The Elliott Wave Analysis Thread

[tech/a]

tech, a query - the last leg from wave 4 to the low looks very much like a 3 wave move - do you have a chart with the details of this last leg?

Cheers OWG

Not here but at home.
Will post it tonight.

 

[Boggo]

Another view perhaps ?

(click to enlarge)

 

[Rudy]

Looks reasonable to me Rudy. There are one or two other interpretations in the smaller waves counts, but at the end of the day what you have there is realistic based on the evidence at hand.

Hi OWG,

Thanks for that. Like you, I believe that we have now only entered into a wave 4 of wave (5) and that we still have a leg down to go. Whether that leg down is an impulse that takes us down to around 2700 or a truncated wave 5 or even an ending diagonal remains to be seen.

On a completely different subject our readers may be interested in a casual observation I noticed on the relationship of waves 1 and 3 in a couple of examples. When I noticed that the S&P500 had gone down to 667 the day before yesterday this level represented a range from the termination point of wave 1 that was almost equal to the range of wave 1 itself in the current wave (5) down move.




To me this was an indication that the wave had probably reached a termination point. As it turned out this was right on the money with the S&P500 going up over 6% last night.

I had noticed a similar thing occur on the XJO on it's waves (1) and (3).




I have noticed that this sort of thing occurs reasonably often so it's something worth while keeping an eye open for. Obviously the ranges weren't exactly equal but in the larger scheme of things they were close enough for me.

Cheers

 

[biggles]

Does anyone know the rules about viewing charts in Semilog. Chart counts can look quite different on daily charts, which i use.
Is it ok to view on semilog if a charts count is not obvious. Is this misleading though

 

[OzWaveGuy]

Thanks for that. Like you, I believe that we have now only entered into a wave 4 of wave (5) and that we still have a leg down to go. Whether that leg down is an impulse that takes us down to around 2700 or a truncated wave 5 or even an ending diagonal remains to be seen.

Highly likely. We almost had a 5th wave failure Rudy! for the completion of wave '3' down (amongst the 62 point drop that didn't happen). I'll throw up a chart later

On a completely different subject our readers may be interested in a casual observation I noticed on the relationship of waves 1 and 3 in a couple of examples. When I noticed that the S&P500 had gone down to 667 the day before yesterday this level represented a range from the termination point of wave 1 that was almost equal to the range of wave 1 itself in the current wave (5) down move.

Right on - These are classified as External Fibonacci relationships. So where you can't find a fib relationship between waves (eg Wave 1 = 61.8% of Wave 3), you can move outside the internal wave structures and find fib relationships externally on the whole wave setup like you've shown. Fib is very powerful, and very under utilized.

 

[OzWaveGuy]

Does anyone know the rules about viewing charts in Semilog. Chart counts can look quite different on daily charts, which i use.
Is it ok to view on semilog if a charts count is not obvious. Is this misleading though

Some people only use Semi-log charts as they tend to be looking at more longer term and don't want to under estimate the relevance of waves at higher degrees.

However, I find switching to semi-log scale even when viewing the charts that go back to the market top back in 2007 can seriously change the fib relationships between the recent waves. So for that reason, I will stay in linear mode.

Longer term charts are best viewed using semi-log scale, otherwise a 30% move back in the 90's won't look like anything at all (v's a 30% move today).

 

[Cartman]

Right on - These are classified as External Fibonacci relationships. So where you can't find a fib relationship between waves (eg Wave 1 = 61.8% of Wave 3), you can move outside the internal wave structures and find fib relationships externally on the whole wave setup like you've shown. Fib is very powerful, and very under utilized.

Hey Oz ---- didn’t think id be back so soon lol ---- dont be scared -- ill be behaved this time ----

I am actually a fan of fibs because I trade FX and the auto bots have them pre-programmed to a tee more often than not, so even though I have no idea why they work, I pay them a fair bit of attention ----

I don’t trade long term charts as u do for my own reasons but ----

On say a 5 min chart where I get a heavy consolidation area and then the trend resumes in the same direction, I give that area the same consideration that I would if the price had totally reversed ----- and as much importance as the previous high or low for the exercise of ‘predicting’ the possible price extension to the next level, and consequent RR ratio ---

Just curious --- in E/W analysis on say a daily chart, where u get the same condition (resumption of trend after consolidation), do E/W’s ever consider labelling that area a ‘new wave’ so to speak? ---- considering it is actually the completion of a sub cycle (wave) within a bigger cycle (wave), I would have thought it important to recognize it as such ----- I certainly do on a shorter time frame ----

Not knit picking here (hi Tech --- lol ) ----- genuinely interested on how an E/W er perceives and notes the importance of that scenario on a higher time frame than the ones i trade ----

cheers Oz ---- bet yr glad to have yr thread back !!

 

[OzWaveGuy]

Hey Oz ---- didn’t think id be back so soon lol ---- dont be scared -- ill be behaved this time ----

Np Cartman - I'm sure you're really a good person (and quite funny sometimes)

On say a 5 min chart where I get a heavy consolidation area and then the trend resumes in the same direction, I give that area the same consideration that I would if the price had totally reversed ----- and as much importance as the previous high or low for the exercise of ‘predicting’ the possible price extension to the next level, and consequent RR ratio ---

Just curious --- in E/W analysis on say a daily chart, where u get the same condition (resumption of trend after consolidation), do E/W’s ever consider labelling that area a ‘new wave’ so to speak? ---- considering it is actually the completion of a sub cycle (wave) within a bigger cycle (wave), I would have thought it important to recognize it as such ----- I certainly do on a shorter time frame ----

In the same way, EW sees consolidation as further sub-divisions of the current wave (or the commencement/ending of waves of higher or lower degrees - and probably what most people find difficult about EW analysis).

Fib is used to find and estimate relationships between waves running in the same direction (for turning points) as well as retracements. So these consolidation points are quite significant depending what timeframe you trade at.

I personally like to understand the bigger picture, not only for trades but to understand the social aspects as well. So the above is valid for the larger time frames as well.

cheers Oz ---- bet yr glad to have yr thread back !!

lol, not my thread, I'm just surfin' here

 

[OzWaveGuy]

XAO
Wave 3 down has ended with a very small wave (v) that almost created a 5th wave failure. Not too surprising, as wave (i) was the extended wave, and wave (v) needed to be shorter than (iii) - wave 3's can never be the shortest wave.

The push up yesterday and the follow-thru today would be considered a single leg. From here we should see a small correction followed by one more push up to finish a zig-zag correction (3 waves) or continue sideways to complete a triangle.

Next Steps
Breaking beyond 3300 would invalidate this analysis as wave '4' cannot overlap into the price range of wave '2'. If a break beyond 3300 does occur I would be inclined to label the triangle (iv) scenario (in light green) as wave '4' instead - thus completing a very significant 5 waves down on the XAO. However this very small wave '4' triangle and thus a very small wave '5' seems too small compared with the bigger structure and the wave '2' flat, hence it's a very unlikely possibility. The good news is: We'll know very soon.

Target
Ideally a wave '4' triangle should play out before heading down to 2800-2900 in the coming weeks.

Cheers

OWG.

 

[Cartman]

Np Cartman - I'm sure you're really a good person (and quite funny sometimes)

thank u Oz ---- somebodies gotta be the 'idiot' to make everyone else feel smart eh?? ---- (ps dont tell anyone, but i'm not really an idiot lol )

i'll tell u one thing though --- i'm smart enuff to know that u (that would be You) , are a very clever man ----- and that is y people read this thread religiously ------ i admit i know crap all about E/W (well i actually do know a little ) ----- you my friend have an amazing knowledge of the methodology ------- and for those that want to study the concepts, this thread (apart from my occasional interruptions haha ) is about as good as it gets ---- without actually paying for it !!! -- so again, i tip my hat to u Oz.

In the same EW sees consolidation as further sub-divisions of the current wave (or the commencement/ending of waves of higher or lower degrees - and probably what most people find difficult about EW analysis).

i know u knew it ----- i see it without 'knowing' it ---- hopefully others now 'see' it

So these consolidation points are quite significant depending what timeframe you trade at.

Absolutely !!

I personally like to understand the bigger picture, not only for trades but to understand the social aspects as well. So the above is valid for the larger time frames as well.

U obviously trade "Options" then ??

lol, not my thread, I'm just surfin' here

Nah ---- its yr thread --- dont be modest ----- (humility is perhaps the greatest human trait to go 'unrecognized and unrewarded' -- --- keep up the good work --

 

[OzWaveGuy]

You're too kind Cartman. And yes Options are useful if you know where the trend is about to head.

On another topic, and something that was discussed a few days ago regarding long term EW counts, I went back to Prechters 'Elliott Wave Principle' and dug up an interesting chart of the DJI 1789 - 1977 at constant dollar value.

The chart is quite amazing as it displays very clear EW impulse and corrective patterns even with constant dollar value. There are also other charts that go back to 950AD and cover the millennium waves that contain corrections that have lasted for hundreds of years. Hence, looking at the bigger picture, the recent bull market action of the last 35 years is like a leaf atop of a large oak tree (and the recent correction all but a light breeze)

 

[tech/a]

OZ the charts a Weekly so have given you both the weekly and Daily.

As you know AGET has algorithm wave counts so arent picture perfect.
I dont expect or need them to be in my trading.

The Weekly count (Major waves) look wrong and the lower timeframe count similar to Rudy's looks more symetrical. Ending wave 5 (3) This I prefer.Alternate count in BLUE.
Anyway trading it as a wave 4 until proven otherwise either way its bullish.

 

[MR.]

As an outsider it does appear one can manipulate or dismiss the waves as one sees fit!

Eliminating and wave theories, Techa appears to me as being rather optimistic. When Ozwaveguy appearing pessimistic. Porper dismissing waves over longer time frames because they doesn’t seem correct. Notice how your emotions influence the Elliott wave data being processed, perhaps?

Get rid of the emotion and with all emotion cast aside what do the various Elliott waves project?

A rebound has been expected. As these pics indicate on the all-ords and the US S&P. Or has the "expected" rebound already happened back in May 08? So now there's just the painfully slow to get to a bottom! As much as I want to believe Techa I would think there is too much pessimism and concern kicking about for a good rebound at this time.

 

[tech/a]

For me its not about being right or wrong.

Its about the analysis being correct until its proven to be incorrect.

I'll trade in the direction of the analysis,until analysis tells me that its either incorrect or has come to an end.

The analysis is on going and may well pan out to be as porper and others state.
While I have respect for all those who offer opinions---I prefer to trade my own analysis--right or wrong.

That way I dont have to start a class action to sue all those who post opinions here because they lost me money!!

 

[Rudy]

As an outsider it does appear one can manipulate or dismiss the waves as one sees fit!

Eliminating and wave theories, Techa appears to me as being rather optimistic. When Ozwaveguy appearing pessimistic.

Hi MR,

It's possible that you may not understand the process used in EW analysis. The EW analyst attempts to determine the current pattern being revealed by the market. There are times when the pattern being revealed is pretty obvious and other times (such as during a highly complex corrective wave pattern) that the pattern possibly can't be determined until the pattern is almost complete.

Quite often during the process there are a number of high probability outcomes for the pattern being revealed. The EW process requires the analyst to keep these possible scenarios in mind and as more of the pattern is revealed one by one the number possible scenarios diminishes. Quite often the number of scenarios reduces to one way before the pattern is completed and the EW analyst can use this information in determining whether a trade is high or low risk.

There is no doubt that there is a natural tendency for any analyst to project their own pessimistic or optimistic bias into an interpretation but that bias is quickly eliminated through the correct application of the process. I don't think that OWG is being pessimistic at all. He is just applying the EW process to the market action.

By the way, they were a great couple of charts you posted.

Cheers

 

[MR.]

While I have respect for all those who offer opinions---I prefer to trade my own analysis--right or wrong.

There is no doubt that there is a natural tendency for any analyst to project their own pessimistic or optimistic bias into an interpretation but that bias is quickly eliminated through the correct application of the process.
.....
By the way, they were a great couple of charts you posted.

Cheers

Yes I also like both charts. Happy to post them here. I feel they do reflect along with the optimistic bias and (perhaps a change in the wind) towards Tech/a's trail of thought. Sorry they are not Elliott Wave's but that I will not pretend to understand.

but that bias is quickly eliminated through the correct application of the process.

That's what I wanted to here, with thanks. To the next set of charts......

 

[OzWaveGuy]

OZ the charts a Weekly so have given you both the weekly and Daily.

As you know AGET has algorithm wave counts so arent picture perfect.
I dont expect or need them to be in my trading.

The Weekly count (Major waves) look wrong and the lower timeframe count similar to Rudy's looks more symetrical. Ending wave 5 (3) This I prefer.Alternate count in BLUE.
Anyway trading it as a wave 4 until proven otherwise either way its bullish.

Fair enough tech/a.

You probably know my position on system generated wave counts

 

[joeyr46]

[
A rebound has been expected. As these pics indicate on the all-ords and the US S&P. Or has the "expected" rebound already happened back in May 08? So now there's just the painfully slow to get to a bottom! As much as I want to believe Techa I would think there is too much pessimism and concern kicking about for a good rebound at this time.

That is exactly when a rebound has to occur according to EW that's why most of us miss it and buy at the top when were sure EW is the only tool I've come across that stops you doing that (or gets you out quickly if you do)
I think we'd all like a rebound and if the EW count is right mostb of us have got it very close to a fifth wave bottom or a small wave 4 and then the final bottom (not the whole bear market) for a rebound for a few months
I think our market is just finishing an A wave before going back into a B wave and then the C so we could get or appear to get quite bullish with a run in houses etc and then follow the rest of the world into a major depression.
Whereas US has had the A and the B wave and are just finishing wave 1 of C
That's why we are not as badly affected as US or UK IMO (yet). Our turn will come the piper must be paid.

 

[tech/a]

Fair enough tech/a.

You probably know my position on system generated wave counts

And I dont disagree with your view. Those which stick out are the ones which I look for I'm only interested in direction. The rest comes from other analysis.

[
Techa I would think there is too much pessimism and concern kicking about for a good rebound at this time.

Frankly I dont know---Ive been around long enough to know that I dont know. (Whether the above statement is correct).

That is exactly when a rebound has to occur according to EW that's why most of us miss it and buy at the top when were sure EW is the only tool I've come across that stops you doing that (or gets you out quickly if you do)
I think we'd all like a rebound and if the EW count is right mostb of us have got it very close to a fifth wave bottom or a small wave 4 and then the final bottom (not the whole bear market) for a rebound for a few months
I think our market is just finishing an A wave before going back into a B wave and then the C so we could get or appear to get quite bullish with a run in houses etc and then follow the rest of the world into a major depression.
Whereas US has had the A and the B wave and are just finishing wave 1 of C
That's why we are not as badly affected as US or UK IMO (yet). Our turn will come the piper must be paid.

There is more downside to come but until analysis points to that as a high probability---.

 

[OzWaveGuy]

As for the XAO today, not a lot of clarity in the short term wave counts. The action can be interpreted in a couple of equally valid ways, so the assumption should be to assume wave 4 is still underway (but could also be considered complete as a simple zig-zag, which would alternate well with wave 2 - a flat).

The push down from the short term high today can be interpreted as a 3 wave move or potentially as a 5 wave move - so a little more clarification is required. The important issue is that 3300 cannot be broken (yet) until wave 5 completes as discussed here --> https://www.aussiestockforums.com/forums/showpost.php?p=407488&postcount=570

Also, as a side discussion and mentioned by MR. earlier about "too much pessimism" for a rebound and something I half joked about a few days back, before the recent bounce...

you might need to scroll back for a bit as there seems to have been an uncanny amount of discussion on this thread in the last few days - probably an indication of 'frustration' and hence an impending bounce).

There is a lot of truth in this: You can usually tell when the bounce will occur, as people do become frustrated and it usually shows in the posts in this forum or in certain threads that contain an element of negativity in the title. The recent wave 4 bounce was no exception.

So don't forget, when pessimism is at it's worst - expect a significant low or bottom to be in place. As many of you should be well aware the opposite is also true - when optimism is at it's highest - as we saw in late 2007, then a top is at hand. Occasionally, I check the news for not what has happened, but indicators that suggest the opposite is about to occur, as sometimes when a topic finally gets to the front page or becomes popular - everyone is already in (eg the recent Gold reversal is an example).

Cheers OWG