Elliot Wave Trading - Page 69 - DailyFX Forex Forum

Jamie Saettele · #**1021** (**permalink**) 10-04-2007, 10:25 AM

Things are playing out as expected...continue to favor a weaker dollar and weaker Yen but the reversal is likely to come in the next week or 2. gbpusd and audusd are closing in on former highs. in the case of audusd, i think a new high completes an impulse. in the case of gbpusd, a new high would complete a double zigzag (see this morning's techs for labels). eurusd and nzdusd are lagging but the declines from the top are corrective so new highs are possible there too. usdchf may have actually formed a low at 1.1623 so there is an opportunity to get bullish agains the low on the setback (happening now). 118.00 usdjpy is still my target (although a push to 119.50 or so is not out of the question either). usdcad is in a corrective 4th and i wont be touching it until it completes 5 waves down from 1.0866...then we can look to trade bullishly for the larger recovery.

Things are probably going to remain slow from now until tomorrow morning so I doubt I'll post anything else today unless there are specific questions (and I'll try and check for those as much as possible).

spin the o · #**1022** (**permalink**) 10-04-2007, 10:27 AM

CHF looks (to me) like it's in wave 5 (assuming 4 is complete) of c in the correction of the move from 1.1623-1.1825.

Anybody watching this?

Spin

benfx · #**1023** (**permalink**) 10-04-2007, 11:14 AM

Hi spin,

I'm looking at $/chf too,

i have almost the same count as you, chart 5':

i'm just waiting a last low to finish the C, and buy it

italm31 · #**1024** (**permalink**) 10-04-2007, 11:20 AM

Quote:

Originally Posted by italm31

Hey guys,
Heads up. A top may be near for the GBP/JPY if your going by the ending diagonal scenario. We just completed the minimum 3 waves required in a wave v of a diagonal.

Hey guys,
For this diagonal to be confirmed, we need a break below the b wave of v at 236.81. We may have a double top in place but that will only be proven below 236.14. I would have liked to have gotten an hourly reversal candlestick but we were a hair way from that. We may get a spinning top at the the next hours close but a spinning top just indicates indecision not necessarily a reversal. (you could tell by my indecision...lol)

italm31 · #**1025** (**permalink**) 10-04-2007, 12:30 PM

Hey guys,
I just saw the funniest video on Bloomberg. This is a true sign of a top in place of markets in my eyes. Gold and oil bulls must be at an all time high. pay attention to what he says about death, taxes, gold, and oil. Got to love investors...lol.

http://www.bloomberg.com/avp/avp.htm...7jFL963jFA.asf

spin the o · #**1026** (**permalink**) 10-04-2007, 12:49 PM

Thought this might interest some of you...

Is this a sign of the end of the trend, or the meat of it?

http://www.telegraph.co.uk/money/mai...bcnviet103.xml

By Ambrose Evans-Pritchard
The Telegraph, London
Thursday, October 4, 2007

Vietnam is planning to cut its purchases of US Treasuries and other dollar bonds, raising fears that Asian central banks with control over two-thirds of the world's foreign reserves may soon join the flight from US assets.

The Saigon Times said this morning that the State Bank of Vietnam was abandoning the attempt to hold down the Vietnamese currency through heavy purchases of dollars. The policy is causing the economy to overheat, driving up inflation to 8.8 percent.

Vietnam, which has mid-sized reserves of $40 billion, is seen as weathervane for the bigger Asian powers.

Together they hold $3,575 billion of foreign reserves, over 65 percent of the world's total. China leads with $1,340 billion, but South Korea, Taiwan, Singapore, and even Thailand all built up massive holdings.

The concern is that once one or two members of the region jump ship, it could set off a broader scramble. None of them wants to be the last one left holding a devalued asset. Vietnam's central bank said this week that it would move "gradually" to a floating currency.

Separately, the gas-rich Gulf state of Qatar announced that it had cut the dollar holdings of its $50 billion sovereign wealth fund from 99 percent to 40 percent, switching into investments in China, Japan, and emerging Asia.

(...)

You can find the rest of the article by following the link above.

italm31 · #**1027** (**permalink**) 10-04-2007, 01:25 PM

Hey Spin
Where have I seen this before. Oh yes, in 1994 I read the same thing about some country threatening to dump there US debt. This was right before the big dollar rise in December. I didn't get it then cause I didn't even know what Elliot Wave Theory was but once I learned it, it made sense. This article (to me anyways) just means we are closer than ever to an extreme. Actually, if you ask me, the world should be happy with the devaluing dollar. Could you imagine what 80$ oil would be like with a high dollar. That would be true inflation not what we have now. Right now its a credit bubble. Thats why I don't believe we face an inflation problem but I believe we will be facing some sort of deflation problem very soon.

italm31 · #**1028** (**permalink**) 10-04-2007, 01:52 PM

Quote:

Originally Posted by italm31

Hey guys,
For this diagonal to be confirmed, we need a break below the b wave of v at 236.81. We may have a double top in place but that will only be proven below 236.14. I would have liked to have gotten an hourly reversal candlestick but we were a hair way from that. We may get a spinning top at the the next hours close but a spinning top just indicates indecision not necessarily a reversal. (you could tell by my indecision...lol)

My double top ending diagonal is holding up so far. Next Id like to see a break below 236.81 which we are not far from right now. Ill be looking for a bearish engulfment candlestich at 4 pm.

spin the o · #**1029** (**permalink**) 10-04-2007, 02:02 PM

well...

Here's where we disagree Ital. You're suggesting deflation is good for the dollar. It may be true longer term (i.e. decades), but shorter term (i.e. a few years), what is the cause of this deflation? I say nervous central banks dumping dollars (cash) is inflationary (because eventually that money comes home), but nervous central banks dumping treasuries on a large scale is super deflationary, (it offsets the cash AND reduces the M2M value of treasuries, causing financial losses for everyone left holding them, especially if on credit) and this is the disaster that awaits the US economy. It may not be now, but it will happen eventually, I don't see any other way to correct all these imbalances.

What we saw leading up to Aug 16th was money "coming home" because of contracting credit through margin calls, so it makes sense that the dollar was strong, but what happens when foreign central banks start really diversifying their dollars? What happens when, as a result of that, all assets lose value because foreigners want out?

Keep in mind the USD is (basically) the only reserve currency right now, so no other currency faces these potential headwinds.

By the way I'm NOT discussing all the other correlated markets (yen, stocks,etc.), nor am I suggesting that we won't have a dollar corrective rise in the near future. I am suggesting that the dollar strength may stop correlating with the other markets in the way we've been used to in the last few years.

Spin

italm31 · #**1030** (**permalink**) 10-04-2007, 02:54 PM

Well Spin,
I may be the wrong person to have this discussion with since I don't give a rat's a** about economics. I know the bare minimum. When economists speak, i tend to dose off so Ill give you the benifit of the doubt. BUT...from what I do get, deflations dont last decades, they last only a few years. Second, when banks start dumping dollars, that will not be deflationary, that will be hyper-infaltionary. I agree with you, hyper-inflation will happen once this next dollar rally is over (wave C). Whe that happens, you better have gold and lots of it. Gold will fall in a deflationary period such as what were about to go through, (just like everything else will) but once this period is over,it's going to the moon so you better own it if you want to survive. Until then, what awaits us is deflation. Cash goes up in value during deflation. Its the only thing that does. Thats why the timing is perfect now for the USD rally and deflation to happen at the same time and thats why markets have been pretty much in sync the last few years. They all rose together,... they will all fall together. Thats deflation!

spin the o · #**1031** (**permalink**) 10-04-2007, 03:57 PM

like I said, dumping cash is inflationary, but dumping treasuries isn't.
Since most of their holdings are in treasuries, the net effect, imo, is nil in terms of adding cash to the economy (selling treasuries takes cash out, right?).

However, the loss of value in treasuries:

is felt by everyone holding them, resulting in losses of capital;
increases the cost of borrowing for the US government, which puts pressure on the taxpayer;
increases the cost of borrowing for everyone, since the spread is based on treasuries;
by extension, reduces P/E ratios and home values since capital costs more.

All these things are deflationary, which could turn hyper-inflationary depending on how the FED reacts.

p.s.
I bring these things up not because I'm an economist, but as an answer to your comments regarding psychology which I respectfully disagree with. If central banks are dumping dollars in the trillions, it makes no difference what you and I and the guy on the street do in the forex markets. My opinion is very uncertain now, so I wouldn't want to convince too many people, but I'm starting to think this trend might be much larger than we think, though other countries may be tempted to devalue their currencies to "defend" themselves, which would make the time to own gold and silver now, not 3 years from now.

Spin

italm31 · #**1032** (**permalink**) 10-04-2007, 04:24 PM

Hey Spin,
Like Ive said before, just because were Ellioticians doesn't means were immune the the psychology of the markets. Just the fact that your not sure anymore as to the direction (cause this thing looks like its going to go in the same direction forever... I feel the same by the way... may be proof of the degree of the extreme of psychology. When contrarians begin to go to join the herd, you know its almost over. As far as inflation vs deflation, I'm ok with agreeing to disagree.

italm31 · #**1033** (**permalink**) 10-04-2007, 08:39 PM

Hey guys,
Just getting ready for NFP tomorrow so I'm trying to put together a trading plan. Emotions are running high these days so tomorrow could be a big mover.Better to be prepared than winging it.
Obvious pair to watch is the Euro. I'm torn on this one as Im sure many of you are. Larger picture (weekly) you know my stance is wave 11 so I'm expecting a downturn soon. However, the I don't know if within this last wave, we've completed an extended wave 3 then 4 whereby tomorrow will bring us into wave 5 OR, if wave 5 is completed and as Jamie already point out, tomorrow could bring us into a 3 of 3 down. So without further a due we need to see the Euro with our bull glasses first.

1. The daily closed with a reversal pattern today so thats certainly indication we may be going up tomorrow.
2. We've traced out 7 waves so far a double zigzag may be complete. This came to about 23.6% retracement of extended wave 3.
3. A sharp move upward took place once the double zigzag ended. This could be wave 1 of 5 upward.
4. The move down from the top appears to be trading in a channel which is typical of a correct. If the upper trend line is breech, chance are, this correction will be over. Already wave 6 has been breech today so wave 1of may already be in place followed by an a and then b of (2). Be careful for a sharp move downward (c of 2) before a move up.

A safe bet with very good risk/reward would be to expect a c of 2 down before a sharp move to the upside. If it retraces to about the 61.8% to 78.6 % of wave 1, the go long with a stop right below wave 1. That way if your wrong, it wont be too bad but if your right, your will at least have caught the meat of wave 5 upward.
Given the volatility I expect tomorrow, I may actually put an order to go long at 1.4083 (78.6 % retracement of wave 1) and a stop right below wave 1 at 1.4063. That a risk of 20 pips.

italm31 · #**1034** (**permalink**) 10-04-2007, 09:17 PM

Quote:

Originally Posted by italm31

Hey guys,
Just getting ready for NFP tomorrow so I'm trying to put together a trading plan. Emotions are running high these days so tomorrow could be a big mover.Better to be prepared than winging it.
Obvious pair to watch is the Euro. I'm torn on this one as Im sure many of you are. Larger picture (weekly) you know my stance is wave 11 so I'm expecting a downturn soon. However, the I don't know if within this last wave, we are in a we've completed an extended wave 3 then 4 whereby tomorrow will bring us into wave 5 or if wave 5 is completed and as Jamie already point out, tomorrow could bring us into a 3 of 3 down. So without further a due we need to see the Euro with our bull glasses first.

1. The daily closed with a reversal pattern today so thats certainly indication we may be going up tomorrow.
2. We've traced out 7 waves so far a double zigzag may be complete. This came to about 23.6% retracement of extended wave 3.
3. A sharp move upward took place once the double zigzag ended. This could be wave 1 of 5 upward.
4. The move down from the top appears to be trading in a channel which is typical of a correct. If the upper trend line is breech, chance are, this correction will be over. Already wave 6 has been breech today so wave 1of may already be in place followed by an a and then b of (2). Be careful for a sharp move downward (c of 2) before a move up.

A safe bet with very good risk/reward would be to expect a c of 2 down before a sharp move to the upside. It it retrace to about the 61.8% to 78.6 % of wave 1, the go long with a stop right below wave 1. That way if your wrong, it wont be too bad but if your right, your will at least have caught the meat of wave 5 upward.
Given the volatility I expect tomorrow, I may actually put an order to go long at 1.4083 (78.6 % retracement of wave 1) and a stop right below wave 1 at 1.4063. That a risk of 20 pips.

If it makes a new low, that obviously was not a wave 1 of 5 up but a wave c of II of 3 down. (Tell you the truth, I actually prefer the bull view for tomorrow.) A good plan for the bears, with a good risk reward, would be to short near the upper trend line and keep stops tight (since you know even if your a bull, we at least expect a c of 2 down). If a new low is made, you know your going lower.

The problem with this plan is we don't have a definite stop so it could be dangerous. The price could gap up above that trend line then go lower or it could go down for a d wave, come back up for an e wave, then go down. Either way, we have no definite stop except wave 2 near 1.4200 which is over 70 pis away. I guess if its within your money management rules and your not risking more than you allow yourself too, a stop could be above the wave 2. Either way, Id be cautious with this one.

Have good night everyone!

italm31 · #**1035** (**permalink**) 10-04-2007, 09:31 PM

If anybody see any other counts on the Euro or has another trading plan that youd care to share, Im sure it would be welcomed by everyone one in this forum as I may have obviously missed something. (since I dont have all the answers...I just pretend like I do...shhh...I never said that)