The Elliott Wave Analysis Thread

[OzWaveGuy]

XAO
With the break below the levels here cited here--> https://www.aussiestockforums.com/forums/showpost.php?p=402507&postcount=476

and also the break of the Nov 08 low, it does appear (at a minimum) that wave (5) down is underway.

Tomorrow could see some minor upside before reversing.

Wave (5) Possible Downside Targets
Assuming the Wave (4) did finish in early Jan, then:

• if wave (5) = (1), another 1160 points to go on the downside
• if wave (5) = 61.8% of (1) then another 500 points to go on the downside.

The unfolding short term waves will provide further guidance over the next several days. So far, the larger upwards corrections since the end of wave (4) on the 7th Jan are considered a series of wave 2's. This would mean some strong downside should now unfold as we work through a set of wave 3's. If this strong downside doesn't unfold, then something else may be about to happen.

In addition, the news for the last few weeks has been particularly bad, so a reversal wouldn't have been out of the question. However, at the moment, adhering to the wave counts is needed as it does appear a 5th wave down is unfolding.

Cheers

OWG

 

[OzWaveGuy]

XAO

The XAO is moving downwards and unfolding in 5 waves. I can only assume that wave (5) is underway, but there is potential for further subdivisions to unfold as well that extend the bigger wave (3).

What is needed now is to work the individual waves downwards looking for wave alternation and fib relationships to determine the sub-divisions within wave 3 of (5).

Today's small leg up from the low could be considered another subdivision of wave 3 and labeled as a 'i' and 'ii'. Alternatively, wave (iii) could have ended today, that will see more downside before the bigger wave '4' corrects upwards. However, if this was the case, there doesn't seem to be enough price movement between the start of wave '3' and the impending start of wave '4'. So for now we'll label today's action a completed 'i' and wave 'ii' still underway until further clarification is at hand.

There's still a remote chance that wave (4) is still underway and this downwards leg is wave 'B'. Mentioned some weeks ago - if a triangle does unfold for wave (4), then the 'B' leg may find a new low before wave 'C' up commences. If this is the case then the 'B' wave down will finish very soon. Drawing parallel trend lines thru this down leg and waiting for an initial 5 wave break upwards out of the channel would give a clue to more upside to support wave 'C' of (4).

Cheers

OWG

 

[Stock360]

Here are the answers:

1. I've been using EWT for trading for quite some time and I know quite a number of people around the globe who have mastered this theory and they have successfully applied this concept in their trading.

2. EWT is my core methodology, what I do is basically identify those stocks who are in Long Term Uptrend and then try trading based on the upcoming Waves. However, EWT alone is not enough and you need to combine it with other more common Technical Analysis Indicators.

3. I normally trade in a time frame of anything between 1 to 6 weeks (3 weeks as an average) and I've found EWT to be best working in this time frame.

4. You may even end-up having 100% success ratio, the only challenge is to be able to identify the Waves Correctly. You'll realize immediately your mistake (of in-correctly identifying wave counts) as soon as you've gone into a loss.

5. Well, I thought that depends on the particular stock's performance. What you need to understand is that EWT can not enhance the performance of your trade but can help you to trade with a confidence.

6. Again depends on how accurate your wave count is

7. Quite high. Since the popularity has increased for CFDs and Short Selling, you can even identify those stocks who are currently in down-trend and then short sell on them by applying the same EWT concepts

Last addition: EWT has proved to be a very successful trading system however its best used with the high volume and high activity stocks. I've often found it working best with the Forex and Market Indices.

All the best with everyone who is learning EWT.

Cheers

Some questions for the contributors:

1. Who actually trades using Elliott Wave?

2. If you trade using EW, what proportion of your analysis involves EW? ie. is it core to your technical analysis, or is it a bolt-on extra, applied after some other trend identification method brings something to your attention?

3. What time-frame do you trade in?

4. What proportion of winners to losers do you have?

5. What is your average winning trade and average losing trade size?

6. What is your risk per trade?

7. What is the opportunity factor of your system? ie. how often does your analysis provide you with a trade?

Since a method of analysis is not a trading system per se, and in the case of EW is often only relevant for the ´setup ´ of a trading opportunity, I think it ´s important for people contemplating EW to get the ´reality check ´of an applied system.

 

[sammy84]

I have to thank the likes of OZ wave guy and Tech/A. I used to think that EW was pretty much rubbish. However, looking back now I can see I only thought this way because I feared what I didn't know. After reading this thread on various occasions I went out and bought Nick Radge's book to see what it is all about. I now can see what a valuable tool EW is for any technical analyst and am in the process of learning more about EW so I can incorporate it in my trading strategy. So thanks guys on this thread for posting your analysis, it really helped me out.

Sammy

P.S- Can anyone recommend any good books on EW after reading Nicks one?

 

[Porper]

P.S- Can anyone recommend any good books on EW after reading Nicks one?

Hello Sammy,

Elliot Wave Principle by Frost & Pretcher is a good start, then a really good one for the slightly more advanced is Dynamic Trading by Robert Miner, this will teach you trading strategies as well as basic Elliot.

 

[Sean K]

Wave (5) Possible Downside Targets
Assuming the Wave (4) did finish in early Jan, then:

• if wave (5) = (1), another 1160 points to go on the downside
• if wave (5) = 61.8% of (1) then another 500 points to go on the downside.

Do you use support and resistance to add support to these targets. For example, there's some decent support around the 27-2800 mark back in 98, 99, and 03. Since that lines up around the 61% target, would you think that's a higher probability target? Or, just wait and see how it responds to that?

 

[OzWaveGuy]

Do you use support and resistance to add support to these targets. For example, there's some decent support around the 27-2800 mark back in 98, 99, and 03. Since that lines up around the 61% target, would you think that's a higher probability target? Or, just wait and see how it responds to that?

I'll usually draw up a range of fib targets based on wave 1 and 3 (eg 38.2 and 61.8%) and overlay them on the chart. Then see what obvious support lines/channels run close to these fib targets. One can then focus in on a couple of specific targets areas.

The 2700 target area is almost exactly 61.8% of wave (1), so at first glance this area would be a primary support region for a significant bounce that may take 6+ months or so to play out.

As wave (3) down was the extended wave, then the odds are high that wave (5) down will not be longer than wave (3). Wave (5) should have some form of a fib relationship with wave (1) or (3) - a 61.8% relationship is a good place to start (and seems to occur often on the XAO)

Once the smaller wave 3 of (5) down finishes then the above target can be refined a little based on the fib relationships within these smaller waves down.

A little long winded answer - but I thought others may find value in the logic used. I'll throw up a chart later this week with some ideas on the impending bounce.

For the EWers: You know what this means - 5 waves down on the XAO is a very significant move that will have extremely harsh consequences (and opportunities). One also needs to look into the future a little and try to understand what the social landscape will look like too (probably very different to what we are used to).

 

[bullbear39]

Would anyone like to offer an opinion on IPL from an EW perspective?
Being new to EW and not having software that automatically plots the waves I've attached my meagre attempt below.

Main questions;
1. Is my (manually plotted) count right?
2. What affect does the gap have on the count, if any?
3. Assuming my wave 5 is right, what happens next? Would like to see someone elses view of the count as of today (04.04.09).

Thanks.

 

[bullbear39]

... er... 04.03.09

 

[Rudy]

Would anyone like to offer an opinion on IPL from an EW perspective?
Being new to EW and not having software that automatically plots the waves I've attached my meagre attempt below.

Main questions;
1. Is my (manually plotted) count right?
2. What affect does the gap have on the count, if any?
3. Assuming my wave 5 is right, what happens next? Would like to see someone elses view of the count as of today (04.04.09).

Thanks.

Hi Bullbear,

I find that EW works better on indices, sectors and commodities than it does on stocks. I have found very few stocks that lend itself to EW when strict EW rules are used.

OWG is better qualified to comment on your count than I am but I suggest that you may be attempting to count impulse waves where none exist. In your chart of IPL what you are seeing as impulse waves have their wave 4's intruding into the price range of their wave 1's which makes them illegal.

I don't see IPL as a particularly good candidate for EW but it could be because of my bias about using EW on stocks that aren't large (and hence are represented by a wider spectrum of investors thus making it more likely that EW will work) like BHP.

Cheers

Rudy

 

[Rudy]

XAO

The XAO is moving downwards and unfolding in 5 waves. I can only assume that wave (5) is underway, but there is potential for further subdivisions to unfold as well that extend the bigger wave (3).

What is needed now is to work the individual waves downwards looking for wave alternation and fib relationships to determine the sub-divisions within wave 3 of (5).

Today's small leg up from the low could be considered another subdivision of wave 3 and labeled as a 'i' and 'ii'. Alternatively, wave (iii) could have ended today, that will see more downside before the bigger wave '4' corrects upwards. However, if this was the case, there doesn't seem to be enough price movement between the start of wave '3' and the impending start of wave '4'. So for now we'll label today's action a completed 'i' and wave 'ii' still underway until further clarification is at hand.

There's still a remote chance that wave (4) is still underway and this downwards leg is wave 'B'. Mentioned some weeks ago - if a triangle does unfold for wave (4), then the 'B' leg may find a new low before wave 'C' up commences. If this is the case then the 'B' wave down will finish very soon. Drawing parallel trend lines thru this down leg and waiting for an initial 5 wave break upwards out of the channel would give a clue to more upside to support wave 'C' of (4).

Cheers

OWG

Hi OWG,

Do you see today's likely action as possibly an extension to your wave (iv) of the current wave 3 of wave (5)?

 

[Nick Radge]

I have found very few stocks that lend itself to EW when strict EW rules are used.

I completely disagree. There are a myriad of stocks that lend themselves to EW, especially in isolation. The trick is not to force the count - its either there or it isn't. If it isn't you look elsewhere because there will be another somewhere.

Here is CSL as a prime example:



or QBE



or CEY



or CTX

 

[OzWaveGuy]

I find that EW works better on indices, sectors and commodities than it does on stocks.

True, the 'volume' of human psychology at work does favor the EW analysis

I have found very few stocks that lend itself to EW

As per Nick's comments - plenty out there

when strict EW rules are used.

Not sure what this means. I'm assuming this means breaking the rules
Either it's EW or it isn't and therefore this is suggesting one is prepared to 'guess' a lot more. If you really can't find patterns, there's plenty of other opps out there so move on to the next.

For IPL, it does contain EW patterns, but they are more complex. On a daily chart it isn't always obvious on what the counts look like and my software doesn't allow me to look at the hourly data too far in the past ( a real pain sometimes). I'll take a closer look later this week.

As for the recent XAO action, It can be counted that wave '3' down is finished (although shorter than wave '1'). So a wave '4' could unfold now but it needs to keep itself tight so it doesn't wander into the price range of wave '2' starting at 3300. If this is correct, then the downside target of 2700 will be unlikely.

The media will disagree with the above analysis as apparently the additional stimulus china is throwing at the GFC is causing 'rallies' around the world. I hope they can account for the final wave 5 down when that unfolds, and then the real rally when that starts soon - and I'm sure they will

 

[Rudy]

I completely disagree. There are a myriad of stocks that lend themselves to EW, especially in isolation. The trick is not to force the count - its either there or it isn't. If it isn't you look elsewhere because there will be another somewhere.

Hi Nick,

Thanks for your thoughts. It's heartening to know that it does work on some stocks. I would be interested to see your count on IPL as it is not so obvious or do we assume that this is one stock where EW doesn't work?

Cheers

Rudy

 

[Lachlan6]

EW working just fine with IPL. Leading diagonal wave (1) followed by the plunge into the wave (3) on the 20th of Nov last year. A running flat shallow wave (4) and now the stock looks to be sub-dividing in the wave (5). The large gap should be resistance to any smaller degree wave ii push up within the larger wave (5), so bottom line the stock looks absolutely terrible and I would ´nt even think about touching it. Unfortunatley I cannot post a chart at the moment but will probably do so later.

 

[Bobby]

There are a myriad of stocks that lend themselves to EW, especially in isolation. The trick is not to force the count - its either there or it isn't. If it isn't you look elsewhere because there will be another somewhere.

WHAT ? look some where else when its wrong , if thats how it works
I bought your last book , found it ~ refreshing , will be buying your next when you complete the fallacy of EW.

 

[Porper]

WHAT ? look some where else when its wrong , if thats how it works
I bought your last book , found it ~ refreshing , will be buying your next when you complete the fallacy of EW.

I gather you're not an E.Wave fan then Bobby ?

Nick Radge didn't say look somewhere else if you are wrong, he said if there is no wave count don't force it and look somewhere else.You have added the "wrong" part to highlight your views and emphasize your sarcasm.

As far as I am aware no trading method works on all stocks, Elliot is no different.

Which part of Adaptive Analysis didn't you understand ?

 

[Nick Radge]

Bobby,
You have misunderstood what I said. Theorists will attempt to place a count into every nook and cranny of any price movement. A realist, or trader for use of a better word, sticks with stocks that offer only a clear and indisputable count such as the one's I have highlighted.

A correct count simply suggests there is a pattern that you understand, a pattern from which you are comfortable 'participating' in the market from and pattern that highlights when you are wrong so you can place a stop. Simple as that. We could switch Elliott Wave pattern for symmetrical triangle or Head & Shoulders. They all serve the same purpose.

Elliott Wave is therefore no more of a fallacy than any other technical chart pattern or indicator. There is no 'divine' secret in it and I have never, ever, insinuated that there is some overpowering be all, end all secret to it.

 

[tech/a]

WHAT ? look some where else when its wrong , if thats how it works
I bought your last book , found it ~ refreshing , will be buying your next when you complete the fallacy of EW.

Its human nature to expect there to be clear cut right or wrong decision points. Red Light Short Green Light Long.
This market is clearly RED.
Taking a trading decision which is clearly RED on a stock within this market is the wisest decision.
Taking a Green light analysis decision in this market is clearly a trade which needs caution.
Taking a trade in which the analysis-- any analysis---is NOT clear is plain guessing.


You don't have to take any trade you cant apply a clear cut analytical strategy.
Doesn't make the analysis you use in appropriate---quite the opposite.
If the analysis can give on trades--any trades clear cut GREEN and RED lights then take them until proven or dis-proven.

The market is in continual motion,regardless of what analysis you use,today's GREEN light could well be RED tomorrow-- It could also be RED or GREEN for the duration of your trading time-frame.

That's Trading.
Its your application of analysis ANY analysis which will see you succeed or FAIL.

NOT THE ANALYSIS.

 

[Cartman]

WHAT ? look some where else when its wrong , if thats how it works

ahh ---- looks like i might have a comrade around here ---- know how u feel Bob !!

Bobby,
You have misunderstood what I said. Theorists will attempt to place a count into every nook and cranny of any price movement.

hence the lagging effect of E/W analysis imo ---- its simply way too slow unless the trader hones in on shorter time frames for entries/exits ---- and if thats the case, why not simply trade off momentum full stop ---- especially in the current climate -----

its not hard to get 10 or 15 short term cycles on a currency pair in a few hours ---- Poor old Ralph (may he rest in peace) would be still trying to work out whether it was the start of a wave one or the continuation of a wave five or whatever (tongue in cheek!)

We could switch Elliott Wave pattern for symmetrical triangle or Head & Shoulders. They all serve the same purpose.

good idea --- they are both more useful to the average trader cause they also work in a condensed time frame