Tuesday, December 20, 2011

XAO Short Term Update

The XAO is still applying the finishing touches on the last wave of a Double Three Correction. However, caution is required as triangles can sometimes be unpredictable, leading to premature or late entries. 

It's also possible that the Triangle (on the 16th Dec) has completed and a decline to 4000 and below may be approaching. A drop down to 4000, then a solid break below this level would be an indication the bears have arrived.

Wednesday, December 14, 2011

XAO Short Term Update

The previous post covered Double Three Combination corrective waves and provides insight on what may be unfolding on the XAO right now. The sideways action on the XAO since the beginning of August without any clear 5 wave impulse moves (in either direction) could signify a Double Three correction.

The next steps for the Double Three would be to complete the finishing touches on the triangle (wave y), keeping in mind it's entirely possible that one of the legs in the triangle could be a triangle itself as discussed in the post linked above.

Tuesday, December 13, 2011

Double Three Combination Corrections

I thought this to be an opportune time to cover Double Three Combination Corrections (there may be a need to brush up on this type of correction very soon)

Double three's are some of the more complex corrections, but if caught early can offer insight to the unfolding wave count and allow one to be in a position to capitalise on the break out. They are usually rare on the larger time scales, but having knowledge of these structures will be useful for when they do occur.

Below is an example of a Double Three on the XAO taking over a month to complete. Without the labels, it can be a little difficult to see. The give away is a long sideways move that consistently moves in waves of 3. Initial interpretations may be a triangle, however, the expected end and break out of the triangle doesn't appear as one expects - leading to several re-evaluations of the wave count.

With the Labels added, the double three is clear. There's even a Fibonacci relationship between the waves - although it's not guaranteed every time. A confusing factor in this example was a triangle for wave 'b' '(b)' in the 'c' leg of the Triangle itself.

The larger picture shows the Double Three is the b wave in a zig-zag correction. This whole structure was the A wave in a triangle that formed over several months.

Tuesday, December 6, 2011

Interest Rates

The RBA announced today a drop of it's cash rate target to 4.25% - inline with the expectations from my June post on Australian Interest rates.

The 90 day bill rate has been steadily dropping down to 4.56% (as of yesterday), hence the RBA decision to continue to lag the 90 day rate is valid since there is no meeting next month and the global economy continues to weaken.

However, longer term, rates are expected to drive higher - perhaps much higher.

XAO Short term update

The XAO bearish short term count needs to be approached with caution since the expected aggressive downside action has failed to materialize. What is apparent is either a smaller wave 'ii' flat that has now completed with the bears moving back in or, a large wave '2' correction that could be a double combination correction and has further sideways to go that will take it into Mid-Late Jan in 2012.

Monday, November 28, 2011

XAO Medium Term Update

The XAO is declining as previously anticipated with some strong support at the 3940 levels approaching.

The medium term view for a zig-zag correction on the XAO is shown below with the index anticipated to ease on the declines in the lead up to Christmas. Under the count below, the wave '2' top should not be broken.

Thursday, November 17, 2011

Friday, November 4, 2011

Medium Term Gold Update

Gold appears to be consolidating as a 4th wave triangle, labeled as wave 'iv' circle. The outlook is for gold to be range bound for several weeks before breaking upwards towards the $2000 level in anticipation of completing wave (5).

MACD is at an extreme at the top of wave 'iii' circle implying wave iv circle needs to unfold and when complete should break upwards to a new high.

Tuesday, November 1, 2011

Australian Interest Rates - lower

Outlined in this post in June was an anticipation of lower interest rates for the medium term. From the RBA web site today....

"At its meeting today, the Board decided to lower the cash rate by 25 basis points to 4.5 per cent, effective 2 November 2011"

I'm yet to check the 90 day cash rate upon typing this post, but I wonder if it has dropped prior to the RBA decision, thus forcing the RBA to lower it's cash rate target. Will check later :-)

XAO - Short Term update

The corrective wave '2' appears complete. It has taken a little longer than anticipated - the fifth wave failure at the termination of 'b' shown circled initially threw off the count of the final leg up to complete '2'.

The XAO cannot drive higher beyond the end of '2' to remain valid in the short term. Expecting plenty of bears.

Thursday, October 13, 2011

XAO Short Term Update

The XAO is unfolding as anticipated in this post and a further push high is likely perhaps to the 4400 levels or slightly below/above. Once at this level (and having completed a 5 wave advance for this final leg of wave 2) the index will need to begin falling aggressively - Failure to meet this requirement will indicate caution.

Wednesday, September 28, 2011

Australian Financial Sector - Long Term update

In the previous long term XFJ update the index appeared to be correcting as a large Triangle for wave B circle. So far, the wave B triangle is continuing to unfold as highlighted almost a year ago with four legs of the triangle completed. The last, wave 'e' is now underway and needs to push higher to the 4000 levels or slightly higher. Once completed, the next major leg down will be underway and take the index down to unprecedented levels.

Perhaps this trader understands what is really going on as opposed to the mainstream media who pick out of a hat the suggestions on why the markets moved the way they did. Notice the high use of the default verb "hope" in many financial headlines as the international markets continue to remain volatile and "unpredictable".

Tuesday, September 27, 2011

Gold update

In the previous Gold post there was a view that a top in gold could be at hand, however, a slightly higher high formed before a significant decline occurred. The decline does not appear to be a 5 wave decline and indicates one more push up is now needed. The view is for a larger degree wave structure to form and with the MACD at an extreme for this thrust - it implies a wave 4 is unfolding (or has already completed). Charts in next post.

XAO Update

In the last XAO update the view was for a decline to finish wave 'b' of a flat before an upwards climb back up to the 4400 region to complete wave 'c' of the larger wave '2'. This market action is playing out as described (so far) and I will assume because wave 'b' retraced 85% of wave 'a', then there is a good chance wave 'c' up will retrace almost all of wave 'b' and hit 4375+.

It's also interesting to note how the MSM are reporting the latest declines - when in doubt:  pick a country and the headline will read something like "Market falls on Greece worry". When the market turns up the next day - "Investors have high hopes for Greece". Pure rubbish.

Tuesday, September 20, 2011

Short Term XAO update

The last XAO short term post indicated the end of wave 2 was imminent, however, an aggressive push downwards has failed to materialise to indicate the next leg down is clearly underway. The wave structure does also not appear to be moving in 5 waves down (yet) and this evidence implies wave 2 is unfolding as a flat correction.

At this stage in the wave development, the structure of wave 'a' and the unfolding 'b' wave appear to be 3 wave moves, indicating corrective action in both directions for the short term. This most likely indicates a flat for wave 2 is in the process of unfolding. 

Tuesday, September 6, 2011

Australian Interest Rates

The 90 day bill rate has declined slightly to 4.77%, hence the rationale for an increase of the RBA cash rate target is non-existent. However, there is strong rationale for the RBA to do nothing and perhaps some rationale to drop the cash rate target by 0.25%. Let see what the nouns and adjectives in the RBA meeting minutes provide.

Thursday, September 1, 2011

Gold - Is the top in?

For those that have been following along, a significant top in Gold has been expected and the question now is: Is the top in?

It appears a  5 wave decline from the "Top" has occurred and more aggressive downside action needs to occur soon, thus completing wave '2' up. The long term chart is here and provides a multi year view. As you can see, gold broke above the top  multi-year trend channel and instability quickly set in with a $200 decline - however, Gold is yet to drop back down to that trendline. This is anticipated very soon.

XAO Short Term update

It's been a long time coming.....

The current wave up is being interpreted as a wave '2' for the reasons outlined in the chart. A break below the trend-line is anticipated very soon. The XAO cannot go above the end of wave 'E' in the chart as this would invalidate the short and medium term views. We therefore have a very defined scope of where the index is allowed to go before breaking specific limits one would put in place to manage risk.

Saturday, August 20, 2011

Interest Rates - Consolidating

The 90 day bill rate is currently at 4.81% and has been trending sideways for several months. There's been talk in the MSM for the case to lower rates by the RBA due to poor economic conditions, this may happen as discussed here but ultimately higher long term rates are on the horizon.

One thing for certain is more adjectives and nouns from the RBA will no doubt be forthcoming to justify some type of decision that's already predetermined by the 90 day bill rate.

XAO - Short Term update

There are two interpretation for the bearish case on the XAO - neither of them a positive sign for things to come - some charts later.

In the previous short term post, wave '4' upwards was considered underway, however it pushed past the 38% retrace level (which tends to be common for wave 4's) and stopped at 61.8% retracement of wave '3' down. A new low needs to now unfold before we see more corrective action.

GOLD - Short Term update

Gold has climbed to new highs and therefore invalidating the short term count. This may mean gold is sub-dividing and extending higher for the short term count and under this condition, further highs will be expected. Charts later.

Monday, August 15, 2011

Gold - Short Term update

Some interesting action on Gold over the last few days. The 1800 levels have been hit, and as discussed in the previous post -  it was likely to quickly reverse....

"Another push higher to around the 1800 levels is needed to complete wave 'v' of '(v)' and will probably break thru the upper channel line in a 'blow off'."......"A significant reversal is anticipated on the coming days or couple of weeks."

Now the question is: has the medium thrust higher completed? We will likely know very soon and don't be surprised if there are aggressive actions to the down side. $1725 has already been hit, almost a $100 sell off in the last several days, a correction upwards now appears underway.

Wednesday, August 10, 2011

Gold - Short and Medium Term Updates

Gold continues to drive higher - but the wave structure says otherwise: Be very cautious.

Gold has broken through some anticipated levels, however, with wave 'iii' complete and wave 'iv' looking almost complete - time is running out. MACD is expected to be at an extreme at the end of wave 3's - which is the case here. Another push higher to around the 1800 levels is needed to complete wave 'v' of '(v)' and will probably break thru the upper channel line in a 'blow off'.

On the Medium term, Gold has overthrown the medium term upper channel line with obvious weakness shown on the MACD price oscillator. A significant reversal is anticipated on the coming days or couple of weeks.

Tuesday, August 9, 2011

XAO - Next major leg down underway?

From the previous XAO post - clarity would soon be shed on the XAO medium term direction and it's not good news.

In fact, this leg down could be very aggressive - Over two years ago this October 2008 post (on ASF) for the long term view provided some rough guidance on how the XAO would play out over the coming years: wave 'A' circle to complete, a corrective wave 'B' Circle to unfold, and once completed 'GFC II'  aka wave 'C' circle would be unleashed.....However, wave 'B' Circle took a lot longer to unfold as a more complex correction.

October 2008 View - zig-zag correction on the XAO

XAO Short Term View
The short term view is for 5 waves down to unfold before the first major bounce occurs. The MACD is at an extreme, implying the end of wave '3' down is complete. It is assumed a triangle will unfold for wave '4' that will see sideways action for 2-3 weeks before another push lower to complete this first of a series of 5 wave declines.

The social mood will continue to decline dragging the stockmarket with it - riots in Europe are a precursor to bigger things to come.

Thursday, August 4, 2011

August Gold Rush

Gold's push higher has been aggressive and it may soon be time for a breather as wave 'iii' soon completes and a wave 'iv' decline sets in. Gold is anticipated to break1700 and head higher still perhaps to the 1750 levels before the instability commences.

Wednesday, August 3, 2011

XAO Bullish and bearish views

Whichever way the XAO decides to move for the medium term trend, we should know fairly soon....

Both scenarios are of equal consideration at this stage and both are not perfect either. However, further aggressive downside moves should elimate the bullish view quite quickly until the larger pattern provides clarity.

The bearish view is significant as it implies a major turning point on the XAO. aka wave C circle down

Tuesday, August 2, 2011

XAO Update

A short update - The XAO continues to be erratic, but I sense there is still weight behind an ending triangle, although larger in formation. Dropping temporarily below 4500 will be acceptable whilst the remaining triangle waves complete.

Friday, July 29, 2011

XAO Update

As discussed yesterday, breaking below the recent low would invalidate the short term count for an ending triangle - this has now happened. The larger move downwards is still corrective and the expectation is for further corrective action to the downside - perhaps bouncing on 4500 first. More charts later.

XAO Short term update

It looks as though the end of wave C has still been unfolding as a larger triangle - from this post: "however there tends to always be a challenge with triangles and how they play out" - hence the formation over the last few weeks indicates a larger triangle has played out as the end of wave C down.

This larger triangle should have now ended and must not fall below 4508 for the short term count to be valid - a corrective push up to the 5000 levels should soon commence. The count from the previous post could still play out - but either way, a push higher is now the required short term view.

Wednesday, July 20, 2011

GOLD - Holding the Fort at the 1600s

Gold's rapid completion of the final D and E waves within the larger wave (iv) triangle and breaking the 1600 levels as described back in May now has the bulls paused at just under 1600 - so what's next?

A 4th wave triangle always indicates an impending change in trend - this could be in the form of a minor correction, or as in this case a much larger corrective move.

Perhaps Gold news could kick off a decline although events rarely influence market moves since it is the social mood from the herd that drives markets.  Bad news in bull markets is usually shrugged off, but as the mood turns, and the market falls - bad news isn't shrugged off so easily. Perhaps Ron Paul knows something we don't? Ron Paul worries Fort Knox gold is gone

The short term chart has a couple of interpretations. The first is the ending of wave E within the Triangle. If it's the Green E, then it appears an ending diagonal is forming and the ending of the Gold bull market may not be far away - this is a loose statement at the moment as channel lines, estimated targets need to be taken into consideration.

The Second, if the wave (iv) Triangle finished at the Black wave E, then it appears a 5 wave move upwards has completed and a small wave 'ii' down is underway - this is the pullback one expects when hitting/breaking psychological levels. The preference is for the black count to be the primary view at this stage with a view to heading up to the 1640-1650 levels.

Once wave 'ii' down gains some footing, we can establish some channel lines and bullish targets. A break below the black wave 'E' at 1520 would certainly be a bearish signal.

Tuesday, July 19, 2011

GOLD update

As covered in previous gold posts, gold has headed higher to the 1600 level since a 4th wave triangle completed and sees Gold at a new high. A small pullback may be needed at this psychological level, but it must not drop below 1540 which could indicate a significant top is in.

Gold is anticipated to break thru the 1600 levels and head higher over the coming weeks. Charts later....

Monday, July 18, 2011

Short Term XAO update

Wave D up should be on the verge of heading northwards with MACD divergence on the 30min chart indicating a change (of some form) is pending. Discussed in the last post was the likelihood that this small down leg may in fact use the previous upper channel line as support – which seems to be occurring

However, a push higher should occur very shortly. Dropping under the channel line with momentum would be a cause for concern on the short term count.

Tuesday, July 12, 2011

XAO Short Term Update

The XAO is expected to bounce soon and head higher as described in the chart below. The previous wave's upper channel line may be a place for the XAO to find footing.

Dropping below the previous recent low would require re-examination of the short term wave count, although would still be legal for a flat within a triangle leg.

Wednesday, July 6, 2011

Gold - Short term update

*** 13th July UPDATE: It now appears the triangle has completed with a very small wave 'E' and the expectation is for Gold to head higher (with the obvious pull backs along the way) to 1600+. In the short term, Gold should not drop below 1540 (the ending of wave 'E'). ***

Gold's 4th Wave triangle is nearing close to completion with waves 'D' and 'E' to complete. Once finalized Gold should head upwards either in a 5 wave impulse or perhaps an ending diagonal pattern finishing above the 1600 levels.

Once a breakout of the triangle has occurred, the first pullback should provide some clues as to the future action and where Gold may end up. The final longer term action of  Gold can be seen here.

Should Gold drop below the start of wave 'C' at 1480 would cast doubt on at least the short term outlook.

Monday, July 4, 2011

Australian Interest Rates - July

The last RBA board decision left interest rates on hold (surprise surprise) and going by the text of the meeting minutes I can't understand how anyone could make a decision one way or the other based on the adjectives and nouns provided. If I were to jumble up the meeting minutes from the last several months and ask you to select the appropriate meeting minutes for the correct month - you'd have no hope.

Alternatively anyone could spend 5 mins reviewing the 90 day bill rate and making a well educated decision as to the RBAs cash rate target - as the cash rate target simply lags the 90 day bill rate. The 90 bill rate is still around 5% (4.98 as of June 30th) and is little changed since beginning of June shown here. For the upcoming July decision, there is no logic for the RBA to change the cash rate target currently at 4.75%.

XAO Short Term Update

The XAO has broken above the upper channel line after finishing a small triangle for a triple combination correction.

The overall assumption is a larger triangle is developing as described in this medium term update, this is based on the fact the last several up/down legs in the longer term sideways structure are corrective - and a triangle does make sense at this point.

A small pullback may be needed in the coming days (shown) to provide some definition to this wave 'D' upwards leg. On the downside, breaking below the down sloping support line would raise some serious questions on the validity of the count.

Wednesday, June 29, 2011

Short term XAO update

THURS UPDATE: It appears a very small triangle wave 'e' has completed after all, and the XAO has broken above the channel line. Next leg up now appears underway.

The last several trading days have not provided clear impulsive patterns higher, suggesting corrective action is ongoing and thus brings a clue - raising a strong possibility an Elliott wave triple combination corrective pattern is unfolding for this entire leg down. An ending triangle will appear at the end of triple combinations, however there tends to always be a challenge with triangles and how they play out - sometimes triangles can form one of the waves within a triangle itself. Hence, the chart below provides a rough idea how the triangle is unfolding

The down sloping channel lines now have a role to play - a solid break out and higher after the triangle completes will be a strong signal. However, there will possibly be a false break that can sometimes occur with triple combination. Supporting an end to this correction is the MACD price oscillator as it is clearly divergent on the 60min chart (not shown) since the second week of June.

The bottom line: A change in trend appears to be close at hand

Sunday, June 26, 2011

XAO Update

It appears the downwards corrective action on the XAO may still not be complete with a distinct lack of a 5 wave impulse from the lows discussed in the second part of the last XAO post.

This may mean a triple flat or a triple combination correction is unfolding.

Short Term Gold Update

Gold has seen some decent moves both up and down over the last 3 weeks. This structure labeled as triangle  wave 'C' appears to be a near completed expanding flat (3-3-5) - a corrective structure and valid within triangles and wave 2's.

Both the triangle and the green wave count (that sees a shorter term triangle completed) anticipate a push higher in the coming days. Again, the preferred count is in black with triangle waves 'D' and 'E' yet to complete.

The longer term wave structure that sees a higher Gold prices is here and anticipates levels in the 1600+ range before a significant top is in place.

Monday, June 20, 2011

Medium Term XAO update

The recent declines on the XAO have resulted in questioning of the wave count since the low of 4560 in March was broken. In addition, the down leg that started in April still looks very corrective, hence the evidence at hand implies a larger correction is most likely still unfolding. This corrective wave may in fact be a large sideways triangle.

The alternative bearish count still has validity until proven incorrect.

On the short term, Triangle Wave 'C' is below as a double flat correction. This leg should be complete or very near complete, wave 'D' should soon be underway.

Wednesday, June 15, 2011

Short Term Gold Update

Gold is still moving as described in previous posts - a triangle is most likely unfolding that will continue to see further sideways moves.

Medium Term XAO - Alternative Count consideration

The recent declines on the XAO do seem to indicate that this down leg may be a lead in to a bigger structure, therefore it's prudent to review an alternative count should the recent low at 4584 be broken.

The chart below shows an alternative count that has the 'B' circle wave completed implying declines will now continue. There are several reasonable interpretations at this stage but the waves aren't clear enough to give a solid interpretation. The consideration is: Has the decline since the 11th April  top been in 5 waves?

The short term chart shows a decline of 5 waves. Wave (ii) a expanded flat and Wave (iv) and expanding triangle (rare). I don't like the odds of these wave structures being in the same move but it is here for consideration until clarity is seen. Under this count, a correction upwards needs to occur before the declines continue. A break out of the channel (not shown) either up or down will provide some additional clues.

Tuesday, June 7, 2011

XAO Short Term Update

The XAO continued to decline and invalidated the notion of an ending triangle for this correction discussed in the last XAO Short term post.

There is a little further clarity with the XAO, specifically two flat corrections joined by an intervening 'X' wave - Double Flat correction. The flats contain the right structure with the 'A' wave being a 3 wave move, and the 'B' wave retracing at least 61.8% of  'A'. Wave 'C' being a 5 wave move. The 'C' wave in the second flat is a little unclear, so there's still potential for a little more downside. I'm happier with this count as it seems to fit better with rules of Elliott Wave (and the Glenn Neely extensions).

There is an alternative count that is bearish and would come into play should the short term low be broken but it requires the XAO to correct upwards before an aggressive down tread commences.

The primary count is still to medium terms highs before the real fun begins.


Sunday, June 5, 2011

Long Term Interest Rates - Higher rates to come?

Discussed in this post was a possible ending of a long term trend in Australian interest rates. Started in 1982, a long term decline of interest rates appears to have completed as a very obvious elliott wave pattern. On the horizon are higher interest rates but after some medium term declines or sideways action that may last for many months.

This long term decline comprises of an Elliott Wave flat pattern: a 3-3-5 structure, thus a completed flat will have an A, B and a C wave with A & B having 3 waves and C with the standard 5 waves.

There is a difference between elliott waves seen in the stock market and what can be seen in interest rates and currency markets. Stock markets move up in waves of 5 and are an indication of progress where interest rates operate in waves of 3 over long periods of time. If they didn't, then conceivably interest rates would eventually reach 100% and higher.  Operating in 3 waves makes it very difficult to estimate long term trends as these 3 wave corrective patterns are the most difficult to predict due to their complexity and the range of many different types.

Therefore, it's usually easier to look for smaller 5 wave patterns within the larger corrective patterns, unless some very obvious pattern emerges - this seems to have now occurred.

Friday, June 3, 2011

XAO Short Term $30B update

The negative mood appearing in the MSM this week on the $30B loss on thursday may be an indication that a medium term bottom could almost be in place.

The index has unfolded exactly as described in the previous XAO post, however the attempted thrust up out of the Channel doesn't look like a 5 wave advance and this may imply something else is occuring. The pullback has been sharp and it's looking possible that a triangle is unfolding as a valid ending to this correction.

Further drops from here are still valid but the low at 4560 cannot be broken for this count to remain valid.

The MACD is divergent on the 60min chart below, implying weakness in the current down trend.

Monday, May 30, 2011

Short Term Gold Update

Short term Gold has been unfolding according to the wave count here and the question now is: Has the wave 4 correction completed as a small triangle as per the green count below?

Further time is required before the answer will be known for sure and perhaps Gold will give us a hint with a strong push upwards in the coming days. However, my thoughts are still with the primary count in black that sees a longer correction playing out as a triangle. For this to be valid, I wish to see Gold decline in the coming days and head downwards to the 1400 levels to complete the 3rd leg in this correction.

Longer Term Gold is here and a push to the 1600 levels or slightly higher is required for a significant top to be in place.

Short Term: A break upwards out of the channel as shown would imply that the short term correction has most likely completed.

Sunday, May 29, 2011

Australian Interest Rates

The next RBA meeting is almost upon us and there will be the usual adjectives and complexities in describing the rationale for the pending decision on the target cash rate. The sideways movement in the 90 day rate for the last several months will probably see the RBA leave their cash rate target on 4.75%.

So where will interest rates go? Using Elliott Wave for interest rates is more complex since rates cannot be anticipated in waves of 5 (like the stock market) otherwise the rates would eventually be over 100%. Interest rates move in waves of 3 oscillating over many decades and I'm assuming a bottom has been reached on the chart below - since a 3 wave multi-decade decline that started in 1982 now looks complete as of March 2009.

This 90 day rate has now seen five small waves up and a correction needs to occur which may see slightly lower interest rates or more sideways depending on the depth of the correction. Longer term, higher rates are on the horizon.

Saturday, May 28, 2011

XAO Short Term Update

The XAO has continued to correct within a well defined channel. The structure as it stands now looks complete as a triple combination elliott wave correction.  A push up thru the channel lines needs to occur now, although this is still no guarantee that this correction is complete as sideways move could still unfold. What will provide clarity is an aggressive push up out of the channel.

Monday, May 23, 2011

Short Term XAO update

The XAO came close to invalidating the current count today and may still do so tomorrow. In the first instance, further declines will imply a correction of higher complexity unfolding (eg a triple zig-zag correction) down to the 76.8% retracement levels.

Pushing higher now will leave the count unchanged and today's pullback would be considered a wave '2'.

The multi-year view is here and the very long term view is here.

Long Term Gold - Daily

The longer term Gold chart implies a push higher is needed to complete a decade long bull market leg. The longer term Gold post is here. Once the current correction is complete (shown at arrow) then a push higher should complete this wave (5).

Short Term Gold Update

Gold has been unfolding in line with the last short term post. If a small triangle is unfolding as per the alternative count, then this should finish very soon and see gold head to the 1600 levels.

The longer term post with a daily count can be found here.

Thursday, May 19, 2011

XAO Short Term Update

Yesterday's All Ordinaries update covered the market action we saw today, so, some confirmation on a potential bottom for the recent correction. Progression upwards in waves of 5 should now unfold...more below...

XAO Short Term Update

The XAO may have found a bottom at last. The next several trading days should provide additional insight on this assessment, however, a break out of the channel line (shown) needs to occur next.

In addition, the 5000 level should ideally be broken in shorter time than the second a-b-c leg took to form eg less than 14 days. This would provide additional confirmation that the next leg up may well be underway.

Gold Short Term update

Gold is still anticipated to head to higher levels at around 1540 whilst a corrective flat or triangle continues to unfold. The count below has been updated to account for recent wave action in completing the (b) wave. Since Gold tends to like Triangles, I will assume a triangle is unfolding and we are currently seeing perhaps only a portion of 1 leg (the A leg).

The next action should see 5 waves up to the 1540 levels or higher and thus completing the (c) leg of a flat (3-3-5). Once complete, a decline should kick in to form wave 'C' and should occur in 5 waves.

Once this correction completes a push to new highs should unfold before a major multi-year correction occurs as described here

Monday, May 16, 2011

Complex Corrections

Corrections are by far the hardest to predict as their nature is usually unpredictable unless some obvious  portion has already completed. However, there may still be further corrective action at hand once a corrective wave appears complete. Double combinations fit this description and they can contain a triangle for the ending wave structure. Identifying this triangle will help to understand the next move when complete.

Many Elliott Wave analysts will incorrectly assume the triangle is actually part of the next wave sequence (eg 1st and 2nd waves) or a wave 4, thus the count will be incorrect. Triangles appear regularly in corrections and it's beneficial to understand when and where they can occur.