The Elliott Wave Analysis Thread

[Rudy]

Yes, I am enjoying the thread as well, just wondering how to trade it except for after the fact.

Hi Kennas,

The EW process looks at the past market action in an attempt to determine which pattern is playing out and where we are in that particular pattern. No system is perfect however what we attempt to do in the next step of the process is to assume a few high probability scenarios. As the market action continues to unfold, these possible scenarios fairly quickly get eliminated until you are left with one pattern.

Your comment "just wondering how to trade it except for after the fact." maybe misses what we are attempting to do. It may appear at times that in discussing possible scenarios we are saying if/but/etc but in the majority of occasions the high probability scenarios tend to predict that the market will go in one particular direction but the possible pattern to achieve that particular directional move is not clear at the time. Therefore from a traders/investors perspective it doesn't matter which specific pattern will unfold as long as the higher probability scenarios point in the right direction and that these scenarios indicate that the length of time that the next move will last is sufficient to execute a safe trade.

In those cases where the higher probability scenarios point to opposing market action then we know that it is not a time to attempt to execute a trade because the outcome is uncertain and hence too risky.

For the above reasons I believe that EW is a powerful tool in the toobox of the trader/investor.

There are times when the pattern is clear and other times such as during the playing out of a complex corrective wave it becomes impossible to predict the outcome of a pattern because the minute you attempt to do it, it morphs into something different. These are times when you just have to sit it out and wait for the next clear pattern to present itself.

 

[Rudy]

I usually only post the XAO commentary and not individual stocks (unless someone asks about a specific stock)

Hi OWG,

I would appreciate you casting your eye over this possible wave count for BHP for me.

 

[sails]

I think BHP needs to get past $31.60 or possibly a "W" pattern is forming on the hourly chart as seen in Rudy's post. I have posted a daily chart below of STO which formed a "W" towards the end of last year and you can see the result. How would you EW experts label this?

Also, there is a possible head and shoulders forming on the daily chart for BHP. That said, I have also found that failure of a pattern can often result in a pretty strong move in the opposite direction, so it always pays to be prepared.

I have also enjoyed this thread and being able to see different EW counts being applied in real time. Thanks guys.

 

[OzWaveGuy]

Yes, I am enjoying the thread as well, just wondering how to trade it except for after the fact.

EW is not for everyone.

I'm interested in your statement above that EW is obvious after the fact - and yes it is - along with everything else.

However, it is used to predict the market - in some cases quite accurately. For example the recent discussion on the 'text book' double 3 correction on the XAO and the impending 5 wave break to the upside to complete a zig-zag correction (with discussion on the upside targets) didn't have you wondering about looking for possible entry points on your preferred stocks prior to the completion of the double 3?

 

[Boggo]

Another view of BHP daily chart.

(click to expand)

 

[OzWaveGuy]

Hi OWG,

I would appreciate you casting your eye over this possible wave count for BHP for me.


View attachment 27722

The (a) leg up is not an impulse move. Wave iii is the shortest wave - illegal under EW.

Take a look at the XMJ - always easier, then BHP.

Will swing around later tonight on this.

Cheers

OWG

 

[nunthewiser]

for what its worth


Personally feel BHP due for a fall to new overall lows before it reaches the targets indicated on rudys chart.......only my 2 cents

prolly wrong

 

[Sean K]

For example the recent discussion on the 'text book' double 3 correction on the XAO and the impending 5 wave break to the upside to complete a zig-zag correction (with discussion on the upside targets) didn't have you wondering about looking for possible entry points on your preferred stocks prior to the completion of the double 3?

I will have to look back at the discussion to see which way you, or others were calling the latest short term move. How that has related to my preferred stocks probably isn't relevant. Mostly red actually.

In regard to this, it's interesting that Rudy has posted a BHP EW chart prediction which to me looks like it's going UP, but isn't he and you both calling the next major XAO leg DOWN?

No, it's not for everybody.

But interesting.

Looking forward to your time/fib projections linked to the EW...

Maybe we could see an entry and exit trigger somewhere using EW?

Cheers.

 

[amory]

for true believers only:

assuming that early last August 08 ... XAO 4880 ... marked the low point of a 5-wave down pattern. this then was followed by about 4 weeks of upswing (an A-B-C pattern if you like).

then followed another horrible 5-wave down to about mid-November. this was followed by another upswing like the one above, only slightly longer lasting, to about 3730.

since then, its been down again. the question now arises:

does the new low of 3300 a week ago signal the end of Wave-1 of a new 5-wave down pattern? where we would now be somewhere in the (usually fairly short-lived) up-wave 2, preceding lengthy down-wave 3.

just guesswork at this stage, but it would take an up-break beyond at least XAO 3500 to challenge the theory. other than that, I fully agree with Rudy's projection (post #367)

 

[Rudy]

I will have to look back at the discussion to see which way you, or others were calling the latest short term move. How that has related to my preferred stocks probably isn't relevant. Mostly red actually.

In regard to this, it's interesting that Rudy has posted a BHP EW chart prediction which to me looks like it's going UP, but isn't he and you both calling the next major XAO leg DOWN?

No, it's not for everybody.

But interesting.

Looking forward to your time/fib projections linked to the EW...

Maybe we could see an entry and exit trigger somewhere using EW?

Cheers.

Hi Kennas,

I regretted posting that chart of BHP and should have cancelled it immediately as I had grave doubts about its validity. As OWG has correctly pointed out my earlier wave was totally illegal and hence voided the wave count.

Like you I think that the chances of BHP and the XJO travelling in opposite directions for any length of time is pretty remote.

I can only apologise for not cancelling that post. It is not EW that is wrong in that case it is clearly the practitioner.

Cheers

 

[OzWaveGuy]

I was sorta afraid that this EW thread was almost a conversation between myself and Rudy for awhile (not that there is anything wrong with Rudy - just to be clear ). Obviously there's a heap of folks reading on in the background and many of you have indicated the value of this thread - so thanks for that feedback.

Part of my strategy on this thread is to enable you with EW as I do it anyway for my personal benefit - so why not share it? Hence, I have posted plenty of real examples and additional material that you may want to consider as well (and I know others have as well - so thanks).

For those new to EW and are keen to learn or want to evaluate it as a tool to combine with your own trading strategy - it probably makes sense to read the threads from Dec last year (if you have spare time) as many different patterns have formed since then and there's a bunch of discussion on each one. In addition, I'll post specific articles for consideration based on market action at the time or specific questions that members have asked. If you have a question and don't want to post then PM is ok.

I know what it feels like learning EW , and to be brutally honest, it wasn't easy and rather painful at times. I subscribed to some of the EW analysts in the market, but it didn't help me that much and I really wanted to get off the plateau i was on. Glenn Neely's Mastering Elliott Wave helped a lot and opened my eyes to additional patterns that can occur - it's hard going though.

Cheers OWG

 

[Boggo]

Obviously there's a heap of folks reading on in the background and many of you have indicated the value of this thread - so thanks for that feedback.
Cheers OWG

Certainly are OWG, keep posting.

Boggo

 

[Rudy]

for true believers only:

assuming that early last August 08 ... XAO 4880 ... marked the low point of a 5-wave down pattern. this then was followed by about 4 weeks of upswing (an A-B-C pattern if you like).

then followed another horrible 5-wave down to about mid-November. this was followed by another upswing like the one above, only slightly longer lasting, to about 3730.

since then, its been down again. the question now arises:

does the new low of 3300 a week ago signal the end of Wave-1 of a new 5-wave down pattern? where we would now be somewhere in the (usually fairly short-lived) up-wave 2, preceding lengthy down-wave 3.

just guesswork at this stage, but it would take an up-break beyond at least XAO 3500 to challenge the theory. other than that, I fully agree with Rudy's projection (post #367)

Hi Amory,

Since that post OWG posted a chart that looked pretty much like the one in my earlier 367 post but more accurate in it's labeling.

Regarding your question. Since the market high of the 1st November 2007 we had 3 large cycle waves down which I've labeled waves (1), (2) and (3). Wave (3) completed on the 21st November 2008.

Both OWG and I believe that we are currently in the process of creating corrective wave (4) through the process of 3 waves labeled A, B and C. Wave A travellled up from the 21st November 2008 and completed on the 7th January 2009. We are currently in wave B which is heading south as anticipated. Once wave B is complete we will get a rally in wave C.

At the completion of wave C we will also be completing the higher level wave (4). From that point on we will have a downward moving wave (5) which if it behaves normally will take out any previous market lows.

I am patiently waiting for the rally under wave C to commence as it will be my last real opportunity to invest safely for a reasonable period of time (multiple weeks). The next real rally of any worth will be the rally that will take place after the completion of wave (5). This later rally should last several months.

 

[krk004]

Enjoy the contributions by all on this forum!

Very much an EW novice, myself.

Anyone want to give their EW thoughts on Gold, Silver or Platinum?

Thanks in advance,

 

[amory]

Thanks for reply, Rudy. like most EW analysts, you are plotting the major waves over a very extended time frame. result, where you are seeing a completed wave-3, my one is a wave-5, with subsequent upward correction same as yours. anyway, although using different paths, we arrive at similar final projections ... ultimately new lows. only I would expect such new lows to occur within the next couple of months, you ... much later?

P.S. to Krk004: I don't think gold lends itself to EW analysis. one is more inclined to study its long & short term up & down channels. for instance, currently at the peak of a rising channel, upbreak would be a good signal, while a return downwards could be heading back to the lower trendline. FWIW

 

[Rudy]

Thanks for reply, Rudy. like most EW analysts, you are plotting the major waves over a very extended time frame. result, where you are seeing a completed wave-3, my one is a wave-5, with subsequent upward correction same as yours. anyway, although using different paths, we arrive at similar final projections ... ultimately new lows. only I would expect such new lows to occur within the next couple of months, you ... much later?

Hi Amory,

I haven't delved into the timing aspects of EW except on a very rudimentary level so here is a very simplistic view of my timing.

My suggested wave (4) is composed of waves A, B and C. Wave A took roughly 7 weeks to complete (21 Nov 08 to 7 Jan 09). Wave B has been underway since the 8 Jan 09 and I assume will complete in say 4 ~ 5 weeks. Wave C of a Flat would normally complete in a period that is somewhere between 61.8% and 161.8% of the shortest wave of waves A and B so I'll take a stab at 4 ~ 5 weeks. So that is the rough timing for the completion of wave (4).

Now as for how long it would take wave (5) to complete. I would tend to go to wave equality in time with wave (1) and wave (1) took around 20 weeks to complete.

So that gives you my best guess on the timing.

Oh by the way, wave B of wave (4) can be anywhere between 68.1% (some round this off to 70%) and 138.2% of the length of wave A so it is still conceivable that we may see new lows during the wave B phase of proceedings.

 

[OzWaveGuy]

Some thoughts on recent XAO and XMJ action (no charts sorry). The XAO doesn't appear to be moving downwards in impulse moves (so wave 'b' circle could still be underway). XMJ is in a large corrective move and I suspect will be for some time.

More later

Cheers - OWG

 

[Rudy]

The (a) leg up is not an impulse move. Wave iii is the shortest wave - illegal under EW.

Take a look at the XMJ - always easier, then BHP.

Will swing around later tonight on this.

Cheers

OWG

Hi OWG,

I had a look at the XMJ and didn't find it any easier than BHP. It is interesting by the way that whilst I got the (a) wave of BHP incorrectly labeled, it performed pretty much as I drew it on my chart.

Lucky I guess


The way I see the latest run up on BHP is that it has almost (if not already today) completed a 5 wave pattern up and will now drop to form wave circle c. This should also drag down the XAO/XJO in the coming days.

 

[Rudy]

Some thoughts on recent XAO and XMJ action (no charts sorry). The XAO doesn't appear to be moving downwards in impulse moves (so wave 'b' circle could still be underway). XMJ is in a large corrective move and I suspect will be for some time.

More later

Cheers - OWG

Hi OWG,

I don't know....... the XAO looks pretty impulsive to me

 

[OzWaveGuy]

Hi OWG,

I don't know....... the XAO looks pretty impulsive to me

View attachment 27765

Wave iv overlaps into the price range of wave ii.

Somethings up. The evidence is suggesting a different count is unfolding - i suspect another push up is required to finish a more complex b wave correction. Will sit out for a bit until this wave clarifies.