Archive for the elliott wave Category

Gold Futures — 120-minute bars [Updated to add Elliott Wave Labels]

Posted in education, elliott wave, technical analysis on 2011-09-15 by Strategesis

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Gold futures (trading symbol = GC) | 120-minute bars

[Updated with Elliott Wave labels, and price action since the original post yesterday. Fourth wave of ending diagonal now in progress. A fifth wave down to a new low is expected over the next week or so. However, if GC trades above 1846 before trading below Friday morning’s low, then the most probable Elliott Wave interpretation shifts to one where the whole pattern is either a Double Three or Contracting Triangle whose third (but not final) wave (a downward move) ended on Friday morning at 1767. Double Threes and contracting triangles move net sideways, so Friday morning’s low could well be the lowest low of the pattern, if it’s not a flat]

Probable Elliott Wave “flat” pattern in progress since 21 August 2011. A “flat” is composed of three subwaves, where the first and third subwaves move in the same direction as each other, but where the middle wave moves in the opposite direction. All three waves (labelled A, B and C) should ideally have roughly the same price extent. Wave A (the first wave) can be any corrective Elliott wave. Wave B (the second wave) can be any corrective Elliott Wave other than a triangle pattern. Wave C (the final wave) must be either an impulse wave or else an ending diagonal wave. Wave C of the flat pattern in gold started on 6 September, and cannot be anything other than an ending diagonal pattern. The ideal low would be around $1700, although it can fall short or extend.

One key distinction between one Elliott Wave and another is whether it moves in the same direction as the trend, or moves counter trend–where “trend” refers to the direction of movement of the larger Elliott Wave that contains the wave that is the focus of the discussion. Elliott waves are fractal, in that they have an infinite hierarchical structure–waves within waves within waves.

Waves that move in the direction of the “larger trend” are referred to as ‘actionary’ waves. Waves that move opposite to the direction of the wave that contains them are called ‘reactionary’ waves. Wave A and wave C of a flat pattern are both actionary waves, but the middle B wave is a reactionary wave.

The other key distinction between Elliott Waves is based on the internal structure of the wave:

A ‘motive’ wave usually has five subwaves, but may have any number in the sequence 5, 9, 13.. (adding 4 each time.) A motive wave does not move sideways. It definitely trends either up or down.

A ‘corrective’ wave usually has 3 subwaves, but may have any number in the sequence 3, 7, 11.. (adding 4 each time.) A triangle must have at least 5 subwaves, but may have 9, 13, 17, etc. Corrective waves may move either sideways, or may move sharply up or down.

There’s a lot more to it, but that’s the general framework. All that remains is the detailed ontology of wave forms, and the structural rules that distinguish one from another. I will be publishing a complete description soon.

Complex sideways correction in US stocks continues…new highs since early-August bottom possible…

Posted in education, elliott wave, technical analysis, technical indicator on 2011-09-14 by Strategesis

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S&P 500 Stock Index; Daily bars — Indicators on bottom of chart are of my own proprietary design

Based on the Elliott Waves, trend-channel and support/resistance analysis, and my interpretation of my indicators (involving not just this chart, but also the monthly, weekly and 4-hour bar charts,) the most likely scenario appears to be that the corrective action since the low in early August is not yet over. In fact, the $SPX will probably test the 1232 high it made on 1 Sep 2011.

Gold poised to break upward…again

Posted in elliott wave, price chart, technical analysis, technical indicator on 2011-09-13 by Strategesis

Gold futures (trading symbol = GC); Daily bars (Click on chart for larger image)

The technical indicators shown on the chart are of my own proprietary design. My conclusion is based on my interpretation of those indicators, Elliott Wave analysis, support/resistance and trend-channel analysis, and the strength of the uptrend in Gold.

Elliott Wave Count Of S&P 500 (e-mini futures) Since Mid-February 2011

Posted in elliott wave on 2011-03-19 by Strategesis

There are several legal wavecounts. The chart shows one of the relatively bearish ones, a five-wave downward impulse that bottomed on Wednesday, 16 Mar 2011:

ES Continuation Contract; 240-minute bars

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It’s also possible–and notably easier!–to count the same waves as either a double or triple zig zag. There are strong, non-Elliott Wave reasons to prefer such corrective wavecounts. Those corrective counts (not shown) will be proven correct if the ES makes a new high above 1338 before it falls below 1197.75.

On the other hand, if the 5-wave downward impulse wavecount (as shown) is correct, then what should follow now is a corrective (non-impulsive upward or sideways move that stays below 1338 (preferably well below,) followed by another motive wave down below 1241.25. Such a downward motive wave, it if happens, could either be yet another 5-subwave downward impulse, or an ending diagonal wave. That dowwave may, or may not, break below 1197.75. If it does fall below 1197.75, the implications could be severely bearish. If it can hold above that price, the implications could be rather bullish.

At this point, there is no Elliott Wave way to disambiguate. There are other reasons that make me prefer the bullish interpretation at this time. But I have identified the evidence that would prove me either right or wrong, and will let the market be the final judge. It’s always right.

Update: Here’s the analogous wavecount of the S&P 500 Index itself [60-minute bars]

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Probable contracting triangle in US stock indices since 21 Feb

Posted in education, elliott wave, price chart, technical analysis on 2011-03-09 by Strategesis

E-mini S&P 500 futures, 150-minut bars

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Price action since 21 Feb is highly consistent (so far!) with a “contracting triangle” Elliott waveform. To confirm that diagnosis, however, price must make a new high above the high on Friday, 18 Feb before it makes a low lower than the one on 24 Feb; and ideally, there should continue to be a progression of lower highs and higher lows until there is sudden, “unexpected” (heh) upspike to a new high. If so, then that final upspike will be quickly reversed and completely retraced back down–with even greater downside action possible.

Caveat: Elliott Wave analysis is no different than any other technical analysis methodology: it’s probabilistic, not deterministic. Elliott Wave analysis is like playing “Wheel of Fortune,” where you try to guess the full phrase based on only some of the letters. Elliott Waves are easily determined once they are fully complete, but getting them right “in progress” more than about 2/3rds of the time is probably impossible (and you have to be REALLY good at it to even come close to that hit rate)

UPDATE [2011-03-10]: Today’s price action has made the contracting triangle interpretation far less probable—although the price structure could still evolve into a larger contracting triangle, into a flat, into a double three, or a downward zig-zag. Also possible is that a major new down trend has started, although there are non-Elliott wave reasons I don’t prefer that interpretation—yet.

Updated price chart [ES | 150-minute bars]

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