As described on the chart, the wave picture looks unfinished to the upside for Gold. Eventually, I'm looking for a move above 1300 and possible as high as 1450. This would result in a larger degree of trend 3 wave move higher that began from the Nov 2014 low. So far, we appear to have A-B in place. We may be in the midst of circle C higher. If that is the...
GBPUSD has caught my eye recently. Today's high is an interesting juncture where multiple wave counts suggest at least a 200 pip sell off. In light of the fundamental news out of UK and the recent Sterling strength, this is a tough one to swallow. No real oscillator divergence is showing up yet. However, in sticking to the technicals on the chart, each of the...
GBPJPY is casually on my radar. SSI (sentiment reading) is showing twice as many sellers as buyers. These sellers have already committed to their position so they become a future pool of buyers. From a technical perspective, 195 is the 1.382 expansion of the Dec 2014 high. Much higher than 195 and we exit the false breakout zone (from an elliott wave...
See the notes on the chart for the wave counts we're following. Additional commentary below. Since the June 4 high, the waves in the EURUSD have become muddied. We wrote about some possibilities the muddied picture presents on June 10 "EURUSD Bears Waking Up". At that point, we were leaning towards a multi-hundred pip sell off. A sell off did ensue, but not...
Current retail positioning on the NZDUSD is +3.75 as 79% of traders are currently positioned to the long side of the NZDUSD trade. This is important because if the pair continues to drop significantly, these traders will likely get stopped out, margin called or simply close their trade out of frustration in the position. This means they become a future supply of...
The wave picture has gotten fuzzy over the past 24 hours. I am beginning to lean more towards today's high as a 'B' wave which suggests a mutli-hundred pip sell off is on the horizon. If it develops, I'll adjust the labels on the chart when counts get eliminated. Note the divergence on RSI...that is also indicative of B waves and ending waves. On a side note,...
The dip to this morning's low lines up with 2 wave relationships. I redrew the red 2-4 channel lines to 'frame' the potential stopping point for wave v. The dip was anticipated (see "Channel Support for USDJPY at 124.50 and 123.00") and reached: 1) 38.2% retracement of wave iii 2) Equal wave measurement from the June 5 high to this morning's low As a result,...
One of the things I like about Elliott Wave analysis is that it helps us determine trend and where are are at in the trend. I'm currently listing the pair as in wave (iv) of blue circle v of purple 5. As you can tell by the count, we are approaching a major top. For those not familiar with Elliott Wave five waves are in the direction of that trend. According...
The ending diagonal pattern is one of my favorite Elliott Wave patterns. It offers defined risk and focused rewards typically yielding excellent risk:reward ratios. As you can see from the chart above, this ending diagonal is counted to finish at least 3 degrees of trend ('C' wave could also be the ending a multiple zig zag making it 4 degrees of trend). A...
I've been watching the USDJPY closely and prices are currently at an interesting juncture. The current sell off has overlapped the green circle on the chart. This creates a 3 wave move from the June 4 low to the June 5 higher. This suggests that prices are likely to retrace the whole pattern and revisit the 123 handle. I'm labeling the current wave iv as an...
This is an update to yesterday afternoon's chart. With this morning's surge higher, I think we finished wave (iii) at today's high. Today's high did come outside the top end of the price range cited on June 2 ("EURUSD Finishes Wave X"). Since today's high stopped at the 2.618 extension AND at the upper blue channel line, this has me leaning towards wave (iv)...
Now that we have surpassed the equal wave measurement for the purple degree, we can look to add to the position in anticipation of 1.53. The size of this position needs to be no greater than 40% the size of the original position (see link at the bottom). The risk to reward ratio is still good, but the 'easy' part of the move has surpassed and trading could get...
This is the preferred count I'm following for the EURUSD (for other possibilities, see the post from yesterday). Today's high measures out beautifully for a 5 wave sequence with wave (i) as a leading diagonal. -wave (iii) = 1.618 * wave (i) -wave (v) = wave (i) These are common relationships in a 5 wave sequence. We also have divergence on RSI which is...
The EURUSD pattern displays a clear 5 wave move higher from the April low. This suggests an upward flat was in play and it terminated right at the 38.2% retracement of wave (3) . The steep sell off could be the beginnings of wave (5). However, the overlap at 1.1065 places more emphasis towards an X wave lower. A rejection of prices near 1.1225-1.1325 will...
The longer view of the EUR/AUD suggests EUR out performance and/or AUD under performance for the next several months. It appears red wave was an ending diagonal. Therefore, the 1.36 low should be solid. Since the circle 5 low did not reach the lower trend line, this expresses some pent up energy available. Breakout trades to the long side are preferred. I...
NZDUSD is testing March 2011 levels (.7108). Sentiment positioning shows +3.88 as nearly 4x as many traders are already long the pair vs shorts. When used as a contrarian signal, that means we have a future supply of sellers who would need to close their long position should this move materially lower. This appears to have room to run as well should a...
The Loonie appears to have finished off the 'b' wave of an a-b-c expanded flat. The potential ensuing 'c' wave would likely take prices down into the 1.07 handle. If you zoom into a 15 minute chart and focus on the Sept 9-10 price high, you can see prices have established a 5-3 wave sequence lower which suggests a temporary top is in place. The larger trend on...
Gold dropped hard yesterday through a support trend line awakening the bears. The drop was anticipated as it appears to be a smaller degree 5th wave to finish off the purple 'B' wave. That drop took us to the 78.6% retracement level of the June-July 2014 up trend. This places Gold at a price point where we are offered a good opportunity to buy with nearly a 1:3...