EDIT: And as far as my optimism goes. If this whole decline is just a wave (C) of a flat, then that flat is most likely a wave four. After wave four comes wave five. That's all well and good, but that wave five will also come to an end, leading to a bigger correction than what we're seeing now. With all of the heartache going on with this economic slowdown, what will happen during the next even bigger slowdown? That thought kind of puts a damper on the parade...
Good point.
I was also thinking about it lately.
I was even about to post here something like "buy and keep", saying that the thing (D&J or S&P) must go higher sooner or later.
Here, however, comes important issue in play.
Sooner or later...
The decline can last easily few years if not more, because
1) this Flat could be just the first part of the bigger correction.
2) this is not a flat but something else
In any of these cases, there is a possibility that we won't see the current levels for, let's say, 5 years.
Are we ready to buy and keep for such long ?
I am personally not At least not yet.
But. As i'm seeing not only this Flat but also some other possible counts which are pretty bullish in the mid-term, the idea to keep alerted for the upside makes sense.
So, all in one, there are, as usual, dfferent counts and only the proper MM can keep us alive in this environment.
Here's a possible wave count for Gold. Price action since the March 2008 high has been a series of three wave moves which could be a leading diagonal in either a wave (1) or (A) position.
Hey Justy, shouldnt a leading diagonal be a 53535? Your diagonal is 33333. Not trying to be a smart ass just making sure I am aware of the theory because lately I've seen a lot of counts with leading diagonals being of 33333 form...
Hey Justy, shouldnt a leading diagonal be a 53535? Your diagonal is 33333. Not trying to be a smart ass just making sure I am aware of the theory because lately I've seen a lot of counts with leading diagonals being of 33333 form...
Thanks!
It can be both. From what I get from the EWP book, leading diagonals are typically 3-3-3-3-3, but Prechter has allowed for 5-3-5-3-5 as well.
Looking at the 5 minute chart of EURUSD we should see a bounce coming up soon... This pair is also sitting on a very long term fib level which I suspect should cause a bounce on the first test which bolster's the case for a bounce, not to mention a visible 5 wave movement.. I'm looking for a bounce back to 1.3050 which is also a longer term fib level and is also only a few pips off of the 100.0 Extension of this first impulsive wave we can see now.
Last edited by brad_1199; 04-08-2009 at 11:10 PM..
Yes I agree as well. Both of those are three wave moves. So here's how I came up with the leading expanding diagonal scenario...
First off, there are only two types of moves according to EW throry: Fives and Threes. There is nothing else. Furthermore, if you see a five wave move there is only a limited number of situations that five can be placed in accordance with EW patterns. Likewise, a three wave move can only be placed in a certain number of situations as well. The first diagram below shows that. On the left is all of the places a five wave move can fit within EW structure. ( A five can be wave one of an impulse, wave one of an extension, wave three of an impulse, and so on.) Three wave moves though, can fit in every single EW wave location (wave 1,2,3,4,5,a,b,c,d,e,w,x,y,z), so it's a little more difficult to place a three wave move in the EW structure.
Nonetheless, looking at the first three wave move only and looking at the right side of the diagram below (three wave moves) we can narrow down the list of possibilities. So starting off, can that first three wave move in gold be in the wave one position of a diagonal? Yes. Okay, so there's one possible wave count. Next, can the three wave move be in a wave two position of an impulse? No it can't. Wave three of a diagonal? No. As I go through the list, I only see two possible places that first three wave move can fit: Wave one of a leading diagonal and in wave (W) of a triple three.
As for the second three wave move. Going through the same list, There are only two places I see that fitting in as well: Wave two of an impulse(diagonals are impulsive), and as wave (X) of a triple three.
So in the end, the two charts below are what I think are the only two possible wave patterns for gold (At the moment, of course. Once we get more price action to study, things could change). The first is the diagonal and the second is the triple three. Both counts call for gold to rally. And since gold and EUR/USD have been very correlated lately, I'd expect EUR/USD to rally. Looking at the last posts from both MarketWavez and Brad, it looks like they expect a rally as well.
The only reason I posted the silver chart last night was just to show that gold and silver were both tracing out impulsive patterns to the downside. So that made the leading diagonal scenario my preferred count for gold.
Yes! You hit the nail on the head. And now I'm going to take your words and twist them. Ha Ha!
From Prechter's book, page 80:
"...Third waves - Third waves are wonders to behold...Third waves usually generate the greatest volume and price movement and are most often the extended wave in a series. If follows, of course, that the third wave of a third wave, and so on, will be the most volatile point of strength in any wave sequence...
...Fifth waves - Fifth waves in stocks are always less dynamic than third waves in terms of breadth. They usually display a slower maximum speed of price change as well... Even if a fifth wave extends, the fifth of the fifth will lack the dynamism that preceded it..."
According to all our wave counts, the third of a third wave is over. If, like you say, we haven't seen anything yet that looks like a panic and yet we've just finished the most volatile part of the decline (third of third wave), then it stands to reason that there won't be much left in terms of both panic and strength of the remaining decline.
Justy
I suppose, the main diference between our opinion is that I don't believe that we have seen the bottom of third wave yet.
It has still a long way to go.
Here's a possibility for eur/usd. The complete correction from the high is in WXY-form where W and Y are now almost equal. Wave Y consist out of an WXY correction aswell, where this smaller Y has a wave a consisting out of 3 waves, wave b which is 3 waves aswell and wave c, which has waves 1, 2, 3 and 4 finished allready.
Now logily we should have a simple wave 5 to end this correction. However it looks like this wave 5 is develloping into an ending diagonal. At 1.22 smaller W and smaller Y are equal, looks like that's a really good number for a bottom.
Another idea is that wave c could be an ending diagonal on its own, where wave 4 is forming now and one more low (wave 5) is needed.
I could be wrong as well, so I'll read it again too...
This is all I found...
"When diagonal triangles occur in the wave 5 or C position, they take the 3-3-3-3-3 shape that Elliott described. However, it has recently come to light that a variation on this pattern occasionally appears in the wave 1 position of impulses and in the wave A position of zigzags. The characteristic overlapping of waves 1 and 4 and the convergence of boundary lines into a wedge shape remain as in the ending diagonal triangle. However, the subdivisions are different, tracing out a 5-3-5-3-5 pattern. The structure of this formation (see figure 1-20) fits the spirit of the Wave Principle in that the five-wave subdivisions in the direction of the larger trend communicate a "continuation" message as opposed to the "termination" implication of the three-wave subdivisions in the ending diagonal."
hi. I am expecting USDJPY to reach at least 85 this weak, because it's seen from the graph that the pair is in the freefall. What are your opinions about this?
hi. I am expecting USDJPY to reach at least 85 this weak, because it's seen from the graph that the pair is in the freefall. What are your opinions about this?
My first target, based on the P&F charts is 89.
Anything more is a nice BONUS
"When diagonal triangles occur in the wave 5 or C position, they take the 3-3-3-3-3 shape that Elliott described. However, it has recently come to light that a variation on this pattern occasionally appears in the wave 1 position of impulses and in the wave A position of zigzags. The characteristic overlapping of waves 1 and 4 and the convergence of boundary lines into a wedge shape remain as in the ending diagonal triangle. However, the subdivisions are different, tracing out a 5-3-5-3-5 pattern. The structure of this formation (see figure 1-20) fits the spirit of the Wave Principle in that the five-wave subdivisions in the direction of the larger trend communicate a "continuation" message as opposed to the "termination" implication of the three-wave subdivisions in the ending diagonal."
I'm not sure if we're reading from the same book. This is from page 40 of Elliott Wave Principle:
"Leading Diagonal
It has recently come to light that a diagonal occasionally appears in the wave (1) position of impulses and in the wave (A) position of zigzags. In the few examples we have, the subdivisions appear to be the same: 3-3-3-3-3, although in two cases, they can be labeled 5-3-5-3-5, so the jury is out on a strict definition."
The book also mentions that if the diagonal is a 5-3-5-3-5, you should be aware of the possibilities and not to mistake it for a series of 1st and 2nd waves. Prechter says the 1st and 2nd wave possibility is more common than the diagonal.
The diagonal scenario in gold is a 3-3-3-3-3, so there is no possibility of it being a series of 1st and 2nd waves.
I'm not sure if we're reading from the same book. This is from page 40 of Elliott Wave Principle:
"Leading Diagonal
It has recently come to light that a diagonal occasionally appears in the wave (1) position of impulses and in the wave (A) position of zigzags. In the few examples we have, the subdivisions appear to be the same: 3-3-3-3-3, although in two cases, they can be labeled 5-3-5-3-5, so the jury is out on a strict definition."
The book also mentions that if the diagonal is a 5-3-5-3-5, you should be aware of the possibilities and not to mistake it for a series of 1st and 2nd waves. Prechter says the 1st and 2nd wave possibility is more common than the diagonal.
The diagonal scenario in gold is a 3-3-3-3-3, so there is no possibility of it being a series of 1st and 2nd waves.
Disclaimer: Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts. Any opinions, news, research, analyses, prices, or other information contained on this website is provided as general market commentary and does not constitute investment advice. Forex Capital Markets LLC. will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.
