Wednesday, May 6, 2015

Elliott wave analysis of Facebook - A top is in place at 86.07

Facebook a top is in place at 86.07 
I have been looking for confirmation that a top was in place at 86.07 and yesterday saw the first close below the support-line from 54.66 and at the same time, we saw support at 77.26 pierced, these two breaks of support does indicate that a top is in place at 86.07 and a correction of wave [3] now is about to unfold. The first corrective target for this correction is found at 69.48, which marks the 23.6% corrective target, but a more likely target is the 38.2% corrective target at 59.55, which is also close to the bottom of wave (4) of one lessor degree.
If you look back in my previous posts you will see a post from March 24 where I mention the possibility of an ending diagonal (you can see the post here). That post was filed at the very same day that the top at 86.07 was being set. I that post I also said that the top likely would be found in the 86 - 87 area and it certainly did.
Well this ending diagonal count is as valid as the count shown above and this count also calls for a correction unfolding. Whenever an ending diagonal is finished, we should expect to see a return to the origin of the formation, which in this case is at 43.55 and it should take half the time it took for the ending diagonal to develop, which would call for a decline to 43.55 (about a 50% decline from the top at 86.07) in about 6 - 9 months.

Let me say already, if a decline to 43.55 is seen, that would call for a relabeling of the larger picture, but ultimately be much more bullish long term.  

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Wednesday, April 1, 2015

Elliott wave analysis of USD/JPY - Has it topped or is one final high for the year needed?


The break below 119.19 indicated that a top could be in place at 122.02 and a correction of the entire rally since the 75.56 low is developing. That said, we have to acknowledge that one impulsive structure does allow for overlapping waves and that’s the ending diagonal. If this alternate count is unfolding, we still need one final rally to new highs just above the 122.02 high and likely not above 123.52 before the major correction takes over.

To confirm that the top is in place a break below support at 118.31 and more importantly a break below support at 115.83 is needed. 

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Sunday, March 8, 2015

DJI - Has the long term picture changed?

DJI has the long term picture changed? 
For years I looked for wave D higher in the expanding triangle. I will admit, that I was looking for a wave D top ultimo 2013 near 16,450 (see my blog post from March 26 -2012 here). Well here we are at 17.857, with a peak at 18,288 more than a year after the expected top, so it would be obvious to ask, if the long term picture has changed?
I don't think that things has changed and I still expect the rally from the March 2009 low at 6,470 as being wave D of an expanded triangle. The rally from 2009 has been kept artificially alive by the Central Bank's pumping billions of USD into the market, but if we look at the RSI indicator, we can see that it has made no new high. Actually it has respected the down trend-line nicely, but it have not yet given a sell signal either.
For a sell signal to be triggered a break below support at 15,855 is needed. The crowed has once again become complacent as the VIX shows 

but do they have any reason to be complacent at this point in time? I would not be complacent at this point in time. I think, that at minimum a major correction is long overdue and if my expanded triangle count is correct, the decline will break below the March 2009 low too.
If we look at the margin debt, which has proved to be a very reliable long term indicator (the chart below is by courtesy from Doug Short). We can see that the margin debt peaked already in February 2014 and has since then moved sideways, but a break below the April/May 2014 lows will trigger a major sell signal as it did in December 2007 and as it did in September 2000, so there is all the reason in the world to pay close attention to this indicator.

Finally I think it's worth paying attention to the US 10Y yields as they have staged a huge rally the last couple of weeks (see the chart below). Will the funds move into the stock market? well it's possible, but I'm not convinced that this is the first place they will go. I think it's more likely that they will move to the currency market and push the USD even lower along side JPY. As the debt needs to be paid back the currency that normally is used for borrowing, will become much stronger as investors cover their debt. 

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Friday, November 7, 2014

Elliott wave analysis of S&P 500 - The S&P 500 is headed for 2,081.85

S&P 500 is headed for 2,081.85 as the first possible upside target 
The rally of the 1,818.90 is clearly impulsive and we can already count five wave up from 1,818.90, but is the top in place? Not likely, when we have the first four waves in place, we can calculate the possible targets for the fifth wave. The first target to plot is where wave five will be equal in length to wave one and red wave (v) will be equal in length to red wave (i) at 2,131.42. 
The next two target to calculate is where wave five will be either 38.2% or 61.8% the distance traveled from the bottom of wave one to the top of wave three and add those two calculations to the bottom of wave four. In this case, that will give us the 38.2% target at 2,081.85 while the 61.8% target comes in at 2,130.73.
So the first target, that we should aim for is at 2,081.85, this could be the final top for red wave (v), but only time will show. If however we break clearly above the 2,081.85 target, then our focus should turn towards the 2,130.73 - 2,131.42 area as the next possible top for red wave (v).
At this point, only an unexpected break below support at 2,002.20 will indicate that the top of red wave (v) already is in place and shift the focus to the downside.  

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Friday, October 24, 2014

Elliott wave analysis of EUR/JPY - Wave B over at 137.01 or not?

EUR/JPY correction over at 137.01 or not? 
The rally from 135.21 has been stronger than anticipated, but the origin of wave i at 137.01 is still unbroken. Under the Elliott Wave Principle second waves are allowed to correct 100% of the first wave, this is especially common in the currency market.
So at this point we are left undecided, whether wave B is in place at 137.01 or wave B still needs a rally higher to the 137.82 - 137.94 area in wave c of B. I slightly prefer the count, where wave B is in place at 137.01, but to prove this count, we need a break below support at 136.52 and more importantly a break below support at 136.04, that will call for the next impulsive decline to at least 134.09 and possibly even lower to 133.40 in wave iii.

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Thursday, October 23, 2014

Elliott wave analysis of AUD/USD - Time to break out of the Diamond formation?

AUD/USD time to break out of the Diamond formation? 
The Diamond formation we have been tracking lately is getting close to its termination. I'm still looking for this Diamond to be a continuation formation, which means a break towards the downside for a decline to the long term target at 0.7384. 
That said, we have to be aware, that Diamond formations also can be reversal formation and if this is the case a break above 0.8833 will be the first warning, while a break above 0.8860 will confirm the formation has been a reversal formation and call for a rally higher to 0.9112. 
As said my preferred count is, that we should soon see a break lower, which would make this Diamond formation a continuation pattern, but we know the risk, this pattern carries. 

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Tuesday, October 14, 2014

Elliott wave analysis - USD/JPY wave iv ended at 106.76. Look for a rally to 111.25

USD/JPY wave iv ended at 106.76. Look for a rally to 111.25 
With an almost perfect test of the 38.2% corrective target of wave iii at 106.81 and the bottom of blue wave iv of one lessor degree, the odds for wave iv being over are very higher and I will now be looking for a break above 107.50 to confirm the bottom of wave iv for a rally to at least 111.25 in wave v and possibly even higher to 112.31.
Short term only a break below 106.76 will delay the expected upside rally in wave v.

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