Well it seems as I nailed both the top i Starbucks and the bottom in Coffee in my November 7 post.
After a classic overshooting of the long term channel, we have now seen a clear break back into the channel and my Elliott Wave Count does support the top of wave III being in place at 82.39. If my Count is correct, we still need a break below 74.46 to add confidence to this Count, then we should see a decline towards the bottom of wave 4 of one lessor degree at 43.04 (also 50% of wave III). However, we might only see a 38.2% correction of wave III, which would call for a correction to 53.61.
Wave A likely ended at 1.01 and I'm currently looking for a break above the resistance line near 1.18 to confirm, that wave B is developing for a rally into the range of wave 4 between 1.50 - 1.92 (ideally 1.80, where wave B will have corrected 38.2% of wave A.
Looking at the hourly chart we can see, that the decline from 16,174.51 to 15,791.29 was in five waves and was followed by a three wave rally just above the 61.8% correction target at 16,028 (the high came near the 70.7% target at 16,057). The new decline does look impulsive in character. That said we still need more confirmation to call the top of wave D. First of cause we need a break below 15,791.29 (low of wave i) and next a break below 15,672 (where wave iii will be equal in length to wave i). A break below the later will add confidence in wave D being in place and wave E having taken over for a massive decline towards at least 10,400.
For now stay focused towards the downside as wave iii develops.
Interesting to see how complacency still dominates despite the current impulsive looking decline.
Is everybody expecting a Xmas-rally?
Looking at the Newsletter Bull ratio from Investor Intelligence optimism runs higher, than seen in a very long time.
The consolidation from early 2011 continues to drag on in the 74.83 - 112 area. In my preferred Count I'm looking for a five wave decline from 112.22 as wave c of a very complex sideways correction.
If we zoom in on wave 3 and 4 of c we can see, that wave 4 has become an expanded flat correction and we might have a top in place with the test of 98.72 and wave 5 lower is about to develop. However, we need a break below short term support at 97.08 and more importantly a break below 96.31 to confirm, that wave 4 is over and wave 5 is under way towards at least 86.36 and more likely wave 5 will extend lower towards 78.84.
It's still an open question whether a triangle is developing or we are in the early stages of a series for waves one's and two's. I prefer the triangle option slightly, but will keep an open mind to whatever the price action dictates me.
As a minimum I will be looking for a correction towards resistance in the 1,286 - 1,294 area. A break above 1,294 will indicate a continuation higher towards 1.367 - 1.375 area as wave c of the triangle.
Only time will tell which scenario is right, but for now we should see a move a Little higher towards 1,286 - 1,294.
With a low at 1.0885 the target-area between 1.0856 - 1.0935 has been penetrated. As long as minor resistance at 1.0968 protects the upside we could see a move slightly lower towards 1.0856. That said, we are very close to an important bottom and a break above 1.0968 will be the first indication, that this bottom is in place, while a break above 1.1048 confirms the bottom for a rally back towards 1.1226 as the first target. Longer term we should at least see a move higher towards wave 4 of C at 1.1581.
We have seen wave v of c move a Little higher, but the important resistance at 1.3832 is still unbroken. I'm still looking for a break below 1.3740 to confirm, that we have seen wave 2 terminate and wave 3 lower towards 1.2731 is evolving.
However, a break above 1.3832 will invalidate this Count and tell us, that wave E hasn't ended yet and we should expect more upside towards 1.4247.
Support at 140.99 did more or less protect the downside as expected. We did see a slight dip below 140.99, but it was not sustained and we are now in the final rally higher towards 142.34 as the first target for this final wave v of 5, however we could easily see an extension higher towards 142.78 and 143.22 as the final top of wave 5 and I. Once the top is in place we should see the beginning of a major correction, which both time- and pricewise will be the biggest correction we have seen since the 94.10 low. The minimum target for this correction will be at 124.95, but it could move lower towards 118.72.
However, for now we should stay focused towards the upside for the final new high above 142.17, but once this high is broken a top could be in place any time.
Today's Support and Resistance Levels:
Current Spot: 1.6655
We did see a break above resistance at 1.6750, which confirms the uptrend. However the following correction is deeper that would be expected. That could imply two things, that a series of waves one's and two's is developing (my preferred scenario) and the other is, that a leading diagonal is developing, but no matter what we should ultimately see a continuation higher.
Short term expect support at 1.6626 will protect the downside for a break above resistance at 1.6689 for a new rally towards 1.6798 and higher towards 1.7071 and 172.39 as the next major upside targets. Only an unexpected break below 1.6522 will invalidate the bullish call and indicate more downside pressure.
I'm a keen Elliott wave follower. I do use, what you might call, standard technical analysis too, but my main focus is on the Elliott Wave Principel.
I use it professionaly as well as in my private affairs. To give you an example I sold my house in late 2005 and are currently renting a flat, not expecting to reenter the property market before 2012-2013.
I'm very much into long term seasonal cycles and demography too.
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