Thursday, October 2, 2014

Elliott wave analysis of FTSE 100 - Top confirmed at 6,904.85

FTSE 100 top confirmed at 6,904.85 
The break below the ending diagonal support-line, has confirmed the top at 6,904.85 and we should now be looking for a decline to the origin of the ending diagonal at 6,023.44, within half the time it took to build the formation. As it took 62 weeks to build the ending diagonal, we should expect a test of 6,023.44 no later than mid-April 2015.
More importantly, the top at 6,904.85 marked the top of the major corrective (B) wave from early March 2009 and we should now be looking for an impulsive decline in wave (C) lower to 3,461 in a major flat correction.
This is the third time the FTSE 100 index tops out near 6,900. In 2000 it topped at 6,935, in 2007 it topped out at 6,751 and now in 2014 at 6,904.85. Every top with a 7 year span. If we look at the bottoms, we can see that it bottomed in March 2003 at 3,278 and again in March 2009 at 3,765. If this sequence should continue, that will mean a bottom in March 2015... I do think a decline of that magnitude is unlikely in that short time frame and think it's more likely, that we will see a bottom in March 2016, but now we at least have an idea of the risk-scenario. 
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Wednesday, October 1, 2014

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Tuesday, September 30, 2014

Elliott wave analysis of the All Ordinaries Index - Decline to 461 is developing

All Ordinaries a decline back to the origin of the ending diagonal at 461 is developing 
A couple of weeks ago we saw a break below the ending diagonal support-line near 547 and not alone does this break confirm the end to the major correction from March 2009 low, but it also gives us the first target towards the downside and a time estimate for hitting this target.
When an ending diagonal comes to an end (breaks below the support-line), the target will be a return to the origin of the ending diagonal, which in this case is at 461.06 and the time estimate will be, within half the time it took the ending diagonal to develop. As can be seen on the chart it took 62 weeks to develop the ending diagonal and therefore the 461 target should be reached within 31 weeks or around mid-April 2015. We could see the target of 461 hit before this date, but it should not be later than mid-April 2015. 
Longer term, I will be looking for a return to 382.94 and below towards the March 2009 low at 305.25, with the ideal target being 185.13, where wave [C] will be equal in length to wave [A].

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Monday, September 29, 2014

Elliott wave analysis of the DAX index - Possible S/H/S top building

DAX possible S/H/S top building 
The DAX index ended its major wave 5 in early July 2007 at 8,151.57 and we have since then seen wave (A) down to 3,588.89 in early March 2009 and wave (B) ended almost perfectly on the 138.2% extension target of wave (A) at 9,931.15 (the high came in at 10,050.98). I'm now looking for an impulsive decline in wave (C) lower to 2,693, where wave (C) will be 161.8% longer than wave (A), which is a very common target for an expanded flat correction.
The DAX is likely building a S/H/S top, with the left shoulder building from late October 2013 mid-March 2014 and the head building from mid-March 2014 to early August 2014 and since early August 2014 the right shoulder has been building. To activate this top-formation a break below the neckline at 8,903 is needed for a measured decline to 7,755, but that is the minimum target. The decline could easily be much larger and likely will be much larger as I expect an impulsive decline in wave (C). I would expect the break below the neckline to be seen in late October 2014. 
Looking at both the MACD and the RSI indicators, we have seen the classic divergence build since the top of the left shoulder to the top of the head confirming a clear loss of momentum during the last part of the rally. 

Saturday, September 27, 2014

Elliott wave analysis of USD/SGD - How to channel your way to the perfect wave count

USD/SGD how to channel your way to the perfect count
Let me start by saying, that this method can't be used every time, but when it can, it will be a tremendous help.
Since the December 2001 high at 1.8558 we can see three well defined channels, which forms wave 1-3 and 5. All requirements to the decline is obtained. Wave 3 is not the shortest as wave 1 is shorter. Wave 3 and 5 is equal in length.
But you should notice another thing. Before the 2001 top, we can see a well defined triangle, notice how the triangles support and resistance lines later define long term support and resistance. The triangle resistance-line even turns to become the larger channel support-line, which catches both the bottom of wave 3 and 5 perfectly.
You don't get it more nicely than this.
With the wave 5 bottom in place at 1.1989 in July 2011 we should be looking for a major rally back to the top of wave 4 of one lessor degree, which in this case comes in at 1.5578. I will be looking for a break above 1.2700 as the first strong indication, that an upside acceleration will be seen, while a break above 1.3199 is needed to confirm the rally back to 1.5578.
Ideally support at 1.2475 will protect the downside for the break above 1.2700 and higher.

Friday, September 26, 2014

Elliott wave analysis of EUR/NZD - Accelerating higher towards 1.6407

EUR/NZD accelerating higher towards 1.6407

Since my last post (you can see it here), we saw the expected correction to 1.5717 (just below the expected 1.5736 target) before the correction was over and the next strong rally was ready to take over. We have seen a break above the base-channel, which calls for an acceleration higher towards the next target at 1.6407. However, the 1.6407 target will likely only be a minor stop on the way higher and the next major target will be found at 1.6830, which most likely will mark the top of wave 3.

Short term I expect support at 1.6033 will protect the downside for the rally higher to 1.6203 on the way higher to 1.6407. Even if support at 1.6033 is broken, a new support will be found just below at 1.5980.

Wednesday, September 24, 2014

Elliott wave analysis of AUD/USD - Next minor downside target is at 0.8805

AUD/USD next minor target at 0.8805

As always let's start with the long term chart. The monthly chart show that a major zig-zag (A-B-C) from April 2001 at 0.4814 ended in July 2011 at 1.1080. Since the 1.1080 high we have seen a corrective decline. Why is it only corrective? The decline in wave A is clearly in three waves on the daily chart (middle chart) and the B-wave is clearly a triangle, That means we have two waves of the larger degree telling us, that this decline only is a correction. At this point it's unclear whether we have seen wave C end at 0.8845 and the rally to 0.9758 was an x-wave or we are in a larger impulsive C-wave decline. Both counts seems equal likely at this point, so we will need to track the lower degree count for signs, which count is the correct one. No matter which count proves correct a decline to the long term pivot point at 0.8000 is in the Cards.

If we zoom in to the 4-hourly chart (the lower chart). we can see a clear impulsive decline from 0.9505, which as minimum should be equal in length to the decline from 0.9758 to 0.8656, which will give us a minimum target at 0.8403. If we are to see a larger correction from 0.8430 that likely would stay below 0.9250, then a triple zig-zag correction is the most likely outcome, with the third zig-zag should take us down to 0.8000. If however support at 0.8403 is broken like a knife cutting through butter, then the impulsive c-wave count is correct and even strong support at 0.8000 will have a diffeculte time holding back the decline.

The next minor target on the way lower to 0.8403 is found in the 0.8785 - 0.8805 area, likely closer to the 0.8805 than 0.8785, but then we are talking 20 pips, so it doesn't really matter, where the bottom of blue wave v will be found, as more downside will be seen once the minor correction in red wave iv is over.