Here is an interesting challenge presenting from recent price action in USDJPY, where price appears "to have been going nowhere". However, a methodical approach through Elliott Wave counts might simplify the field in terms of geometric options and probable direction.
DECIPHERING THE ELLIOTT WAVES:
The recent price action in USDJPY may have left some traders wondering what direction might the market take especially as we face the following blank price field and contemplate recent price gyrations:
First, let's untangle the recent price action by simply recognizing simple a-b-c features of zig-zags with 5-3-5 internal wave construction:
Next, let's acknowledge that the recent swift down move has all of the respectful characteristics of a motive wave, defined by intermediate waves (1), (2), (3), (4) and(5).
Let's also situate ourselves in relation to the current price action and wave count, by assuming that Intermediate wave-(4) has completed with 5-3-5 internals of a zig-zag, and that we are currently in the development of an Intermediate wave-(5):
It is also well worth noting that Elliott Wave's Rule of Alternation appears to apply here, as this Intermediate wave-(4) took on a simpler a-b-c internal structure of minute degree expressed across a larger amplitude compared to Intermediate wave-(2), which displays a more complex internal structure across a much flatter amplitude.
Now, turning to Intermediate Wave-(5), perhaps it has become apparent that the dominant geometry expressed by points 1-2-3-4-5 in the field appears as an Elliott Wave Ending Diagonal, which characteristically appears in 5th wave of impulses (as well as wave-c of flats and zig-zag corrections), thus ending the entire bearish impulse at minor degree wave-5.
As an aside, please also note that the recent upswing in price may have been caused by this internal Elliott Wave Contracting Triangle ("CT"), expressed in blue capital letters A-B-C-D-E, whereby price rallied following this geometry's signature "under-throw":
OVERALL:
Price is expected to rally and validate the 2-4 Line of the dominant Elliott Wave Ending Diagonal, assuming that this is the most probable developing geometry that would offer the mechanism of next price action.
However, the interim move will require some patience, as I would expect points 3 and 4 of said geometry to develop in a zig-zag pattern, validating internal geometric lines as shown in following chart - Note how a 0.618 Fibonacci retracement level aligns with the internal CT's lower border projection and highlighted R/S level (large arrows across band):
Ultimately, I would expect the entire Intermediate bearish impulse to end in a truncation, as shown below:
INVALIDATION:
Above program would become invalidated if price where to rally in the following fashion. For this contrarian inquiry, I have forced the Predictive/Forecasting Model to define a probable bullish target, as shown in the chart, and added a possible Fibonacci extension to support this alternate plan:
Best,
David Alcindor Predictive Analysis & Forecasting Durango, Colorado - USA
Expecting price to meet resistance at defined 120.069 level - RSI's correlating pattern with price is worth heeding, as well:
David Alcindor
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22 OCT 2015 - Chart Update / Tech-Note:
Price ignored the speculative zig-zag I had anticipated prior to validating the upper border of the channel, and instead went right for it:
In Fibonacci terms, taking point measurements from Intermediate (4) to Minor-4, this retracement is currently resting at 0.750 (a great preparatory signal level), and is expected to remains subdued to the 0.786 handle.
Worth keeping under close watch - I decided to get out of my position from Minor wave-3, expecting a near-completion of current Minor wave-4, and thus a probable decent to 116.707, which is likely to act as a temporizing R/S level (i.e.: expect a reaction to be capped by the under-belly of the 1-3 Line (BLACK) equivalent to an aggressive counter-trend of 0.214-FIB (AFT Method), although if this level of resistance failed, then the A-C Line (BLUE) would present as a next-probable contender, in which case, a significant 0.385-FIB would occur.)
This is all speculative, but a game plan based on objective data (Fibonacci levels, structural levels and R/S lines) can offer a probable plan of anticipation, sort of a structural game theory.
Best,
David Alcindor
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25 OCT 2015 - Chart Update:
David Alcindor
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29 OCT 2015 - Chart Update / Tech-Note:
BOJ decision remains pending - Price continues to move as forecast:
David Alcindor
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29 OCT 2015 - Chart Update / Tech-Note:
TG-1 = 121.645 remains a "make-or-break" level, likely to INVALIDATE the bearish target defined in the original analysis.
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02 NOV 2015 - Chart Update / Tech-Note:
Price mulls higher-highs:
David Alcindor
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03 NOV 2015 - Chart Update / Tech-Note:
Price continues to rally. TG-1 remains in sight. As you may recall, TG-1 is a quantitative target ("Quant-Target"), which tend to define future R/S level if entering into new territories, or confirm prior R/S levels when moving into prior levels.
Quant-targets will also react in a limited fashion, retracing in the Fibonacci order of 0.386 to 0.618, in contrast to Qual-Targets, which tend to define reversals.
Thus, expect a limited retracement upon validation of TG-1.
David Alcindor
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07 NOV 2015 - Chart Update / Tech-Note:
Price continues to strictly adhere to the bullish forecast, with TG-1 = 121.645 - 20 OCT 2015 knocked out of the way without any interim due retracement (as the nature of these Quant-Target typically call for).
Instead, price continues to rise to the Qual-Target: TG-Hi = 125.225 - 23 OCT 2015. As mentioned in analyses done in minor and mojor USD crosses, as well as #gold and #euro, there is a unanimous voice calling for a significant decline in the USD.
Let's keep this Qual-Target in mind:
David Alcindor
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11 NOV 2015 - Chart Update / Tech-Note:
Watch for this potential retracement risk ... Geo's Off-Set Rule #2 would offer support as shown:
David Alcindor
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12 NOV 2015 - Tech-Note:
Adding a SL against the proposed retracement. Issue here is potential geometry pointing down for retracement (not reversal) versus Predictive/Forecasting Model dangling unanswered target above.
As mentioned before, Geo is best to define a probable trajectory, whereas Model is best to define end-point.
David Alcindor
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12 NOV 2015 - Chart Update:
David Alcindor
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13 NOV 2015 - Chart Update / Tech-Note:
Price continues to carve lower-lows and lower-highs. A mechanism of ascent back to TG-Hi = 125.225 remains the object of this smaller timeframe analysis. Geo's Off-Set Rule #2 remains the highest probable mechanism to do so.
I might not agree with the intermediate Target Price (mine is higher but in the same direction) but Kuddos for the broken down analytical approach with multiple charts. Much easier to follow and a testament to your succint analytical abilities David. Thank you for sharing!
4xForecaster
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Thank you @ananora23 - I appreciate your feedback. Extensions, projections and probability statements are made based on the lowest risk, most probable options - There is an infinite way this may unfold, but the market geometries exist over only a few letters, limited vocabulary and strict syntax, thus limiting the number of probable narratives in price action - The analysis simply draws on this assumption.
Feel free to share alternate views. Understanding of what may really occur would be best supported by contrarian, alternative or other creative views, all of which is encouraged to post here and in any other analyses I have posted recently, of course.
Best,
David Alcindor
Heelfan23
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Hello David. What a great day of receiving updates to all of your extraordinary forecasting! At this are you seeing any kind of retracement, or a brief pullback? RSI has moved to the overbought area, and seems to be due for some kind of retracement. Thank you again for all of the great analyses!
4xForecaster
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Hello @Heelfan23 - There are two sorts of targets which are generated by the Predictive/Forecasting Model. One is defined by numbers (TG-1, TG-2, ... TG-n) and the other by a qualifier (TG-Hi or -Hix, andTG-Lo or -Lox).
I mention these simply because quantitative targets (TG-1, TG-2, ... etc) will often revisit the level of the target that was hit - In this case, the TG-1 stands a good chance for this to occur, although this is by no means a consistent feature of these Quant-Targets.
David
Heelfan23
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Thank you so much for the response! That is exactly where I was thinking there would be a pullback to, if one were to occur. I just wanted to get your thoughts on it as well. Have a great weekend!
There are several "Chatrooms" in which I do most of the "brain chatter" with myself. These rooms are more like back-stage "ateliers" where I prepare trades in advance. You are welcome to wipe the dust off of the windows and peek in. The glass is rather thick, so I rarely reply to taps on the glass or even shouts from the door. I work very late hours in the ER and I use these moments to collect thoughts, ideas, concepts, and lay it out there in the open.
Following are a few of the rooms where I prepare trading ideas before they become shared on Twitter, Linked-In, Google, Facebook, StockTwits and TradingView communities - So, if you want to have first peek, feel free to stop on by. If I don't reply and it smells like coffee, it's because I might be in the basement, hammering other charts in another "brain chatter" room:
ATHENA - Geometric Methodology Of An Elliott Wave Pattern:
... Letting the reciprocal lines tell you where to hold, stop and go
Here is the latest room I opened - Here too, not much peer to peer chatter. Just free-sharing a new pattern methodology. If you liked the "Geo", then have fun with this one:
Feel free to capture and share links - I do apologize ahead for not immediately or rather rarely replying to inquiries within these chatroom - Best is to contact me through the threads, such as this one, where the discussion can reach a far greater number of traders and benefit not just the chatroom participants, but the larger community of traders here on TradingView and outside.
Also, these chatrooms are not spaces where I would engage traders into circular arguments, as I really have no opinion of the underlying market for which the analyses are provided. This is all educational, and if you need real trading advice, seek that of a certified professional - I am a non-certified life-time student of the market. I am the author of several proprietary (i.e.: not for sharing) patterns (Great White, Janus, Euclid) and lesson-based shared methods (EAGLE, AFT), but I do spend most of my time double tasking between broken people and breaking markets.
Best,
David Alcindor
PS: If you like certain charts, ideas, concepts, then given it a thumbs-up so I know which one to delve into and which one to lay off of. And, if you think these are ideas that can advance the edification of a peer, then I thank you ahead for sharing - I don't make money via memberships. Just trading my own ideas and free-sharing ... Just a better credential, if I may say so.
Cheers to your profitable trades,
David
ChatchaiVong
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thank so much
Oztrade
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Hi David, nice analysis you have here - I have been watching this pattern form for some time, not physically sitting here watching it lol. But lets see if we get to the 88.6% for our BAT Completion.
4xForecaster
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Hello @Oztrade - Yes, several patterns could be defined through this span. However, if price fell to 0.886, it has less chance to retrace and more chance to trace out a Bullish Crab with point-D carving out a lower low - This is just taking a glance through the Model.