Elliott wave analysis of AUD/USD - Limited room to the upside

AUD/USD decline failed

Support at 0.9205 protected the downside yesterday, which has prolong the correction in blue wave iv. This blue wave iv can't break into the price-area of blue wave i, which means that it maximum can rally to 0.9324 before turning lower. Short term I will be looking for a break below 0.9268 and more importantly a break below 0.9248 as indications that blue wave iv is over and renewed downside pressure is becoming dominant again.

If resistance at 0.9324 is broken, it will force me to recount the decline from 0.9409, but it will not change much in regard to the larger picture and will only act as a delay before the next decline should be seen.

The support at 0.9205 has now been tested three time and on the next test we should see a powerful decline upon a break. Remember the rule of 4, which says that when support it tested for the fourth time, if it breaks a significant and powerful move should be expected.

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Elliott wave analysis of S&P 500 - New all-time high

S&P 500 new all time high

The S&P 500 posted a new all time high yesterday at 1,912.28. This high was not confirmed by the DJIA, but then nothing indicates that a top is in place yet. If however, the none-confirmation between the S&P 500 and the DJIA remains then it should be a flashing red light.

Looking at the monthly chart, we are currently kissing and hugging the resistance line way back from the October 1987 low. A small divergence can be seen on the RSI indicator, both warnings that a top could be nearby, but then we don't have any hard evidence that is the case yet.

Zooming in on the daily chart, we can see the rally from early October 2011 clearly is impulsive, but it is also possible to count five wave since the October 2011 low at 1.074.77. Again we have divergence between the RSI indicator and price. Warning signs, but still no real evidence of a top being in place.

Zooming in further to the hourly chart, the rally since the 1,814.36 low in mid-April looks like a correction (A-B-C) rally. The first target for wave C will be where it equals wave A in length and that will be at 1,938.42, but we should also calculate the 61.8% length of wave A, which will give us a target of 1.910.59, this target has been exceeded slightly, but as we have a possible resistance line just above this target too, then we just can't push it aside. Here too we can see a minor divergence between the RSI indicator and price, again flashing the warning lights, but then we have no evidence of a top in place yet.

The conclusion must be, that we could be close to a top, but we need more evidence to draw the final conclusion. The first strong indication of a top will be a break below support at 1,899.78, but a break below 1,892.49 is needed to confirm that a top is in place for a strong test of the support line near 1,880. A break below 1,880 will add a strong downside pressure here.  

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Elliott wave analysis of USD/SGD - Triangle consolidation over?

USD/SGD Triangle consolidation over?

Looking at the decline from 1.8558 in late December 2001 we can count a distinct five wave decline to 1.1989 in late July 2011. Since that low a major sideways consolidation has taken place. The big question is of course whether we have seen a wave 4 triangle or it is a B wave triangle?

Looking at the internal relationship between wave 1 - 3 and 5, we will see that wave 3 and 5 is equal in length (36.01 figures), while wave 1 is slightly smaller at 24.02 figures. That makes wave 1 66% of the length of both wave 3 and 5. The EWP principle says that two of the waves in an impulsive move tend to be equal in length, which is clearly the case here. Because of that relationship my preferred count is that we have seen a B wave triangle and not a wave 4 triangle.

Looking at the triangle, we can count a finished B wave triangle with the 1.2445 low and we should now be looking for a break above minor resistance at 1.2595, as the first strong indication that a firm test of the triangle resistance line near 1.2800 is developing and a break above here will indicate a thrust out of the triangle towards at least 1.3539 and more likely even higher towards 1.4498.

That said, as long as minor resistance at 1.2595 hasn't been broken we will have to consider the possibility of this being a wave 4 triangle. If this is the case, then minor resistance at 1.2595 will likely protect the upside for a break below support at 1.1989 indicating a thrust out of the triangle towards the downside for a final decline closer to 1.0500 before a major rally higher towards at least 1.3200 should be expected

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Elliott wave analysis of NZD/USD - Correction before lower again.

NZD/USD correction time?

NZD/USD has decline in a nice five wave structure from 0.8696 (red wave (i)). I will now be looking for a minor correction back towards 0.8592 (the 38.2% corrective target of the decline from 0.8696 to 0.8527) or maybe even to 0.8631 (the 61.8% corrective target) to end red wave (ii) and set the stage for a powerful decline in red wave iii lower towards 0.8345 and possibly even lower.

A break above minor resistance at 0.8549 indicates that the correction higher is on-going, but remember that it's only a correction I'm looking for. Once this correction is over look for a downside acceleration.

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What Duane said after joining The Elliott Wave Surfer Service

Hi EWS,

 

Great job this week!! Wish that I had more capital to capitalize on all of your great calls! The ones that I have managed to catch have been extremely profitable. I really appreciate you sharing you vast trading knowledge with us. I really look forward to reading your post everyday not only for the counts, but for the invaluable trading knowledge you share with us! 

 

Keep up the great work, the job that you have done so far has greatly exceeded my expectation!!

 

Duane 

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Elliott wave analysis of Nifty 50 - Correcting before lower

Nifty 50 correcting before lower

After we saw a clear blow-off top at 7,563.50 we saw a strong decline that closed the gab from May 16. I'm currently looking for a correction towards the 61.8% corrective target of the decline from 7,563.50 to 7,131.60, which comes in at 7,398.51. The correction from 7,131.60 has unfolded as a double zig-zag and the second zig-zag will be equal in length at exactly 7,398.51, which enforces this resistance.

To confirm that the correction is over, we will need a break below minor support at 7,259.80. The next impulsive decline should take out support at 7,078.15 without problems for a continuation lower towards 6,638.60 (the low of blue wave 4, see the chart below).


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Elliott wave analysis of DJI - Powerful decline should be seen soon

Dow Jones Industrial Index in the early part of a impulsive decline or is an ending diagonal developing?

My preferred count is still that we saw the orthodox top on December 31 at 16,588.25 and we have since seen wave A of an expanded flat correction down to 15,340.69 and wave B rallied to 16,735.51 and we are now in the very early part of a impulsive decline in wave C, which will have a bottom below wave A. Ideally wave C will decline to 14,721 where wave C will be 161.8% of wave A.

Short term we have seen wave I from 16,735.51 to 16,397.46 and wave ii is currently unfolding as an expanded flat correction towards 16,551. Once wave C is in place we should see a powerful wave iii lower through important short term support at 16,312.66 confirming the impulsive decline scenario for a move lower towards 14,721.

As long as important short term support at 16,312.66 stays intact, we need to consider an alternative count, that would call for one last rally to slightly above 16,735.51 in wave e of an ending diagonal. No matter which count is correct, then the potential upside should be limited and a powerful decline should be seen soon.  


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Elliott wave analysis of AUD/JPY - New impulsive decline developing

AUD/JPY new impulsive decline developing

In my May 19 post I said that the correction from early August 2013 likely was over and all we needed to confirm that a new impulsive decline is developing was a break below support at 94.21.

Well support at 94.21 was cleared without any problems and I'm now looking for the next impulsive decline towards 77.38, where wave C will be equal in length to wave A from 105.43 to 86.34.

Ideally we will now see the former support at 94.21 turn into resistance and protect the upside, but even a minor break above 94.21 towards 95.00 would not change the overall picture of a major decline developing over the coming weeks and months.

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Elliott wave analysis of GBP/AUD - New impulsive rally developing

GBP/AUD new impulsive rally developing

Since my last post on May 13 (see under Currencies - Miscellaneous), we have the expected rally above 1.7998 confirming the bottom at 1.7834 (the deep 81.6% corrective target of wave i) and wave iii should now develop for a rally towards at least 1.8825 . On the way towards 1.8825 we should expect the top of wave i to cause some hesitation, but it should only be a minor hurdle on the way higher.

Longer term (see the chart below) I'm looking for a rally towards the 38.2% corrective target of the decline from 2.7100 down to 1.4405, which comes in at 1.9359.  

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Elliott wave analysis of USD/JPY - Big decline soon?

USD/JPY big decline soon?

Today's I would like to present the rule of four. "This rule stats that when prices breaks or fails to break a support or resistance level the next move should significant and a big move should be expected".  

We are currently testing important support at 101.36 and a clear break below (ideally daily close below)  this support will indicate that a big decline should be expected.

Looking at the larger picture, I'm looking for a correction of the rally from 75.56 to 105.44 and at 98.36 we will have seen a 23.6% correction of this rally. A 23.6% correction will be the very least I would expect and if we only does see a correction to this levels, it will imply a strong underlying uptrend. A more normal target would be a 38.2% correction, which would cause a decline to 94.00, which also marks the bottom of wave 4 of one lessor degree, which is a very common corrective target.

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Elliott wave analysis of USD/CHF - Correcting before higher again

USD/CHF correcting before higher again

Since the fifth wave failure at 0.8700 we have seen a nice five wave rally to 0.8960. This five wave rally broke slightly above the reflex point at 0.8953, which is a very strong indication, that after a correction a new impulsive rally higher towards at least 0.9119 and likely even higher towards 0.9280 in wave (iii) should be expected.

I do think the most likely target for the correction will be at the 38.2% corrective target at 0.8859, but we will have to allow for a deeper correction towards the 50% and maybe even the 61.8% corrective targets. The reason why I think a 38.2% correction will be enough, is the very strong rally of the 0.8700 low, but often wave two becomes a deep correction, as the battle between the bulls and the bears is still almost equal. However, the Elliott Wave Principle tells us, that we should expect a three wave correction after an impulsive five wave rally and once this three wave correction is over a new five wave rally should be seen.

Looking at the larger picture. A large ending diagonal terminated at 0.8700. Normally we a quick return to the origin of the ending diagonal will be seen, which in this case is at 0.9839. As a rule it should take about half the time to get back to the origin of the ending diagonal, as it has taken to develop the pattern. The ending diagonal has been developing over the last year, which means that we within the next six month should test resistance at 0.9839. However longer term I'm looking for an even bigger rally.

PS! I have just notified my members of the Elliott Wave Surfer Service that the blow off top in Nifty 50 is over and that we have a major bottom in EUR/NZD in place.

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Elliott wave analysis of the S&P 500 - The bearish shooting star confirmed

S&P 500 bearish shooting star confirmed

In my morning mail yesterday I mentioned that a possible bearish shooting star candle could be forming, but a confirmation in form of another bearish candle was needed. This bearish candle was seen yesterday. This last rally to new highs was followed by a massive divergence by the RSI-indicator, which indicates that this rally was a weak rally. That said, we need confirmation that a possible top could be in place. The first indication of a top will be a break below support at 1,850.61, while a break below support at 1,814.36 is need to confirm the top and add considerable downside pressure.

Below I have showed the weaker indices, they are the Nasdaq 100 and the Russell 2000. The Nasdaq 100 also showed the same bearish shooting star as S&P 500, but non of these indices was even close to the top from early March. The fact, that is the small cap stocks that is leading the decline, make the rally in the S&P 500 and DJI weak rallies. Normally the small cap stocks are leading stock market rallies, which is not the case currently.

I still think the rally of the last 5 years in the stock market, should be treaded carefully, but let me be clear. We have not yet seen confirmation of a possible top in the S&P 500, the DJI, DJT and the DJU, while both the Nasdaq 100 and the Russell 2000 looks much weaker, but here too, still no confirmation.

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Elliott wave analysis: DAX in the final rally higher.

DAX in its final rally higher after its thrust out of the triangle

On Monday we saw a thrust out of the wave 4 triangle that has been building since late January. The Elliott Wave Principle says, that triangles always precedes the final move in direction on the underlying trend. The trend up to January 21, 2014 was clearly up. As the EWP says we have seen a break out of the triangle towards the upside.

Looking at the internal waves of the rally from the start of wave 1 at 4,973.92 on September 23, 2011. We can see that wave 3 became almost exactly 300% of wave 1 at 9,757.91, when wave 3 becomes an extended wave we should expect wave 1 and 5 to be equal in length, which gives us a wave 5 target at 10,867.48.

If we zoom in on the final part of the triangle and the last rally in wave 5 (see the chart below). we can see that we only are in the middle of wave 5. I will be looking for wave iii to end near 9,841.68, where wave iii will be 261.8% of wave I. Once wave iii is confirmed we should still be looking for wave iv and v to develop.

However, we have to be aware, that once wave v of 5 is in place a larger correction will develop. A correction that will be larger than any of the corrections we have seen since the September 23, 2011 low and maybe even bigger than any corrections we have seen since the March 2009 low.  


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Elliott wave analysis of GBP/USD - Top in place?

GBP/USD - Top in place?

 

We can count five waves since the 1.4809 low in July 2013. Even though I must say, that the last rally from 1.6461 leaves a lot to desire in term of being impulsive (maybe it's just part of an expanded flat correction?). No matter what it is, if support at 1.6822 and more importantly support at 1.6758 is broken we should look for downside pressure.

A break below support at 1.6822 will trigger a possible minor S/H/S top (see the 4 hourly chart below), which target is well below the critical level at 1.6758 and a break below here should at least call for a return to 1.6461. Even if we "only" are looking at an expanded flat correction the coming wave C should decline to 1.6287.

Keep an eye on the 1.6822 and 1.6758 supports for clues of a possible decline in Cable.


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EUR/JPY - Why the decline in EUR/JPY should not have been a surprise.

EUR/JPY - Why the decline in EUR/JPY should not have been a surprise.

 

This cross has traded in an ever more narrow range over the last few weeks and I was about to loose my patience. When that happens it often pays to look at something through a different pair of glasses. On May 8 I showed the above chart to my subscribers and wrote:

 

EUR/JPY - A powerful move will be seen soon

 

EUR/JPY the Bollinger Bands indicates a powerful move soon.

When the Bollinger Bands narrows (The Bollinger Band Squeeze) as we have seen it lately in this cross, it indicates that a powerful move will be seen soon. I'm still looking for a move towards the downside as the most likely outcome. That said I'm sure that it pays to follow which ever way it breaks. I will keep a close eye on this cross for clues. 

Details

Category: EUR/JPY

Published on Thursday, 08 May 2014 11:20

Written by Elliott Wave Surfer

 



 Already the next day on May 9 we had seen the first break, a daily close below the lower Bollinger band, indicating more downside pressure to come. The downside break also fitted nicely to my Elliott Wave Count from the 145.69 top. On May 9 I did this follow-up, to my post from the day before:

EUR/JPY Bollinger Band follow-up from yesterday

We saw a close below the lower (red) Bollinger Band yesterday, this was the trigger we where looking for and we should see the downside pressure mounting from here. I will be looking for a decline towards 137.00 and possible even lower towards 133.52  and 126.00 longer term. Before this correction from 145.69 finally comes to an end.

The critical level is now at 142.36 (yesterdays spike high).

EUR/JPY - Bollinger Band follow-up 

Details

Category: EUR/JPY

Published on Friday, 09 May 2014 10:57

Written by Elliott Wave Surfer

 

As I'm writing this today Saturday May 10, I can see that EUR/JPY closed Friday at 140.09. If you took the trade from the Thursday close at 140.50 you would already have a nice profit and the expectancy of much more to come.

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GBP/AUD - Time for the next impulsive rally?

GBP/AUD time for the next impulsive rally?

In my April 30 post here  I wrote its was time for a minor correction back towards 1.7920. We could still see 1.7920 tested, but it seems that the 50% corrective target at 1.8015 was strong enough to protect the downside and I will now be looking for a break above 1.8150 and more importantly a break above 1.8205 as confirmation that the next impulsive rally towards 1.9582 is developing.

That said, as long as support at 1.8150 protects the upside we could see a move closer to 1.7920, but at no point can a break below support at 1.7483 be allowed as the would cause an overlap between the possible wave four and wave one, which is allowed under the EWP.


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Nifty 50 - Long Term Top in Place?

 

Nifty 50 - Long term top in place?

We didn't quite see the ideal target at 7,043 tested (the high has been 6,869.85), but the structure of the rally of the 5,933.30 indicates that a five wave rally in wave c of v is fulfilled and the risk is turning to the downside.

The upper chart shows the weekly price action of the Nifty 50 and as can be seen above I regard the rally of the October 2008 low at 2,252.75  to Aprils high at 6,869.85 as wave 5. Wave v of 5 turned into an ending diagonal, where we saw a small throw over, which is pretty common for this type of pattern.

At this point in time, the first part of the major correction I'm looking for could be an expanded flat correction which will make it possible for wave b to reach the ideal target at 7,043, but that is pure speculation on my side as I have no evidence of that outcome presently.
Short term I will be looking for a break below support at 6,415 as the first strong indication that a long term top is in place, but a break below 5,933.30 is needed to confirm the top of a powerful decline back towards the origin of the ending diagonal at 4,531.15 and lower longer term. 

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EUR/CAD - New impulsive decline developing.

EUR/CAD - Next impulsive decline developing

Since the 1.5586 top in mid-March we have seen a nice impulsive (in five waves) decline from 1.5586 to 1.4997, this decline was followed by a double zig-zag correction, that has corrected 50% of the impulsive decline at 1.5292 (the high has been 1.5306) and the decline from 1.5306 does again appear to be impulsive indicating that a strong decline through support at 1.5080 should be expected soon. The next downside target for red wave iii will come in at 1.4353, but it could easily extend lower towards 1.3772. The long term target will be near strong long term support at 1.2127. 

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EUR/NZD - Final decline developing

EUR/NZD - Monthly

 

Is locked in a major falling channel. In August 2012 the bottom of the channel was tested at 1.4966 and we have since a small but very complex zig-zag rally to 1.7274. The b-wave of this zig-zag became an expanded triangle, which was the clue that this was only a correction. The decline from 1.7274 has been an x-wave and once this x-wave finally comes to an end close to 1.5653 we should see a new zig-zag rally higher. I would expect the next zig-zag to be much more powerful, but only time will show.

 



 

EUR/NZD - Daily

 

 Here I have zoomed in on the zig-zag rally from 1.4966. As can be seen above the (b)-wave became a complex expanded triangle that told us, that this rally of the 1.4966 low was only a correction. That said, looking at the monthly chart there is lots of room to rally and longer term I will be looking for a rally much higher, once the x-wave towards 1.5653 finally comes to an end.

 



EUR/NZD - 8 Hourly

Zooming in closer we can see that we are tracing out the final red wave v  of the decline from 1.6787. The ideal target for this red wave v is at 1.5653, where red wave v will be 61.8% of the distance travelled from the top of red wave I to the bottom of red wave iii added to the top of red wave iv. However, we should be aware that once red wave v falls below the bottom of red wave iii at 1.5766 all requirements to this five wave decline is fulfilled. There is also always the risk of a fifth failure, but the only thing we can do is to follow the decline in red wave v and to the best of our abilities break it up in a five wave decline to pinpoint the bottom.

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Gold - In the final part of wave E of the wave 4 triangle.

On April 14 I showed the above chart to my subscribers. Wave c of the major wave 4 triangle has just ended and I was looking for wave d lower. Depending on which kind of triangle that was unfolding a decline all the way to 1,180 in wave d. However, on April 28 it was clear that wave d ended at 1,268.54 as an horizontal triangle was unfolding and I showed the below chart

 On April 28 the subscribers was alerted that wave a of E was over and that a decline towards 1,283 should be expected before the final rally higher towards at least 1,321. As can be seen at the chart below, then wave b of E ended a little lower than the expected 1,283 (the low came in at 1,273).

 

Finally I made this post to my subscribers this morning, telling them that I was looking for a rally towards at least 1,316, which almost has been tested. However, I do think it's more likely that a continuation higher towards 1,321 and possibly even higher towards 1,331 should be seen before wave c of E finally is over and a major decline in wave 5 of C lower towards 1,002.65 is seen.

The Elliott Wave Principle is the only form for technical analysis that can provide a blueprint like the above, for what should be expected of the future price-action.

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US 10Y Treasuries - Yield - Look for wave C lower to 2.36

US 10Y Treasuries -Yield

Since the year end high at 3.03  we have been in a zig-zag correction. Wave A ended in early February at 2.57 and wave B ended in early March at 2.82 and we have since been in wave C lower towards 2.36 and maybe even lower towards 2.07 if wave C extends. Short term I will be looking for a break below 2.57 to confirm that wave (iii) of C lower is developing.

The short term cycle will point hard down into May 8.

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Have a nice weekend

GBP/USD - Which triangle count is correct?

GBP/USD - Long Term Working Count

This count has been my preferred count for a long time and has worked well. Wave E of the triangle became very small, but I have seen this many times. E-waves of triangles should always be treated carefully. This count calls for a rally in wave C higher towards 193.91 longer term.

GBP/USD - What if this was the correct count for the triangle?

It's possible to make a case where wave E of the triangle ended at 1.4809 and if this is the case, then wave (C) will only make it to 1.8350, where wave (C) will be equal in length to wave (A), but that is still a powerful rally from here. Could wave (C) be just 61.8% of wave (A)? Yes it's possible, if this is the case wave (C) would only make it to 1.6997 and that would be below the top of wave (A) at 1.7042, which makes this option very unlikely.

GBP/USD - Daily count for the alternate scenario.

This count shows that we possibly could be in the last wave higher from 1.4809. As we have already broken above the 100% target of wave (i) I will be looking for a continuation higher towards the 38.2% target of the distance travelled from the bottom of wave (i) at 1.4809 to the top of wave (iii) at 1.6603 added to the bottom of wave (iv) at 1.6248 and that would call for wave (v) at 1.7239. If however, wave (v) becomes 61.8% of the distance from the bottom of wave (i) to the top of wave (iii) that would call for a continuation higher towards 1.7714,  which is pretty close to the 1.8350 target, but not quite there. So how could we make it to 1.8350? If the next corrective pattern becomes an expanded flat, where wave B rallies above the starting point of wave A the target at 1.8350 could be reached and satisfy the longer term pattern.
Will just have to see how the waves unfold and which count proves correct, but remember the trend is your friend.

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