Elliott wave analysis of NZD/USD - Wave (ii) ended at 0.8749

NZD/USD wave (ii) ended at 0.8749

Wave (ii) corrected 92% of wave (i). Under the Elliott Wave Principle wave two is allowed to correct all of wave one, but can never ever break the origin of wave one.

During the last part of the wave (ii) rally we have seen the reliable 3 wave push to a top pattern, which indicates a top is in place and that we soon should see a break below support at 0.8675 and more importantly a break below 0.8636 confirming the top for a new decline to 0.8399 and lower towards at least 0.8136 in wave (iii).

Remember the 3 push to a top pattern has to be followed by three lower tops on the indicator, which also is the case here.

Gold seen from a time perspective

Gold seen from a time perspective

I was looking at gold from a time perspective and found some interesting relationships.
First of all if we look at the major consolidation from September 25 - 2011 to September 30 - 2012 it took 53 weeks the ongoing consolidation has taken 51 wekks, counting Fridays in. So time equality will be seen in two weeks time.

If we look at the triangle itself:

Wave A took 9 weeks

Wave B took 18 weeks

Wave C took 11 weeks

Wave D took 11 weeks

Wave E has taken 3 weeks till now. If wave E takes two weeks more it will then have taken 5 weeks to develop. 5 is a Fibonacci number and is right in the middle of half of 9 and 11 weeks.

From a time perspective that means we could have wave E in place during week 27 from June 30 to July 4. Once wave E is in place we should look for the final thrust out of the triangle towards the downside for a decline to the ideal target at 1,002.

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Elliott wave analysis of Gold - A larger triangle is building

Gold larger triangle developing

With the break above resistance at 1,308.00 there can be no more doubt, that a larger triangle is developing. We are currently in the later part of wave e (the last leg of the triangle), but we are not quite there and will have to let the triangle unfold fully before looking for a break out of the triangle.

Wave e of the triangle tend to have a Fibonacci relationship with wave d, so I would look for a move to the 61.8% corrective target at 1,332.15 as the first possible termination-point for wave e, but wave e could move higher towards 1,345 and even 1,356 depending on the strength of wave e.

Short term I will be looking for a correction towards 1,300.55 before the final rally higher towards the first target for wave e at 1,332.15. To indicate that a top is in place a break below support at 1,284.91 is needed and more importantly a break below 1,258.63 confirms the top for a thrust out of the triangle towards the downside for a decline to 1,002 as the ideal downside target.

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Elliott wave analysis of EUR/USD - Correction from 1.3503 continues

EUR/USD the correction from 1.3503 continues

With the clear break above 1.3587, we finally got the clue needed to tell us, whether the correction from 1.3503 ended at 1.3587 or it only was part of wave c higher. We now know that it was part of wave c higher to 1.3690, where wave c will be equal in length to wave a. At 1.3690 wave (ii) will also have corrected 38.2% of wave (i). A correction of only 38.2% in wave two is a rather small correction and indicates underlying strength in this cross.

That said, we have to remember, that we don't yet have any knowledge, where wave (ii) will end. All we can do is look at the facts and try to access the possibilities and at this point they favour, that wave (ii) terminates near 1.3690.

Short term I'm looking for red wave iii to end near 1.3644 and call for a small flat red wave iv before the next minor rally higher towards 1.3683 to end red wave v and red wave (iii) and then another flat correction 1.3618 before the final rally higher towards 1.3690 to end red wave (v).

Once wave (ii) is over near 1.3690 I expect a new powerful decline towards 1.3200 and possibly even lower.

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Elliott wave analysis of USD/JPY - Triangle could be over soon

USD/JPY the B-wave triangle could be over soon

The decline from 102.79 only made to 101.57 and we have to consider this as wave (d) and the on-going rally as wave (e) to end the triangle. If this is the case, then we should expect wave (e) to top out near 102.28 for a break below support at 101.69 and more importantly below 101.57 that would confirm a continuation lower towards 100.80 and lower towards 97.60 as the first possible target for wave C.

At no point should we see a break above the top of wave (c) at 102.79 as that would invalidate this count.

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Elliott wave analysis of Silver - Next impulsive decline soon?

Silver next impulsive decline soon?

I have been reviewing my long term chart of silver and came to think of the triangle of GBP/USD. This triangle ended with a relative small wave d and e and this could also be the case for silver. I have drawn up the new possible triangle with a thicker blue line.

If this count is correct we should see resistance at 19.99 protect the upside for a break below 19.48 and more importantly below 19.16 for a continuation lower to 18.64 and the 16.43 in wave 3.

A break above 19.99 will invalidate this count, but not necessary the possible new triangle.

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Elliott wave analysis of GBP/USD - Why an expanding would be a better fit

GBP/USD why the expanded flat would be a better fit

I was reading some of my previous longer term analysis this afternoon and I was reading my post on GBP/USD from May 1 under the name -Which Triangle Count Is Correct.

I think it's safe to say that the count where wave E of the major (B)-wave triangle ended at 1.4809 in early July 2013 is the best count. Looking at the internal waves of the this rally we can see some very interesting relationships between them. Let's take a look at them:

Wave 2 corrected 50% of wave 1

Wave 3 became a extended wave and was 423.6% of wave 1 at 1.6794 (the top of wave 3 came in at 1.6822)

Wave 4 became very shallow and sub-normal as it didn't even correct 23.6% of wave 3

Wave 5 should ideally become 38.2% or 61.8% of the distance travelled from the bottom of wave 1 to the top of wave 3 added to the bottom of wave 4. However, wave 5 ended at 1.6996. which was just 1 pip above the 61.8% target of wave (A) at 1.6996.

Looking at the next lower degree of waves we have the following relationships:

Wave (ii) corrected was a deep correction, correcting exactly 81.6% of wave (i) at 1.5099

Wave (iii) extended and became 361.8% of wave (i) at 1.6595 (the top of wave (iii) came in at 1.6603)

Wave (iv) corrected exactly 23.6% of wave (iii) at 1.6248

Wave (v) would have been 38.2% of wave (i) through wave (iii) added to the bottom of wave (iv) at 1.6845, the top of wave (v) came in at 1.6822

Going down one degree more the relationships is as follows:

Wave ii corrected a little less than 50% of wave i at 1.5408 (wave ii ended at 1.5426)

Wave iii didn't really become and extended wave as it only became 138.2% longer than wave i at 1.6787 (the top of wave iii came in at 1.6260)

Wave iv corrected almost perfectly 50% of wave iii at 1.5843 (the bottom of wave iv came in at 1.5850)

Finally wave v became almost exactly 61.8% of the distance travelled from the bottom of wave i to the top of wave iii added to the bottom of wave iv at 1.6574 (the top of wave v came in at 1.6603).
When we find relationships like these we can be pretty sure we have the right count, but what about wave 5 which is out of tune? I have many times seen, that the ideal target is reached by the B-wave of an expanded flat correction. If this should be the case here too, then wave B will be 161.8% of wave A and end at 1.7186, very close to the 38.2% target of wave 1 through wave 3 at 1.7235 (see the chart below).

A rally towards 1.7235 will also clear the (A) wave high at 1.7042 and make this a much prettier count, that is why I think that an expanded flat is the better fit here.

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Elliott wave analysis of Russell 2000 - S/H/S top building?

Russell 2000 - S/H/S top building?
While both the S&P 500 and DJI has made new all time highs lately, the broader Russell 2000 has not even been close to its March 2014 to at 1,212.82.

As can be seen on the weekly chart above, it broke below the support line from November 2013 and is currently back-kissing this former support line, which now acts as resistance. At the same time a S/H/S top could be building. To confirm the top-formation we need a break below the neckline support at 1,082.53 until then this potential top-formation is nothing more than just a potential top-formation.

If we zoom in on the minor rally from 1,082.53 we likely need one last rally to just above 1,179.84 to end wave B and the possible right shoulder. Short term a break below 1,144.10 will be the first warning, that the top could be in place, while a break below 1,118.66 is needed to confirm the top for a test of the neckline support at 1,082.53.

The strong divergence between the Russell 2000 and both the S&P 500 and DJI, should be taken as yet another warning, that a long term top could be close by.

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Elliott wave analysis of Facebook - B wave almost over

Facebook wave B almost done

Facebook has been a wonder to behold since its IPO in May 2012. At first the IPO seem to be an disappointment as FB quickly dropped from 45 to 17.55 in early September 2012. If you have been following me on my blog (The Elliott Wave Surfer) knows, that I call the bottom and the following rally almost to perfection.

The rally of the 17.55 low has been a perfect five wave rally to 72.59 (a rally of 313%). The internal Fibonacci relationships between the waves has been just perfect.

Wave 1 was a pretty small wave rallying from 17.55 to 23.24.

Wave 2 became a simple zig-zag correction, that corrected almost 81.6% of wave 1.

Wave 3 became an extended wave by being 685.4% of wave 1 at 58.80 (the top of wave 3 came in at 58.96).

Wave 4 alternated from wave 2 by being an expanded flat correction.

Wave 5 became a bit unusual as it ended at 50% of the distance travelled from the bottom of wave 1 to the top of wave 3 added to wave 4 at 72.68 (the top of wave 5 came in at 72.59)

Since the wave (3) top at 72.59 we have been in a correction of which we have seen wave A down to 55.44 and wave B, which is still unfolding has become a complex double combination. However, wave B has almost corrected 61.8% of wave A and a small five wave rally out of the minor b-wave triangle seems to be complete or will complete shortly (see the 4 hourly chart below).

I will now be looking for signs that the correction from 55.44 is over. The first sign will be a break below minor support at 64.30 and more importantly a break below support at 61.79 that will confirm, that wave B is over and wave C lower towards at least 48.86 is developing.  

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Elliott wave analysis of the DJI - The next target cluster

Dow Jones Industrial Index - Next target cluster

With the clear break above the possible 16,744 target (see my post from May 13) we should focus on the next target cluster, which comes in from 17,065- 17,150.

At 17,064.82 wave c of the expanded flat will be 138.2% of the distance travelled from the top of wave a at 16,588.25 to low of wave b at 15,340.69.

At 17,149.81 wave D will be 138.2% the distance travelled From wave B at 14,198.10 to wave C at 6,470.11

If 17,149.81 is broken clearly we will have look even further north towards 17,359 as the next possible target, where wave c of the expanded flat correction will be 161.8% of the distance travelled from the top of wave a at 16,588.25 to the low of wave b at 15,340.69.

The first strong indication of a long term top being in place is a break below 16,588.25 and the top will be confirmed upon a break below 16,015.32. That means as long as support 16.588,25 holds firm we should look for a continuation higher towards the 17,065 - 17,150 area, before the next possible top.

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Elliott wave analysis of Crude Oil - The B-wave triangle ended early

Crude Oil the B-wave triangle ended early

The final e wave of the B-wave triangle we have been tracking lately ended early at 101.60 and wave C higher towards 107.73 and maybe even higher towards 110.71 is developing. Short term the former triangle resistance line, which has now turned into support will protect the downside for a move above 105.22 towards 107.73 and maybe higher.

Only an unexpected direct break below 103.07 will turn the picture bearish, but this is not a likely scenario.

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Elliott wave analysis of DJI - Is the ending diagonal finished?

DJI ending diagonal in place?

My preferred count is still, that we saw the top of wave D of the huge expanding triangle (megaphone formation) the last day of 2013 at 16,588.25 and the decline to 15,340.69 was wave A and the rally since 15,340.69 has been the B wave of an expanding flat correction and wave C should take over soon.

If wave B has taken the shape of an ending diagonal, then the upside potential from here is limited to 17,071.30 as wave three (c) can not be the shortest of the waves. We also saw a classic break above the ending diagonal resistance-line yesterday, which is pretty common for this kind of formation. If however, a top is in place or close by, we now need some confirmation, that is the case. First of all we need a break back below the ending diagonal resistance-line near 16,794, but more importantly we need a break below the ending diagonal support-line near 16,475 and more importantly a break below 16,341.30 will confirm the top for a quick return to the ending diagonals origin at 15,340.69 and lower.

Let me be clear. I'm looking for a top soon, but until we see some confirmation, that a top could be in place, then the uptrend from March 2009 is firmly in place. However, I still think that it will be prudent to work with close stops to protect as much profit as possible. No matter what, I do not think it's time to jump on this steam train as it's running out of steam and soon it will be all
downhill.

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Elliott wave analysis of USD/ZAR

USD/ZAR last rally higher developing
Since the early May 2011 low at 6.5200 we have seen a impulsive rally here. Not the most pretty impulsive rally, but it does apply to all of Elliott's rules.

As can be seen on the chart we are currently in black wave v (the final wave higher). Black wave v itself can be broken down into four red waves till now, which tells us we still have one final move higher to expect in red wave v. This red wave v seems to be well under way for a rally towards at least 11.3986. At 11.3986 red wave v will be 61.8% of the distance travelled from the bottom of red wave i to the top of red wave iii added to the bottom of red wave iv.

Looking at the larger count, black wave v isn't expected to end before we reach 12.0120, where black wave v will be 61.8% of the distance travelled from the bottom of black wave i to the top of black wave iii added to the bottom of black wave iv. How does that fit with the final red count? If red wave v becomes an extended wave and rallies 100% of the distances from the bottom of red wave i to the top of red wave iii and add that distance to the bottom of red wave iv, we will get a target of 12.1049 . It seems that a cluster of possible target is forming between 12.01 and 12.10.

If we look at the larger picture (see the chart below). We could be working on a new impulsive rally higher as the weekly count suggest, This count also have a possible target at 12.0352, within the cluster zoon. However, we will have consider the possibility of a huge triangle developing. If a triangle is developing, then we shouldn't expect the top at 11.3890 being broken before the final wave E takes over and a break below the support line near 10.2580 is seen.

I'm slightly in favour of the impulsive rally developing, but I will stay alert to any signs of a top before 11.3890, that would shift the odds in favour of the triangle scenario.  

No matter which count proves correct, we have to painfully aware, that the on-going rally will be the last before a major decline is seen.

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Elliott wave analysis of NZD/USD - Gann lines added

NZD/USD accelerating lower

When the expanded triangle top broke on May 28 we knew that a important top was in place and that a strong downside pressure should be seen.

I have added the important 2x1 Gann line from the top as this should continue to act a strong resistance (I don't expected it to be tested any time soon thus) and I have added the 1x1 line from the intermediate bottom at 0.8623 as this should act as support. I do expect this line to be broken slightly by red wave iii and by red wave v before a larger correction is seen in wave iv.

Short term I expect resistance at 0.8440 will protect the upside for an acceleration lower towards 0.8239 as the next major support. That said only a break above 0.8477 will delay the downside pressure, but this outcome is by no means the preferred outcome.

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Elliott wave analysis of Apple - Is Apple a buy here?

Apple is it a buy here?

Since the top in mid-September 2012 when Apple topped out at 705.07 a decline to 385.10 was seen by mid-April 2013 and since then Apple has regained almost all of the lost ground, but is Apple a buy again here?

To figure out where we are in the larger picture, we will have to go back to March 2000, when Apple peaked at 37.59, I have marked this high as wave (1) and the following wave (2) decline corrected almost all of wave (1) and ended in April 2003 at 4.83, from where wave (3) took off.
When we look at wave (3) we can count a nice five wave rally, with some nice wave relationships. Let's take them one at the time. Wave 1 rallied from 4.83 to 202.96 and was followed by 61.8% corrective decline in wave 2 to 78.20 (the ideal 61.8% corrective target would have been at 80.51). Wave 3 became almost perfectly 161.8% * wave 1 with the high at 404.50 (the ideal target would have been at 399.13). Wave 4 was expected to be a shallow correction as wave 2 corrected most of wave 1 (remember Elliott principle of alternation between wave 2 and 4). However, wave 4 only corrected 14.6% of wave 3, which is an unusual small correction and was a warning, that the final wave 5 would like be strong. As wave 2 was a simple zig-zag correction wave 4 should be either a flat of a triangle and it became a triangle (although a very small one). Wave 4 ended at 380.48 and the stage for wave 5 was set. Wave 5 did become a powerful wave and ended at 705.07 just below the equality target with wave 3. R.N. Elliott did state, that during a five wave rally two of the waves tend to be equal in length.

Then we are back to the correction from 705.07 and whether Apple is a buy here? I will say no. Wave (2) was a deep zig-zag correction and due to Elliott's alternation principle we should expect wave (4) to be a flat or a triangle consolidation. The decline from 705.07 to 385.10 was clearly a zig-zag correction and the rally of the 385.10 has been a overlapping non-trending double zig-zag rally. The zig-zag structure could imply that a triangle is unfolding and in this case we should expect resistance here at the 81.6% at 644.02 corrective target ideally will protect the upside for a decline towards 446.
However, at this point we can't disregard the possibility of an flat correction unfolding. If a flat correction is unfolding, then we still could see a move slightly higher close to the former top at 705.07 before turning lower in wave C of (4).

In case of a flat correction, Apple at best could make a 10% profit, but the risk is much larger and I don't think this risk is worth taking at this point.     

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Elliott wave analysis of S&P 500 - At the top?

S&P 500 at the top?

A new all-time high was posted by S&P 500 on Friday keeping the uptrend firmly in place.
I have being reviewing the possible counts over the weekend and think the above count does look as a good possibility. Since the low in 2009 at 666.79 we have seen a impulsive wave A to 1,219.80 and a triangle consolidation as wave B, which ended at 1,158.66 and wave C higher is currently in motion.

The why is this option a good possibility? Wave C would have been 1.382 * wave A at 1,922.92 and the high on Friday was 1,924.03. We also have a possible ending diagonal as the last part of wave 5 of C all pointing towards a top being in place soon. However, as always we need confirmation, that the top could be in place. The first strong indication of a top will be a break below 1,917.03, while a break below 1,909.82 will confirm the top for a decline towards 1,869.65 and below.

You should also take a look at the hourly chart I posted on Friday and see how much the two patterns look alike. They are clearly fractal.

As I said in Friday's post. Be prudent at work with tight stops here, because once this market tops, and do believe me it will top out soon, then the downside action could prove very strong. 

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