Elliott Wave Counting with EG

Last chart I posted would be for the Short and Medium Term Projections for GBPJPY

Below is a Longer Term Projection on GBPJPY Using EW Theory and Harmonic Patterns.

Knowing that again so many traders think that the USD is going down and with all the credit and the sub prime issues both in the USA and UK, the "market" has the tendency to think that we are going to see the "FALL" of the USD and see the Strengthening of the JPY.

Based on my Monthly Chart EW Count, yes ... it is still possible that this pair is going down up to the Wave 1 @ 208.14 of this Wave C in The Monthly Chart. However, I would think that this will not go any further than the last low we had at 219.31

Infact, we would probably see a running flat corrective wave where the C wave does not go beyond wave A. And this is due to the underlying strong main trend ( BULL TREND ).

This means that Our wave C down will end at 234.74 area and will reverse to the Upside with a strong move to get back to the Bull Trend.

Carry Trades will be back till the range of 259.69 - 263.33

After this....... you will see it in my monthly chart.

Notice where my Monthly Projection is and where my Daily Projection is located too....

Quite a number of things pointing to a narrow range of price levels.

I hope that if anybody follows this analysis and Projection and believe that this actually helped them profit ( incase this does unfold as i have projected here ) .... would be kind enough to make a donation to Charity.

May you all have a nice year end harvesting all these pips.

I will have to manage with whatever is left in my account. This has been a very expensive lesson for me. But I think I have learned quite a lot in this 1 year of studying forex.

EG

For anyone who follows the projections I made above....

This will be invalidated with a Price Fall lower than 234.22 which is end of Wave 1 in this sub wave C of the Big Wave B UP.

EG

Hi EG,
can I ask you how do you see this count on H1 according to your count?

Hello FxMt

You will see that I have revised my wave c up count in the next post without invalidating yet my Projections for the medium to Long term.

I will go for your Questioned Labelling for 1? and 2?

EG

I have revised my wave count for the sub wave c UP of big wave B UP.

It seems that wave 3 inside wave c is finished after getting into a micro EW Count.

This has resulted in What I see as a diagonal triangle / Wedge where wave1 is allowed to overlap with wave 4 in this case because this occurred in a wave 5 inside wave 3.

This is further supported with what we now see as a wedge that we can apply the Wedge theory to. ( As far as I can remeber, the original theory was npt allowed to be discussed here. How ever, I am discussing this based on EW theory and chart Patterns which seem to have the same strategies ).

Anyway.... to move on with this you will see in the chart that somehow things look like they will fall into place and the whole thing looks too IDEAL and too good to be TRUE.

But if it does unfold as such, may you all profit from this.

EG

Ok I give up... I have rebooted my computer as I am unable to attach new charts to this posts for continuity.

followed by

and finally I am I able to attach all my charts

EG

Allow me to correct my monthly chart projection Limits.

In the earlier chart I referred to wave 4 limit as 208.14.

This was a mistake as this is wave 1 inside wave 3. Since we are now in wave 4 inside wave C, then the wave 4 limit should be end of wave 1 in wave C @ 192.43

I would maintain my stand now that price will not go lower than previous low of 219.31 as some major analysts have predicted ( well... they probably know more. I am but a newbie here. )

But based on the number of things I have tossed into the cooking pan of analysis using EWT, Harmonics, FIBS and the Wedge this is how I see things to turn out with this pair.

Maybe I am just trying to fit evrything to some thing very idealistic...

EG

Monday up to Tuesday... I would be looking forward to watching Price drop to 235.74 or ;ower . But not lower than 234.22

Then if the bounce appears and pricer reverses, then I would expect price to go up the range of 245.21 to 247.51 for the end of Big Wave B for the rest of the week till next week.

That would sound like a nice carry trade till next week.

The only major Drop that I expect to happen when this Big wave B occurs is a 38.2% retracement / Drop towards 235.32

I maintain that view because I am expecting this to play out a Bearish Butterfly on the Daily Chart while unfolding its EW Count.

From 235.32....... It will be BACK to the Carry Trade.

Let us not follow the crowd.

EG

can you analyze australian dollars?

hhhhhhmmmmmm.......

I was hoping to stir the pot and derive some form of discussion on the points I presented in my chart specially because it was not solely based on pure Elliott Wave Theory.

Maybe the way it was presented makes it difficult to understand...

So I will try again and try to break the analysis 1 by 1.

I will start off with the 5m chart.

First, I would like to set the basic or general direction that I am seeing for this Pair.

Using the monthly chart, I believe that we are in a Wave 4 Sideways moving corrective wave.

Wave 2 on the monthly chart as you will see is a sharp Zigzag wave. And by the RULE OF ALTERNATION Based on Elliott Wave Principles, if wave 2 is a simple sharp zigzag wave then we would expect wave 4 to be a complex sideways moving corrective wave. That is probably why we see this wave 4 to be expanding sideways. And by the looks of it, it does not look like it is forming a triangle.

In any corrective wave, we initially see a 3 wave structure ABC.
I then make an initial assumption that C = A. I use the FIB Extention Tool to project this FE 100.0% using Points 0 1 and 2.

Where :
0 is the origin of wave A
1 is the end of wave A
2 is the end of Wave B

FE 100.0 is my Initial Target for Wave C end.

I hope that I have explained my self well on this one.

Please refer to the attached monthly chart and NOTE that completion or attaining this target will take months or even years. I am just sort of giving you an over view of this pairs price direction.

In EW Theory, we believe that sub waves comprice these bigger waves we see in the monthly charts. This means that the same EW Principles are applied to the Price movement in the lower time frames as is applied on the higher TFs and that same waves that follow the same EW rules make up the bigger waves.

Kindly note the Purple ABC. This is how I see wave 4 unfolding.

You may be wondering why I am repeating these posts....

Initially I thought posting charts and leaving notes on my charts would be enough.

Now I think, many who are not familiar with EWTheory/Principles may have a difficult time grasping what I am trying to present here. Not that I think these are all correct. But I am hoping to draw some form of discussion on the GBPJPY EW Count and hope that I can have my counts validated by other traders who use the EW theory in their arsenal of tools trading this pair.

So Let us move on...

Still on the monthly chart, as you can see, based on my chart I am already assuming that GBPJPY is now on the Wave C Up in this monthly chart.

Wave C we must remember is an impulse wave which is subdivided into 5 waves ( YELLOW LABEL ).

Following the guidelines in numbering or labelling impulse waves, you will see on the next chart that we already finished wave 3 yellow and we are now seeing Wave 4 inside this wave C.

I have skipped the weekly chart as we can still clearly see the wave structure on the monthly chart.

Note also where I have placed my target for wave 5 which is the end of this wave C up.

That is the FE 100.0 @ 259.93.
Using the FIB Extention tool which You see in Pale green using the Points 0 1 and 2

129.32
241.06
148.19

Now before we reach wave 5 end, we still have to tackle wave 4.

First we must determine what to expect wave 4 to be in terms of its structure. we there fore apply the rule of alternation after we determine the structure of wave 2.

As you can see on the chart, wave 2 is a complex sideways expanding corrective wave. Therefore we expect wave 4 to have the simple sharp zigzag corrective wave form.

Now here are some points I have gathered to remind me of what governs a wave 4 development.

1. wave 4 does not overlap with wave 1. unless it is in a wave leading diagonal triangle. since this is a wave C, then wave 4 is allowed to retrace down up to 192.43.

2. In terms of Percentage retracement, wave 4 can retrace the length of wave 3 from 23.6% up to 50%

Ok... I have missed to label the end of wave 3 yellow on my monthly chart.

This is the High @ 251.07 on my chart. see enhanced chart below.

So drawing a Fib retracement scale from end of wave 2 up to end of wave 3.... you will see that the retrace range of 23.6 down to 50% is from 179.37 up to 234.15... and in many cases 38.2% retrace is most common.

Now.. note also that Prechter mentions in his book that wave 4 normally ( not alsways though ) ends at or near the termination point of a subwave 4 of the previous Im,pulse Wave 3.

If we then combine all this guidelines... It is possible ( BUT NOT ABSOLUTE ) that we may be seeing the possible low of this wave 4 even if it is not yet complete.

On the Daily Chart..

Initially the move from 251.07 down to 219.31 was considered to be a Big Wave A. This could take the form of 3 or 5 waves.

We can clearly see a 3 wave structure on the chart. The only way for us to be able to confirm that Big wave A is complete at 219.31 is by seeing the wave 4 count of a `12345 count get invalidated.

That is if the retracement up goes higher than the assumed wave 1 end at 237.60.

Our current price is at 238.71 with an earlier high at 238.84. This confirms the end of Big Wave A at 219.31

So we are in Big wave B now.

The Rule of alternation also applies to Wave A and Wave B. If wave a is a sharp or simple zigzag then wave B will be a complex sideways expanding corrective wave.

In this case, Big Wave A is a sharp zigzag wave so Big Wave B must be a complex sideways expanding corrective wave.

As we can see on the Daily chart, Big Wave has expanded sideways and formed a triangle in its sub wave B also.

Big wave B though classified as an expanded wave may also simply be described as a 3 wave structure ABC even if the sub wave B is a triangle.

sub wave a and sub wave b ( triangle ) already looks complete. So we should now be seeing the sub wave c inside this Big wave B to be unfolding.

Now that we are in wave c which is divided into 5 waves as an impulse wave,

This is where I have to options of labelling me EW Counts on this Pair.

First I use the FIB extention tool to project wave 3 and wave 5 when I can see that a POSSIBLE count for wave 1 and wave 2 is present.

Option 1 ______
First sign is where I positioned the Magenta FIB Extention tool.

This means that wave one started at 229.20 which is also the end of the triangle sub wave b and the wave 1 is at 234.22 and wave 2 is at 229.72

Option 2 ______
Second potential count iswave 1 still at 234.22 while wave 2 is at 233.67

I will select Option 1 because I came across a literature and I can not remember where.... but it states that sub wave 1 of wave 3 must go beyond end of higher degree wave 1. This is only satisfied by Option 1 in Magenta.

As a guideline then I will set my target for sub wave 3 at the FE 161.8 of this drawn FIB Extention tool Magenta. And this is at 239.19.

Referring to the chart again, you will see that we are very near this price level on the GBPJPY.

Let us dissect the wave 3 further on this 4 hour chart.

We know that wave 3 ( 33 here ) must never be the shortest. Seeing what seems a 5 wave structure already finished, let us check if the previous rule has been violated.

Again we use the fib extention tool on each impusle wave.

we see wave 33 is a little less than 100% of wave 31 ( Pale Green FIB Extention Tool. This means that wave 33 is shorter than wave 31. therefore, wave 35 must be shorter than wave 33 to adhere to the rule.

Let us measure or compare the current length of wave 35 to wave 33 using the BLUE FIB Extention tool. Here we see that wave 35 is just about 80% of wave 33.

With this , it means that wave 33 is not the shortest comparing to wave 31 and possible wave 35.

wave 31, 32 and 33 seem to have already exhibited the complete characteristics of their wave nature and completetd the sub wave counts.

This leaves us to confirm the remaining wave 35

PS. the chart below supercedes the previous EW Count I made and posted as a revision prior to this specially where I label wave 2 in the sub wave c.

Now a cleaner chart on the 4h TF

Projecting target for wave 3 navajo white using the magenta FIB Extention Tool.... this is at FE 161.8 @ 239.46 Price is just about to reach it with the Friday's climb.

Using the internal wave structure of wave 3 navajo white using the yellow waves 30 , 31 and 32...... based on the Pale Green FIB Extention tool, wave 35 is expected to reach FE 261.8 @ 245.01

But using the projections of the Pale Green FIB extention tool seems to over shoot the actual natural target. Besides the internal structure of the wave 3 navajo white is not the usual type as it seems that it is wave 31 which is extended and not wave 33.

Furthermore, as I have explained in the earlier post wave 33 is found to be shorter than wave 31. therfore wave 35 must be shorter than wave 33.

And as you can see the 2nd chart, this rule does not seem to have been violated it. But I must be able to prove that wave 35 is already finished or at least will be lower than the BLUE FE 100.0 @ 239.60

higher than 239.60 will invalidate the wave count inside wave 3 navajo white because this will make wave 35 longer than wave 33 which is already shorter than wave 31.

we must also remember that Big Wave B on the daily chart normally retraces Big Wave A up to 78.6% which is already at 244.27

so we can not just end wave 35 or wave 3 navajo white @ 244.27 since this suggested end of Big wave B where we are at its sub wave c and probably at the end of its wave 3 navajo white would seem very unlikely considering that we still have to make a retracement of commonly 38.2 percent of wave 33before wave 5 navajo white for its sub wave c end.

so i had to use other tools to seek validation or potential confirmation if we really saw the end of wave 35 or wave 3 navajo white.

and the wedge theory was brought up which I encountered in the Daily GBPJPY Analysis thread.

after checking and making some calculations, I think I found a reason to seek additional confirmation using a deeper knowledge of EWT.

then I got reminded about the leading diagonal triangle which when found in a wave 5 (here it is wave 35) will render a wave count valid. and here we are, i believe we have a leading diagonal triangle in this 4 hour chart.

Next step is to prove that the internal structure of this leading diagobnal triangle conforms to the EW Rules.

let us jump into the 15 minute TF.

you will see that in the attached chart, we have what seems a valid and qualified internal subwaves of this leading diagonal .

next to prove is that wave 55 on attached chart for the end of wave 35 must have a valid 5 wave impulse wave. which it seems to be exhibiting in the 2nd chart.

Assuming that wave 35 is valid and that wave 3 navajo white has ended,

We can only further confirm this once price breaches or falls below the lower side of the wedge. When that happens, I would be looking at the 38.2% retracement of this wave 3 navajo white for the wave 4 navajo white.

like I said earlier, wave 4 retraces wave 3 from 23.6 to 50%. and commonly it retraces 38.2%

Now, notice where 38.2% retracement falls and compare that to the estimated Price based on the wedge theory...

The attached chart would show that they both fall in almost the same area.

Should we call this mere coincidence?

Anyway, based on EWT, wave 4 is allowed to retrace up to the end of wave 1 at 234.22 though this exceeds the suggested limit of 50%.

1. Throwever of price outside the wedge above it upperside going for the FE 161.8 @ 239.46. 38.2% retraces falls at 235.74

2. Price has seen its wave 35 end at 238.84, then 38.2% retracement is at 235.36.

But like I said, this is just the ideal coincidence. And based on EWT, price for wave 4 is allowed to retrace till end of wave 1 at 234.22

The 38.2% retracement and that wave 4 limitation may be translated as strong support levels.

If price goes lower than 234.22, then my EW Count is invalid.

If wave 4 plays out as expected and making my EW count valid, then price should continue to climb again for the wave 5 navajo white.

Sights are set for the FE 261.8 - 300.0 of the Red FIB Extention Tool at 245.48 - 247.48

Incidentally, this range also falls in the same area as the 61.8% - 78.6% ratracement of the Big Wave A to attain Big Wave B.

Another coincidence?

Please not that on the chart, another thing to watch out for is the estimated time at which price will meet the estimated price target of the Bullish wedge retracement. where a vertical line is drawn from the intersection of the extended support and resistance trendlines that formed the wedge and see where that vertical line intersected the trendline formed by extending the line using points 1 and 4 of the price bounce inside the wedge. And here it is estimated to be attained at 2007.10.15.20:00 GMT +6.

Zooming out and looking atthe 4 hour chart again.....

we canb see that a number of projections using the FIB Extention tool have their estimated price levels almost in the same area as the others.

Let us take this 1 by 1.

1. Big Wave B yellow is seen as a 3 wave B were if C=A ( Aqua ABC ) then C is equal to FE 100.0 @ 244.39

2. Wave 5 navajo white is estimated to be in the range of FE 261.8 - 300.0 (Magenta FIB Extention Tool) 245.48 - 247.78

3. Incidentally, based on a guideline, Big Wave B is expected to retrace Big Wave A by 61.8 to 78.6% and 78.6% is at 244.27 Golden FIB retracement Levels on the right side of the chart.

ALL boxed in Yellow

Multiple coincidences?