Look beyond ordinary analysis
Last week I was looking for a rally in EurUsd, this week it came.
But there is a complication in this wave count
and a big opportunity also!
over the last few days I have been rethinking the larger structure and the position we stand at today.
Given the extended declone in the price of late,
I am now thinking that the alternate wave count is more fitting to the price action.
In the bigger picture, this means DOOM for the Euro!!!
If you have been following my analysis for any lenth of time you will know that the larger trend for Euro is to the downside, especially against the dollar.
over the last 18 months the market has been tracing out a very large contracting triangle.
Right now we stand in wave ‘e’ red, of that triangle.
and the alternate wave count views that ‘e’ wave as already complete!
this inturn means that the down trend should take hold again shortly if it has not already done so.
either way I think we are in for fireworks on this chart soon, and there is not a thing that the central bank and political class can do about it.
the waves hold the power!
I have labelled the rise off the lows this week as a possible ‘a,b,c,’ rally.
this rally when complete will finish wave 2 blue, and there lies the opportunity to short.
It could be the trade you will tell the grandkids about!
for next week I will be watching the rally to see if the alternate wave count is confirmed or not.
watch this space!
This week I placed a trade on Cable and so far it has worked out well.
the position is now well protected and whatever happens from now on is all a bonus.
I am of the opinion that the rally has another way to travel before extinguishing and completing wave ‘ii’ black.
I have so far labelled the expected move as a five wave affair to the upside in green to complete wave (c) grey.
this would leave the larger form as an upward flat correction.
this is open to change though as the wave develops.
The eventual structure is of little consequence on the overall target of 13600.
I think this looks more likely now after this weeks trading.
the rally so far completed waves ‘i’ and ‘ii’ green.
Wave ‘iii’ green could have some more room to the upside to complete given the sequence of 1,2 moves off the low.
then we should get a sideways move in wave ‘iv’ green, and wave ‘v’ should carry us into that upper target.
that’s the theory of course, lets see what the reality brings.
the fact that prices moved above the wave (a) grey high confirmed to me that the rally is the most likely course from here.
the invalidation point for this wave count lies at the wave (b) low.
For next week, it is a matter of managing the trade and watching the waves unfold, the hard work is done!
My old pal Dollar Yen, how you hurt me so!
I have been anticipating a decline in dollar yen foar a few weeks now and all the market wants to do is rise!
I have not chanced my medium term view though.
I still think that the most likely path for prices is a decline into the 9600 region to complete the current overall corrective decline that is in force for over a year now.
the rally we have experienced of late is best viewed as an expanded flat correction to the upside in wave (b) grey.
I think we have completed that wave up and wave (c) grey will begin soon.
you can see that the MACD has been showing a divergence for the last week and is on the verge of a centre line cross to the downside.
Upside momentum has stalled and the RSI is overbought.
On tha chart I have shown the Fibonacci greid extended over wave (a),
the 50% retrecement level lies at 10404
You can see that wave (b) reached that level today,
‘b’ waves typically reach the 50% retracement level before turning back into the trend.
For next week that is exactly what I am expecting, wave (c) should start soon, and I intend to trade the decline.
The gold price continues to trundle along in a corrective form for now!
but I don’t think this will last for much longer.
I think we are on the cusp of another leg up in gold, and 1500 could well be on the cards before the next wave up is complete.
let me walk you through my thinking.
the gold price seems to be tracing out a three wave recovery in a wave form called a double combination.
this is labelled w,x,y in green on the chart.
Wave ‘w’ had three large internal moves,
wave ‘x’ was an expanded flat correction,
and wave ‘y’ is now completing another three moves to the upside.
the final leg up of wave ‘y’ is about to begging according to this wave count.
this price range between 1300 and 1320 has acted as resistance and support five times over the last few months,
so it is an important level,
this inability to move down through this level is pointing to another wave up to complete the pattern.
the most recent correction labelled in black seems to be another combination flat wave.
the lower trend line should hold the price and form the base for the next leg up.
for next week I will be keeping an eye on that lower trend line.
if we get some confirming price action on an hourly chart, I will notify subscribers to the opportunity developing.
when the next rally is complete, you will see stories about the robust gold price and how it is a hedge for this and that and it will always rise no matter what!
at that point we will know the rally is over!
The Dow is looking very interesting at this point in time.
WE have now gone through 4 weeks straight, with zero net gain in the index!
there is a big move coming, I wager this big move will be to the upside.
and going by the upper trend channel, this move could be in the 1000 point range.
So it would be a nice one to catch!
the medium term wave count in yellow has so far traced out a completed waves one through four with wave five yellow yet to complete.
the flat market over the last month leads me to believe that the market is stuck within the initial portion of wave (v) yellow,
the low of wave (iv) yellow has held so far,
so it is possible that we are seeing the a fifth wave extension building.
A fifth wave extension would take the market above the 19000 handle, possibly as high as 19500.
If you look at the chart I have shown the Fibonacci grid placed at the low of wave 4 blue.
The grid extends 262% of wave (i) yellow form the low in wave 4 blue.
This gives us a possible target of 19590 to finish wave 5 blue.
A rally of this size would bring the price right up to meet that upper trend line.
If the low of wave (iv) holds we could well see the market move higher soon.
I may try placing a buy order at the most recent all time high.
a move passed this point would confirm the wave count.
that’s it for this weeks Elliott wave picture.
Sign up today and get Weekly Technical Analysis including Elliott Wave perspective, Commitments of Traders Reports, Free Trading Alerts and much more