Elliott wave outlook

GU 1min

http://i1168.photobucket.com/albums/...1m11-03-13.png

Hi luis
calling luis (live room.)
regards.
Cross

Going Short from here. Wish me luck!!

Hi mig
you short eu, and tarhet is the 5 on 4 hour chart

Appreciate comments on my Renko 1m wave count.
Cheers,
U2

If this is indeed the end of 2 of 5 then 3 of 5 is at least 100% of 1 which puts us at .28738 and if it is a usual wave 3 we are looking at 1.618% which puts us at 1.27631

Hopefully we will get a good fall off in the next 4 hours, that would definitely signal a typical wave 3 characteristics.

EU short still looking good.

People are putting up really good counts - keep 'em coming!

CG, looking at your GU analysis charts got me interested. I ran some fib projections and the results are below. GU 2nd waves foreshorten everytime, so my idealized projection of 'common wave relationships' correspondingly falls short for waves 3,4 and 5 by the same distance whereby wave 2 is short of its target:

Intermediate wave down from Jan 2013 top
common wave relationships:
wave 1:16382 to 15675
wave 2 zigzag retraces .618 : 16111 (actual: 15845 (23.6%))
wave 3 is 1.618 of 1 : 14967.07 ( 1143.93 points from 16111 )
wave 4 (complex) retraces .382 of 3 :15404.05 ( 436.98 points from 14967.07 )
wave 5 = wave 1 :14697.05
wave 5 if w4 divs fib sections : 14799.56

With wave 2 short by 266 pips the adjusted targets for waves 3 and 5 are 14701 and 14431/14533 respectively. Is wave 3 perhaps already completed? I suspect not, but it is close. Price in subwave iv of wave 3 down is below 14900 and possibly approaching 14700 at the moment. That seems a realistic target with a reasonable length of 500 pips for subwave v of wave 3 - so subwave v will not exceed the length of subwave iii.

Another downside target is 14600 which I derived by calculation from reverse (hidden) divergence. I will post a divergence study showing this a bit later. Of course, should PA go there without tracing out wave 4 first, then wave 3 will not be longer than either 1 or 5. Relabelling will be necessary. (Looking at the 15min TF the labelling of iii and iv can also be changed to (1)-(2) for an extended wave 3 but we'll cross that bridge when we get there)

Here is a chart showing wave 3 down in progress with a MACD indication of the exact location of sub-subwave 3 of subwave iii. Same price as you have it CG, but as suggested by TLs drawn on MACD I consider the correction to be longer in duration. My labelling of iv is therefore slightly different from yours. I also strongly suspect that PA has jumped channels (as it likes to do in GU), so my TLs are probably not going to hold.

http://ubuntuone.com/2Dvo1QamLxLjLLCbUOhVly

This chart shows both normal and reverse (hidden) divergence in the recent GU wave 3 down. It is common knowledge that divergence correlates to elliott wave counts, especially between waves 3 and 5. Here is a practical example.

GU is a tricksy pair. I think of GU as Gollum. Nasty surprises, channel hopping, deception and sometimes sweet as can be: respecting S/R and honoring indicators. Real ol' Slinker and Stinker. Yet, even so, EWP always applies and (at the moment) the indicators don't lie.

Firstly, notice how the Fib projections of subwave i (of wave 3) cause PA to react everytime - especially the 2.786 level. Usually, 1.618 and 2.618 projections elicit this respect, but Gollum has quirks of his own. Again, MACD shows the exact location of subwave 3 of subwave iii (red circle).

Normal divergence (solid purple lines) occurs between MACD (as well as RSI but not shown) and PA from the point where subwave 3 of wave iii put in its low. This siganls the end of the downtrend is coming, as with each successive PA lower low (LL), MACD and RSI post a HL.

But when will divergence stop and PA correct upwards? The clue is in the reverse(hidden) divergence shown by the cyan lines. After each occurence of normal divergence, MACD and RSI make a HH whilst PA makes a LH. Normal divergence and reverse divergence work in tandem. As long as there is an occurence of reverse divergence following a normal divergence, PA continues to a LL - this is true here and in about 66% of cases. As soon as the reverse divergence stops, we can expect a final low (end of 5 of v of wave 3) to be posted and PA will reverse trend to trace out GU's corrective wave 4.

For an uptrend the above also holds (opposite direction of course). I have noticed that the above sequence of signals is only applicable to impulsive waves and even then only with 66% reliability. But even old Gollum's true intentions cannot hide from the trusty MACD!

Once wave 3 ends, MACD will spend some time above its 0-line as wave 4 corrects PA to the upside. Impulse wave 5 will then put in a new downside price low with the same normal/reverse divergence indications as described above - BUT - it will fail to make a new MACD low (below the MACD value for wave 3 of iii on the chart) thereby giving a final Normal Divergence signal that the impulsive downtrend is over.


http://ubuntuone.com/2qDpLd8XN35ELeRraThoBq

Venzen, nice work as usual!

Did you see the latest GU post on my blog? Basically i'm cautious right now and have stated the same as you just have, we have already reached 138.2% of wave 1 for the 3rd... more important than ever to watch smaller timescales. Of course, we still have the 5th to come yet to save any poor short entries!

Ha ha, no let up to the short side (Cable) yet!!! big miss on manufacturing production.

Good idea about saving the shorts

Yes, saw your latest GU blogposting - that's where I got the idea to peer into the future and "see" the end of wave 3. MACD and divergence only helps so much, and PA is confusing. Upward PA right now is ambiguous: could be corrective to the latest blast down or it could be the start of wave 4. Let's see.

edit: I'm hoping for more downside for the sake of satisfying the "common wave relationships" fib levels. This will also make further wave projection possible - and with more confidence...

With the slight lower low earlier, i now prefer further south to the 161.8% fib level (14,725) before the 4th. Who knows maybe there will be no retest of the weekly wedge and Cable will have a 3rd wave 4/500% of wave 1?!

Hi Venzen
Why use MACD 3 13 8 ?

Hi Tim,

The MACD default settings of 12,26,9 are just too slow for me. A teacher once suggested to me that 4,14,9 gives a "fast" MACD that is good for intraday charts. Well, I tried that and started getting really good signals and I started using MACD as my main indicator. Then, earlier this year I was trying to convince a friend that EW was a reliable and principled TA method and, of course, I started speaking about Fibonacci and the Golden Ratio and its occurence in nature as well as the markets. My friend liked the idea and asked: "Why don't you use Fibonacci numbers in your indicators?". That's why I have 3,13,8. Its a slight change from 4,14,9

I am not sure if there is really any benefit, but it has now become a "superstition" for me

The one place where a Fib number does not work for me is in the Stochastic - as you can see from my charts I still have that at 26 period. Any other setting (like 21 or 34) just doesn't give me the divergence signals I look for.

Anyone Trading GJ...? I am having a killer EW Sequencing going down over here...

Not trading it but just had a look. GJ certainly is hitting the Fib levels right but it's in the same holding pattern as all the rest...

Although the PA and wave characteristics indicate a market-wide slow retracement, I'm waiting for confirmation of a decisive move before committing any trades

I disagree, I see a clear elliot wave sequencing pattern.... GJ Short Target... 135, 132....