The Elliott Wave Analysis Thread

[Rockon2]

Love it Marketwaves



:band Hey, hey, good lookin',
Whatcha got cookin'?
How's about cookin' somethin' up with me?


http://au.youtube.com/watch?v=OxB1t2EEK0M

 

[OzWaveGuy]

I thought I'd post an update to the Oct 08 long term primary wave count.

So far the XAO has been following the downtrend discussed some months ago and has been closely hitting some of the Fibonnaci targets discussed for wave 4 bounces. This leads me to believe that the longer term count is holding firm.

Under this scenario, we are in the wave (4) correction of wave 'A' circle, which may turn out to be a triangle and last for some months. Once completed, a significant thrust downwards may occur and be equal to the length of wave (1). I have updated the potential end point of wave 'A' circle to 1870 points where this target coincides with wave (5) = wave (1).

From a social trend standpoint, Job Losses in the US and China appear to be escalating, Military action is increasing in addition to US troops being deployed on US soil as a civilian control strategy should the worsening financial (or other) crisis drive unrest.

If Wave (5) down does eventuate then I would expect a worsening social environment, with more military action, protectionism, bankruptcies, internet 're-structuring' and job losses to name a few.

Whilst many will not agree with the above analysis, there is an increasing likelihood that this scenario is playing out. A new low from here will almost guarantee the primary degree (or higher) correction scenario as a result of the increasing negative social mood.

Note: I have used a linear scale to determine the possible downside targets. Semi-Log scale will provide different Fibonacci downside targets (2650 as end of 'A' circle)

 

[OzWaveGuy]

The market action today can be viewed in different ways.

One interpretation (currently preferred and shown below) is that the thrust out of the Double 3 (wave b circle) has now completed. This thrust has traversed 61.8% of wave 'a' circle (the thrust preceding the double 3) which is a solid Fibonacci relationship between waves traveling in the same direction. In addition, one could interpret 5 waves up is complete assuming the double 3 ended a little sooner than previously discussed (shown). Using the basic Fibonacci relationships within this latest thrust - wave (iii) is almost 161% of wave (i) and wave (v) is almost 138% of wave (i).

Also, another compelling argument is that 5 small waves down from yesterday's high is complete.

As a personal note: I exited all long positions yesterday, not because of this analysis on the XAO (which I just finished tonight), but because the wave structure on the XMJ didn't seem to support further upside. One of the reasons I'm bearish on the XAO in the short term for further downside is that a triangle appears to have formed as wave 'b' circle on the XMJ (on the XAO it was a double 3). As many EWers know, a triangle implies an impending change in trend (or correction) is at hand.

Since the completion of the XMJ triangle (will post something later on this), 5 waves up can be considered completed.

I was sorta kicking myself for not picking up on this potential scenario on the XAO a little sooner, but the wave between the end of the double 3 - wave 'e' and the end of wave (i) appeared to be a 3 wave move - however looking at a smaller time scale, it clearly shows a 5 wave move with wave 5 the longest wave.

There are other interpretations (an ending diagonal), but as it stands tonight, the wave structure appears to count best as shown below. Therefore its highly possible that the XAO won't see the 4000 point mark in the short term.

 

[Graeme]

Hi OzWaveGuy, your last count is what I have also. I think we've just started a B to test support around 3450, then we'll have a C back up to 4200-ish

 

[OzWaveGuy]

Elliott wave works in 5 waves up followed by 3 waves down (in its basic interpretation). However, what does it mean when 5 waves up followed by 5 waves down at the same degree can be seen?

 

[OzWaveGuy]

Hi OzWaveGuy, your last count is what I have also. I think we've just started a B to test support around 3450, then we'll have a C back up to 4200-ish

Graeme, in the scenario you describe, what type of correction do you think will play out? It's possible that a flat could play out to take it above 4000.

 

[Rudy]

Elliott wave works in 5 waves up followed by 3 waves down (in its basic interpretation). However, what does it mean when 5 waves up followed by 5 waves down at the same degree can be seen?

Hi OWG,

I really appreciate you taking the time to provide an explanation on how it is possible to get what appears to be a completed pattern of 5 waves up followed by 5 waves down. It has always been a problem for me as it appeared to be in breach of Elliott Wave principles.

Your explanation appears sensible to me.

Cheers

Rudy

 

[Rudy]

The market action today can be viewed in different ways.

One interpretation (currently preferred and shown below) is that the thrust out of the Double 3 (wave b circle) has now completed. This thrust has traversed 61.8% of wave 'a' circle (the thrust preceding the double 3) which is a solid Fibonacci relationship between waves traveling in the same direction. In addition, one could interpret 5 waves up is complete assuming the double 3 ended a little sooner than previously discussed (shown). Using the basic Fibonacci relationships within this latest thrust - wave (iii) is almost 161% of wave (i) and wave (v) is almost 138% of wave (i).

Also, another compelling argument is that 5 small waves down from yesterday's high is complete.

As a personal note: I exited all long positions yesterday, not because of this analysis on the XAO (which I just finished tonight), but because the wave structure on the XMJ didn't seem to support further upside. One of the reasons I'm bearish on the XAO in the short term for further downside is that a triangle appears to have formed as wave 'b' circle on the XMJ (on the XAO it was a double 3). As many EWers know, a triangle implies an impending change in trend (or correction) is at hand.

Since the completion of the XMJ triangle (will post something later on this), 5 waves up can be considered completed.

I was sorta kicking myself for not picking up on this potential scenario on the XAO a little sooner, but the wave between the end of the double 3 - wave 'e' and the end of wave (i) appeared to be a 3 wave move - however looking at a smaller time scale, it clearly shows a 5 wave move with wave 5 the longest wave.

There are other interpretations (an ending diagonal), but as it stands tonight, the wave structure appears to count best as shown below. Therefore its highly possible that the XAO won't see the 4000 point mark in the short term.

Hi OWG,

I also believe that we have commenced the wave B in your scenario. One of the reasons why it appeared to me that we were about to enter into a period of the market moving down was the perfect EW pattern that was being created by the price of oil. Below is the WTIC chart which is the Light Crude Oil.





As can be seen it has entered into a wave 5iii phase of the cycle. Wave 5iiii must terminate lower than the $35.13 level and even an optimistic view would have the bottom for oil to be around the $30 mark if not lower. I have found that the price of oil is quite representative of many other commodities and hence to me I could therefore sense that we were in for a number of down days for the market.

Coming back to the XJO (ASX200). The start of the A wave was 3217. The top of the A wave was 3818 so we had a range of 601 points. If wave B is a Zigzag then we can expect a fall of at least 20% and more likely either 38.2% or 50.0%. Hence for a Zigzag I would expect falls of between 230 and 300 points.

If wave B is a Flat then we can expect a fall of at least 70%. Wave B's normally fall between 95~140% of the wave A range.

I don't know if it's my instincts or my subconscious "wish" but I think that it will be a Zigzag. Part of my reasoning for the Zigzag is the very strong support that built up around the 3500 level of the XJO and it will take some pretty negative sentiment to break down through that level.


Cheers

 

[MARKETWAVES]

Dow Jones

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Trying to close the Gap ? .........

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[MARKETWAVES]

US Dollar .................

CHART UPDATE :

Strong is this 1st trade-set up of the year ,
overall , it still looks like a bullish continuation

and the Rally continues .............. !
Stay Tuned -
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[MARKETWAVES]

Dow Jones

Probable Wave-count ................

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[Graeme]

Graeme, in the scenario you describe, what type of correction do you think will play out? It's possible that a flat could play out to take it above 4000.

Sure, I think the B will be tricky. Maybe it's sideways from here like you say. I lean toward a double zig zag so we can test support again. I'm still a novice for EW and only really look at daily charts, so I could be completely wrong

 

[Rudy]

The market action today can be viewed in different ways.

One interpretation (currently preferred and shown below) is that the thrust out of the Double 3 (wave b circle) has now completed. This thrust has traversed 61.8% of wave 'a' circle (the thrust preceding the double 3) which is a solid Fibonacci relationship between waves traveling in the same direction. In addition, one could interpret 5 waves up is complete assuming the double 3 ended a little sooner than previously discussed (shown). Using the basic Fibonacci relationships within this latest thrust - wave (iii) is almost 161% of wave (i) and wave (v) is almost 138% of wave (i).

Also, another compelling argument is that 5 small waves down from yesterday's high is complete.

As a personal note: I exited all long positions yesterday, not because of this analysis on the XAO (which I just finished tonight), but because the wave structure on the XMJ didn't seem to support further upside. One of the reasons I'm bearish on the XAO in the short term for further downside is that a triangle appears to have formed as wave 'b' circle on the XMJ (on the XAO it was a double 3). As many EWers know, a triangle implies an impending change in trend (or correction) is at hand.

Since the completion of the XMJ triangle (will post something later on this), 5 waves up can be considered completed.

I was sorta kicking myself for not picking up on this potential scenario on the XAO a little sooner, but the wave between the end of the double 3 - wave 'e' and the end of wave (i) appeared to be a 3 wave move - however looking at a smaller time scale, it clearly shows a 5 wave move with wave 5 the longest wave.

There are other interpretations (an ending diagonal), but as it stands tonight, the wave structure appears to count best as shown below. Therefore its highly possible that the XAO won't see the 4000 point mark in the short term.

Hi OWG,

I believe that the scenario that you propose is the highest probability scenario. As wave circle c completed wave A with a 3 wave pattern then my conclusion is that corrective wave (4) must be a Flat and cannot be a Zigzag.

A question for you. Would you consider a lower probability scenario where wave A is a triangle with the general shape shown in the following chart/figure?

NOTE: I have for the purposes of this drawing changed your circle waves to waves with ( )'s as I haven't got time to draw circles around them but I think you will get the gist of what I am proposing.



I guess that strictly speaking the pattern suggested is illegal as waves (a) through (e) need to all be corrective waves and waves (a) and (c) are in fact impulse waves. I have probably answered my own question but would like your opinion as well.

 

[OzWaveGuy]

For those trading using EW as the underlying analysis method - this may be of interest.

 

[OzWaveGuy]

I guess that strictly speaking the pattern suggested is illegal as waves (a) through (e) need to all be corrective waves and waves (a) and (c) are in fact impulse waves. I have probably answered my own question but would like your opinion as well.

Yep, it's a tough one considering that there are impulse moves. I'm still counting on a triangle or a flat to play out.

Hence, sideways motion would ideally suit a wave (4) pattern, considering wave (2) retraced 50% and took 2 months to develop. This could mean wave (4) if a triangle (or flat) could be 161% of the time of wave (2) - so perhaps the end of Feb or early March as a possible completion zone. Still a little too early to tell yet. Of course, this doesn't rule out a new low as the b wave leg unfolds.

 

[OzWaveGuy]

Based on the recent market movements since Friday and following on from here --> https://www.aussiestockforums.com/forums/showpost.php?p=382786&postcount=303

Using some of the basic EW assumptions here --> https://www.aussiestockforums.com/forums/showpost.php?p=381327&postcount=296

One could make some assumptions: If a 5 wave move downwards is unfolding, the end point would end up around 3393 points. Following would be a 3 wave correction followed by 5 more waves down (probably to a new low) to complete wave B, before heading back up to wave C

 

[Boggo]

Chart of XJO with Wave 5 target area.

This could drag on for a while though, sit back and watch now.

(click to expand)

 

[Rudy]

Based on the recent market movements since Friday and following on from here --> https://www.aussiestockforums.com/forums/showpost.php?p=382786&postcount=303

Using some of the basic EW assumptions here --> https://www.aussiestockforums.com/forums/showpost.php?p=381327&postcount=296

One could make some assumptions: If a 5 wave move downwards is unfolding, the end point would end up around 3393 points. Following would be a 3 wave correction followed by 5 more waves down (probably to a new low) to complete wave B, before heading back up to wave C

Hi OWG,

I may not be correctly understanding what you are saying. I hope that you are not saying that corrective wave (4) was completed last week and we are starting a 5 wave move down terminating as wave (5).

I can't see how the high of last week could be the termination point of wave (4) as we did not get the wave A,B and C of the next lower degree. I think that a more likely scenario is that we are in the wave B portion of corrective wave (4) and that as the circle a, b and c waves were a 3 wave pattern then corrective wave (4) is on that count a Flat pattern. Hence I would suggest that the EW count is probably as depicted in the chart/figure (XJO version) below.

 

[OzWaveGuy]

Hi OWG,

I may not be correctly understanding what you are saying. I hope that you are not saying that corrective wave (4) was completed last week and we are starting a 5 wave move down terminating as wave (5)

Wave (4) still underway. The first 5 down (as in your chart) is underway.

 

[Lachlan6]

We may have just completed the five down now in the short term. If so expect a three wave correctionary bounce into the area marked, before the market rolls over to the downside again. Some divergence at play down here suggesting a short term bottom has been reached.