need to climb higher to complete a double zig-zag correction as part of a possible wave (4) triangle as well.

For the EWers reading this thread, I'll spend some time during the coming week on indicators that can help with EW counts that you may want to consider.

Cheers

OWG

 

[Porper]

Thanks for the feedback WP. Would be good to get another EWer more active in this forum

Yes, it is strange how E.Wavers are staying away from this thread, or any other regarding E.Wave.

 

[tech/a]

Yes, it is strange how E.Wavers are staying away from this thread, or any other regarding E.Wave.

They are?

 

[BBand]

You guys are never wrong

The trend is developing - if its not this then its that, and if its that does not happen - then it soon will, if not its something else----------until it happens and the count is proved correct

Well done guys, we've done it again

Just kidding, I'm sure EW has as much merit as any other form of TA, just that the penny has not dropped yet for some of us.

EW reminds me of trying to find your way to the centre of a maze

I'd like to give it another go and look forward to the help OWG is promising to give - it might offer more clarity to the indicators that I use

Good work OWG

 

[potato]

Hi OWG is this how u see BHP atm, or do u mean that green wave 4 has not ended and we are in a big triangle?

 

[Porper]

They are?

Whiskers.

 

[Nick Radge]

The trend is developing - if its not this then its that, and if its that does not happen - then it soon will, if not its something else----------until it happens and the count is proved correct

Think of EW like you would view a moving average cross over. Until the cross over occurs, the trend is in place. The same applies with Elliott Wave, however, with EW we know that after a 5-wave decline there is a reasonable chance that the trend is about to change. With a moving average crossover, we simply have no idea how far the trend can go before the cross occurs, nor do we know what length MA's to use. EW doesn't concern itself with these issues.

It's not a do-all be-all method, as Kennas continues to remind us - a strong trend can subdivide causing an extension of the trend. However, there are still well defined levels from which to initiate or defend a position.

Is EW required to be successful?

Absolutely not.

 

[OzWaveGuy]

Some additional thoughts for consideration....

1) I personally find EW is about improving the accuracy of investing and trading and complementing Tech Analysis that one undertakes (in any timeframe, which is one of the biggest benefits). In-addition Fibonacci is key tool for EW analysis.

2) EW provides a set of predefined patterns that occur in the market - understand the patterns and you have a better chance to pick up on what's going on and more importantly what is about to happen. If you have a good memory for patterns, then this will be a benefit. For me, I don't have a great memory so I had to work a little harder.

3) In my personal experience and talking to other investors and traders I find a basic understanding of EW may not be helpful, and could be detrimental to one's trading (You probably wouldn't see a doctor that sorta understands medicine). I hear a lot of: I have a friend that used EW for some years but gave it up - EW is not for everyone.

4) Having a solid understanding of basic EW is crucial in moving to the more advanced topics. This is where many fail and will give up - as it 'appears' very complex. Reality is that EW is a set of repeating patterns that re-occur at different timeframes all the time.

A few years ago when I first looked at EW - I can still remember thinking it looked like a crazy type of indexing system you'd find in a book, utilizing different numerical and alphabetical symbols depending on the chapter, section, sub-section, paragraph you were on. Likewise, If the book were the market, a little being written each day, you just have to work out where the sentences, paragraphs, sub-sections etc are starting and ending. There can be obvious clues when something is about to end and begin.

Because EW is based on social mood, another benefit is being able to have a better grasp of longer term social changes as well. This may benefit some more than others.

Cheers

OWG

 

[OzWaveGuy]

Hi OWG is this how u see BHP atm, or do u mean that green wave 4 has not ended and we are in a big triangle?

Hi Potato

The count I have is slightly different, however, the upwards part-completed a-b-c correction is how I have labelled the current move.

 

[OzWaveGuy]

A quick update on today.

The move upwards today 'could' be the start of the breakout of the current sideways trend. Although there was a retracement after lunch today, and it does look like there could be a further retracement tomorrow to complete a possible 2nd wave.

I have already placed Fibonnanci grid over the current move to look at where it could take us. I previously discussed 3900 as a minimum target area and the top of the fib grid lands on almost on the 3900 mark - so this helps to map out a little more of the market story using different tools together with EW. More on this later.....

Cheers

OWG

 

[BBand]

Hi OWG,
Thank you for your thoughts on EW.
They are very helpful and I can relate to them with my own method of trading.

I have an open mind regarding trading methods, for me they all work otherwise people would not use them - its just that we all have our own preferences and thats how it should be.

Find a method you are comfortable with and there is a good chance you will be successful, (provided you get the main aspect of trading right.)

I aim to understand as many of the popular ,methods of TA as possible - after all we are ultimately just trading the psychology of the crowd.

We all know that no matter what method we use, all signals are not born equal, and I want to know what other people are thinking and want to trade with the crowd, preferrably before them.

I base my trading on confluence between different forms of analysis whether it be various forms of support/ resistance, dow theory, candlestick patterns etc
The more traders likely to trade at a certain level - the better

AWG can use indicators in association with EW and I really appreciate his offer to show us how he does it and at the same time hopefully I will aquire a much better understanding of EW

My trading is based on indicators

 

[It's Snake Pliskin]

Think of EW like you would view a moving average cross over. Until the cross over occurs, the trend is in place. The same applies with Elliott Wave, however, with EW we know that after a 5-wave decline there is a reasonable chance that the trend is about to change. With a moving average crossover, we simply have no idea how far the trend can go before the cross occurs, nor do we know what length MA's to use. EW doesn't concern itself with these issues.

It's not a do-all be-all method, as Kennas continues to remind us - a strong trend can subdivide causing an extension of the trend. However, there are still well defined levels from which to initiate or defend a position.

Is EW required to be successful?

Absolutely not.

Interesting perspective there Nick.

Between you and OZ Wave Guy we are getting good if not the best EW information.
Cheers..

 

[BBand]

Hi Nick,
I appreciate what you are saying - but when it comes to indicators - its horses for courses - its picking the right horse (s) that is the problem for most of us.

With EW its pure price action and that's the major attraction for me

It also provides a good insight as to where we are within a trend, if we can pick the waves/corrections accurately - which is my problem.

If Oz can show how he uses indicators in defining a wave etc - that will be a major step forward for me.

I understand the theory behind EW and its distinct advantages - but I could never make it "work"

Now I think I am in with a chance again

I'm looking forward to Oz's input, when he's ready - no hurry

Thanks in anticipation
Peter

 

[Cartman]

Is EW required to be successful?

Absolutely not.

Totally respect your abilities Nick Just wondering how you and others might relate to my perception of E/W theory

You dont need to count to 5 or 7 or 9 waves etc etc ABC's are not required There are only really three waves Everything is a combination of three waves!! Why? Because the first wave (thats the only one you have to decide on) is either up or down ----- If the first wave is up then the second wave has to be down !! then the third wave has to be up otherwise its still the second wave!! Third wave is then the opposite of the second wave Cycle finished ! The third wave then becomes the FIRST wave of the next cycle !!

1st step ---- Choose the time frame you wish to trade in then apply the above noting new highs/lows ---- Simple yet effective.

 

[Porper]

There are only really three waves Everything is a combination of three waves!! Why? Because the first wave (thats the only one you have to decide on) is either up or down ----- If the first wave is up then the second wave has to be down !!

Well then it wouldn't really be E.Wave, you are just working on the basis that an impulse will be corrected by a counter move, followed by an impulse again.

How would you set targets or even have an idea when the first impulse has finished ?

However you are correct up to a point when you say it doesn't matter whether it would be a wave C or 3, both are tradeable, apart from the fact that using fibs and knowing the count will give you a target zone, also wave 3's tend to be longer than C's, handy to know in advance where you are expecting the move to end.

 

[Cartman]

How would you set targets or even have an idea when the first impulse has finished ?

.

Hi Porp, Targets are a manipulation of our own (mis) conception of what is likely to happen --------------- self fulfilling prophesies of previous price action

E/W is more a study of human psych than anything (which I agree is very predictable)

Matter of fact the whole market is a complex arrangement of Human greed in action If you understand how greed operates you will most likely become very wealthy from the market

Kind of funny really !!