Elliottwave-Forecast.com - Official Thread w/ Analysis Blogs

Correlation between Oil and $USDCAD

One of the biggest trades in 2014 2015 is undeniably Oil and the correlated commodity currency Canadian dollar, or sometimes called Loonie. For some reasons, most Americans typically associate big crude oil exporters with Persian Gulf countries like Iraq, Kuwait, or Saudi Arabia. However, in reality, majority of crude oil consumed in the United States comes from Canada.

According to U.S Energy Information Association (EIA), in 2014 the U.S. consumed 2.9 million barrels of oil per day from Canada, compared to the second biggest supplier the Persian Gulf at 1.8 million barrels per day. For Canada, Oil is the single biggest export category at 27%, compared to the second largest export category Automotive at 12.6%. Given how significant Oil is to Canadas economy, its not surprising to see negative correlation between Oil and $USDCAD as shown from the chart below:



Understanding the Fundamental Dynamics of Oil
OPEC, an oil cartel made up of 13 oil-producing nations, has been known in the past to have a considerable influence in the Oil market. Today, they collectively supply about one third of the global oil. The oil cartel often influences the global oil market by adjusting the production volume, i.e. cutting production volume when oil price drops.

However, over the past decade, North American upstarts producing unconventional oil sources called shale oil started to gain market share and threatened OPECs dominance in the Oil industry. Shale oil, as distinguished to the conventional crude oil, typically has a higher cost of production. OPEC, led by Saudi Arabia, decided to go into price war with the US shale producers since 2014 and kept the oil production output constant despite the evidence of a surplus in the market. Consequently, oil prices started to drop due to the oversupply, and OPEC hopes to drive out the younger and higher cost opponents.

The price war has been going on for 17 months now and in the last OPEC meeting in Vienna in early December 2015, they still decided to go with the price war and scrap production limits. With no end in sight in the oversupplied condition and brutal price war, Oil responded swiftly and dropped to the lowest level since 2008. $USDCAD followed along and also broke to the highest level since 2008.

Interestingly, without the benefit of a hindsight of what OPEC may or may not do during the last meeting, we have been able to forecast the short term move lower in oil through the study of Elliott Wave cycles as shown from the December 11 short term 1 hour chart below:



The technical study of Elliottwave distribution and cycle can also be used to help forecast the longer term direction of Oil as this old video made in 2011 shows how we were able to call Oil lower to around $20 when it was still at $100.

Its certainly interesting and helpful to understand the fundamental dynamic of a particular instrument. Equally helpful or sometimes can even be more helpful however is a good technical study, such as Elliottwave analysis, to complement any fundamental analysis, as Elliottwave cycles can be used to identify the markets intention earlier than the crowd. If you would like to know more about how Elliottwave forecast can help your trading, try our service 14 days FREE

Elliott wave Theory: Catching wave III or C

Elliott wave Theory is a great tool for traders when the traders understand that it is only a tool to help them anticipate a big move. The dream of traders using Elliott wave is always to see the Market rallying in their direction and the Plan becoming a reality. The Market moves in sequences which is either Impulsive or Corrective. Impulsive waves move in a sequence of 5, 9, 13 while corrective waves move in a sequence of 3, 7, 11.

The fact is that in today’s Forex market, the sequences are more Corrective than Impulsive, and it’s almost impossible to see a perfect 5 waves move in the era of High-Frequency Trading. Today, it’s more common to see 5 waves sequence in Indices and Commodities instead. However, in reality it doesn’t matter whether market moves in impulsive or corrective sequence when traders understand that both impulsive and corrective sequences share similarities until the third swing. The only difference between the two is that in impulsive sequence, there is an extension in swing 4 and swing 5.

At Elliott wave Forecast, we understand the limitations of the Elliott wave Theory and we use the technique with the practical view towards trading. We use the Theory to trade what we call the Elliott wave Hedging to allow us catch either a wave 3 or wave C. Wave 3 or C should travel most of the time at least towards 1.00 %-1.618% the distance of wave A or wave 1.

Understanding different time frame cycles and how they relate with one another, combined with the knowledge of Elliott wave sequence and Elliott Wave Hedging will allow traders to catch the powerful wave III or C. Traders with this information can use it to identify wave II or B, which has the same sequence, within the higher time frame cycles. Once wave II or B is identified, traders can then forecast the inflection area in which Market will turn in favor of the trend, thus allowing traders to anticipate and catch wave III or C.




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$GBPUSD Technical outlook and News Events on 12.16.2015

We have 2 important news events for British Pound on Wednesday 12.16.2015

-Average Earnings Index at 9:30 AM GMT (UK Time)
-Claimant Count Change at 9:30 AM GMT (UK Time)

Both news events could bring some volatility into GBP pairs on Wednesday morning, however $GBPUSD will be more affected by the $USDX reaction on the FOMC events at evening 7:00 PM GMT (UK Time) / 2:00 PM EST

It’s well known fact that Technical Analysis is always a step ahead of Fundamental Events. We believe there is no way to make good trade decisions based on Fundamentals, however these events brings volatility to the market so we should be aware of them.

We are going to get through some GBPUSD data we have so far. The chart below is Elliott Wave analysis on 12.08.2015 ( NY Update). The pair has given us nice rally from the marked area:1.4980-1.4954 and it has already reached extreme zone from the 1.4896 low.



Current price structure suggests $GBPUSD has ended cycle from the 12/02 date as diagonal pattern and now doing pull back against the 1.4896 low. There are several options that might be seen on Wednesday. As far as the 1.4892 low holds we can see GBPUSD pushing higher. If that level breaks then GBPUSD could see extension lower towards 1.4800 – 1.4700 handle before a bounce occurs.

Please keep in mind the market is dynamic and the forecast could have changed in a mean time. If you want to get full 24h support from our market Experts, sign up for 14 days Free Trial so you can trade on right side of the market with EWF.

Note: All the labels and levels have been removed from chart analysis in order to protect clients privileges.

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Into the FOMC Event

Wednesday the 16th of December at 17:00 UTC, the Federal Open Market Committee – FOMC is to announce decision on Fed Interest Rates and few minutes later to proceed with a press conference from FED’s Chair Mrs. Janet Yellen.

While hike Expectations are currently holding at 90% in favor, it is to be seen if that will be the case and if it is, what will be the amount of raise in basis points, today holding at 0.25 percent. Worth to mention, FED will be raising Interest Rates for the first time in 9 years, since 2006.

The majority of Economists and Financial Analysts are forecasting a potential FED Interest Rates Hike will play among the spectrum of 10 basis points to 0.35%, up to 25 basis point to 0.50% max. Yet while Dollar, United States currency, has been appreciated during the last 2 years greatly against other currencies like the EUR by 22% increase in value since 1.39’s from May 2014 , AUD by 28% increase in value since 0.95 from July 2014, NZD by 29% increase in value since 0.88 from July 2014, CAD by 27% increase in value since 1.06 from July 2014 and while Metals like Gold and Silver have dropped significantly against the Dollar, by 26% and 35% from July 2014 respectively, it is a question to be answered how much room FED has to begin with while starting the normalization process.

One more additional but critical aspect FED will have to consider as well is the unstoppable drop in Oil prices. While Energy is a considerable parameter in inflation, the excessive Oil decline down to 35 Dollars per Barrel, approximately a 67% loss of value since 107.00$ from June 2014, should and most probably will produce a considerable drag to seeing the Inflation picking up and heading towards the target of 2.00%.

To conclude, there is no Doubt that FED will proceed with a Rate Hike during the event, yet two things cannot be predicted at current phase, first being how Markets will react post event in terms of Dollar Strength and secondly, later in 2016, if FED will be able to continue with the Normalization process and raise the Interest Rate towards the 1.00% target.



Graph Source: https://research.stlouisfed.org/fred2/graph/?g=1Adu

Please note, Fundamental Analysis is considered to be equally important to Technical Analysis and it is often advantageous to understand the dynamics underlying a particular trading instrument. Yet, Price Structure always predefines the direction of the movement even if the Fundamentals are not in favor. Elliott Wave Analysis combined with Cycles and Distribution, a system that we have developed in ElliottWave-Forecast.com, helps us to be on the right side of the move even if the Economics’ Event Release is against.

Sign up Now for the Free 14 day Trial and Trade the FOMC event with ElliottWave-Forecast.com

ASX All Ordinaries Short-Term Elliott Wave Analysis – December 18, 2015

Short term Elliott Wave cycle suggests rally to 5420 on 10/23 ended wave “x”. From this level, Index has turned lower in wave ((W)) with the internal unfolding as a triple three structure where wave (W) ended at 5041 and wave (X) ended at 5334, wave (Y) ended at 4963, and second wave (X) bounce is proposed complete at 5176. While the Index stays below 5176, or more importantly as far as 5335 pivot stays intact, Index is expected to resume the decline either to a new low below 4963 or at least in 3 waves lower to correct the rally from 4963.



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CADJPY Short-Term Elliott Wave Analysis – December 24, 2015

Short term Elliott Wave cycle suggests decline to 86.35 ended wave 3. From this level, wave 4 bounce unfolded as a double three structure where wave ((w)) ended at 87.05, wave ((x)) ended at 86.5, and wave ((y)) of 4 is proposed to be complete at 87.4.

Pair should now try to at least correct the rally from 86.35 in 3 swing, with primary view of extending the decline to a new low. If pair breaks above 87.4 again, it is likely doing a double correction and would open extension higher in 7 swing before the decline resumes. In the event if 87.4 breaks, pair is expected to extend higher in 7 swing from wave 3 low, but as far as wave ((iv)) pivot at 88.9 stays intact in the bounce, pair is still favored to resume the decline to a new low.




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Test Your Elliott Wave Knowledge

Hello fellow Traders, we challenge you to Take this Quiz and test your knowledge.

On the chart below you can see our h4 Elliott Wave analysis of $GBPJPY from 11.21.2015 date. Take a close look at the labeling and see if you’re able to answer on these 3 questions…



1. Rally from the 180.63 up to 188.80 is labelled as:
a) Flat
b) Triple Three
c) Double Three
2. How many swings you can count from 180.63 low:
a) 5 swings
b) 7 swings
c) 9 swings
3.(X) blue connector in the middle has the form of:
a) Running Flat
b) Expanded Flat
c) Zig Zag

Send the answers to [email protected] and win 50% Discount on any Subscription Plan you choose. These discounts will be applied only to new members who send the correct answers until 3rd January 2016.

If you’re not able to answer on these questions, you have opportunity to get 14 days of EWF membership for Free and learn from our Market Experts.

In Free Trial you get access to Professional Elliott Wave analysis of 50 instruments in 4 different time frames, 2 live webinars by our expert analysts every day, live trading room, 24 hour chat room support, market overview, daily and weekly technical videos and much more…

Nasdaq Short-Term Elliott Wave Analysis – January 06, 2016

Short term Elliott Wave cycle suggests bounce to 5117.3 ended wave (X). First leg of decline from this level unfolded in a zigzag and ended wave W at 4847. Wave X bounce is currently in progress in 3 or 7 swing to correct the decline from 5117.3 and ideally can reach 4981 – 5012 area before the Index resumes lower again. We don’t like buying the proposed bounce and expect continuation lower after wave X bounce is complete as far as 5117.3 pivot stays intact. If Index breaks below 4847 without further bounce from current level, decline from 5117.3 can be in 5 waves and so another low below 4847 can end wave ((v)) of A before a bigger bounce in wave B to correct the decline from 5117.3.



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Nasdaq Short-Term Elliott Wave Analysis – January 07, 2016

Short term Elliott Wave cycle suggests bounce to 5117.3 ended wave (X). First leg of decline from this level unfolded in a zigzag and ended wave W at 4847. Wave X bounce is proposed complete at 4926 and the Index has resumed lower again. Decline from 4926.2 unfolded in 5 waves and ended wave (a) at 4804.7. Wave (b) bounce is currently in progress towards 4865 – 4879 area before the Index resumes lower again, provided that wave X pivot at 4926 stays intact.

As an alternate view, the decline from Wave (X) at 5117.3 to the last low at 4804.7 can be in 5 waves and ended wave A. If this is the case, then Index can now bounce in wave B to correct the entire decline from 5117.3 before resuming lower again. In other words, we expect more downside in the Index against 4926.2 in the first degree. If this pivot fails, then we expect more downside in the Index against 5117.3 in the second degree.



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USDCAD Short-Term Elliott Wave Analysis – January 12, 2016

Short term Elliott Wave cycle suggests rally from wave (X) low at 1.38 is unfolding in a double three structure where wave W ended at 1.417, wave X FLAT ended at 1.406, and pair has resumed higher in wave Y towards 1.44 area. Near term, rally to 1.423 ended wave (a), and pair is in wave (b) pullback towards an ideal target of 1.413 – 1.415 area before turning higher again. We don’t like selling the proposed pullback. As far as 1.406 pivot stays intact in the pullback, expect buyers to come from 1.413 – 1.415 area, and the pair to resume to new high.



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Is it time to buy Indices yet? China may provide an answer

Global Market Selloff

Global Indices sold off strongly to start 2016 in a risk off sentiment. Shanghai Composite Index led the global index selloff with the catalyst being the PBOC (People’s Bank of China) setting a much weaker than expected Yuan fixing from 6.49 to 6.56 through Thursday in the first week of 2016. Below is the weekly market performance of global equity market as of Jan 8, 2016



By setting a much weaker than expected Yuan fixing, the PBOC may be speeding up the currency depreciation. Chinese Yuan depreciation is being seen as a negative catalyst for the equity market as this may imply China’s economic growth deceleration and also liquidity concerns on capital outflow. Last week, China market had a daily decline over 7%, triggering the circuit breaker twice in 4 days.

Another alarming development is China’s net selling of Treasuries in 2015. China is the biggest overseas creditor to the U.S and it has pretty much bought and hold Treasuries until 2015 as the chart below from Bloomberg shows.



The hundreds of billions sales of Treasuries in 2015 is a bid from China to support the economy and stem capital flight, as overseas investment that fueled the country’s boom in the past two decades left the country. In December of last year, the PBOC also burned a record amount of its foreign-exchange reserves to maintain Yuan within the range. The combination of a big drawdown in reserve and more-than-expected weakening of the Yuan suggests that the slowdown in China can be worse than most anticipate and can drag down the rest of the world. Looking forward, global asset market may continue to react negatively until the size of the Yuan depreciation becomes clearer.

Looking around the market, three indices World Indices namely IBEX, SPX500 and Shanghai Composite all bottomed in August 2015. IBEX has already made new lows below 2015 low, rest of the Indies also looking heavy and the distribution in Shagnhai Composite Index has turned negative and is calling for more downside to come.
Let’s take a look in more details at the Elliottwave structure of Shanghai Composite Index weekly chart below



Shanghai Composite (SHCOMP) peaked on June 12, 2015 at 5178.2 and turned lower. From this peak, the correction started with the first leg of decline wave ((W)) ended at 3373.5 on July 9, 2015. Second leg wave ((X)) bounce ended at 4184.45 on July 24, 2015. The Index is currently in the third leg wave ((Y)) lower and expected to reach equal leg towards 1944 – 2370 area. If the Index reaches this area, it will retest the 2013 low.

If SHCOMP is going to have more downside, it is safe to assume that other World Indices should also remain heavy and the move lower which started in 2015 is not over yet. We can also calculate approximate percentage of the correction. If Shanghai Composite will move towards 2370, that will be a 33% correction from last year’s closing value. This doesn’t mean that other indices will also correct 33% as Shanghai Composite has a bigger volatility, but this suggests that global indices should be on track to do the biggest correction since 2009 and should correct in the double digit territory in 2016.

How EWF can help you

Knowing the general direction is not enough in trading. Financial market does not move in a straight line. Even in a very bearish / bullish market, there will be strong correction along the way. More important therefore is the correct trading execution, that is trading in the right inflection areas with a logical entry and defensive plan. You can be right in the direction, but wrong in timing and position size (too overleveraged) and still lose money. EWF can help in this regards with smaller time frame charts to provide a clear inflection area to enter with well defined risk.

If you want to know further how to use this information to trade S&P 500, Eurostoxx 50, or any other global indices (we currently cover 15 global indices), sign in today for a limited 14 days FREE trial to see our Hourly, 4 Hour, Daily and Weekly Elliott wave chart and find inflection areas to trade.

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$EURUSD and German $DAX

We have 3 important news events for US Dollar on Friday 01.15.2016 at 8:30 AM EST/ 1:30 PM GMT (UK Time) which are hopefully going to make some movements in the market.

-Core Retail Sales
-Producer Price Index (PPI)
-Retail Sales

These Fundamentals are released once a month , and they usually bring some volatility into USD pairs, however there is no way to make good trade decisions based on the news. Technical Analysis is always a step ahead of Fundamental Events and future paths are already included in current price action. We are reading the market through Cycles, Elliott Wave patterns and Correlations and we already have the Forecasts ready in advance.

EURUSD makes up 57.6% weight of USDX basket, so a news release which is going to move US Dollar Index is sure to move EURUSD as well. The pair has been trading in a range and there are many possible paths and Elliott wave structures that could take form in near future so we turn our attention to the German stock market for now which often has inverse correlation with EURUSD.

Chart below shows DAX with 5 swings down from 11/30/2015 peak and as this is not an impulse wave, we think this is an incomplete sequence and as far as pivot at 12/30/2015 (10864.95) remains intact in our system, we like the idea of DAX making another swing lower towards 9527 – 9220 area to complete 7 swings sequence from 11/30/2015 peak.



The index is missing a swing to the downside toward 9527 – 9220 area. EURUSD often moves inverse to DAX, therefore, If DAX is going to make this proposed push lower, we can assume that EURUSD will also make another push higher to retest 12/14 (1.1060) peak before pulling back again in 3 waves at least and could get more sideways after that. The current analysis of $USDX, $DAX and $EURUSD could be found in membership area of Elliott Wave Forecast.

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EURJPY Short-Term Elliott Wave Analysis – January 19, 2016

Short term Elliott Wave cycle suggests cycle from 12/4 peak at 134.58 remains alive as a double three where wave (W) ended at 127 and wave (X) bounce is in progress as a triangle. Wave A of (X) in the triangle is proposed complete at 129.08, and as far bounces stay below this level, the triangle idea remains valid and pair should remain consolidating before breaking lower again at later stage.

If pair breaks above 129.08, it will invalidate the triangle structure and suggest a double correction with the next selling area of 129.6 – 130.2. If this happens, the pair is still favored to go to new low from the next selling area at 129.6 – 130.2 as far as pivot at 134.58 stays intact.

We don’t like buying any proposed bounce and expect the pair to remain sideways for the time being to complete the triangle before resuming lower again later.



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Will Bank of Japan’s hands be forced to ease further?

The Bank of Japan (BOJ) will have a meeting this week on Friday, Jan 29 to decide on monetary policy and they are going to have a tough decision to make. Having introduced asset purchase program in 2013, dubbed as QQE (Quantitative and Qualitative Easing) and then in 2014 expanded the program to 80 trillion Yen ($665 billion) per year, today BOJ still face the same problem that they battled three years ago, that is persistently low inflation.

The goal of QQE, as BOJ explained it in April 2013, is to achieve price stability (inflation) target of 2% at the earliest possible time. Initially they target 2 years time frame to achieve the 2% inflation goal, so what is the result after almost 3 years of asset purchase?

As of Jan 20, 2016, BOJ’s balance sheet asset has risen to 389.6 trillion Yen, compared to 174.7 trillion Yen at the start of the QQE in April 2013. That is a 123% increase in the monetary base and still growing. Furthermore, measured as a percentage of GDP, BOJ’s balance sheet today stands at more than 50%, a much higher ratio compared to other countries experimenting with QE. All this is to say that BOJ is doing the experiment at a much grander scale.




Yet despite all the buying spree, today Japan’s inflation remains close to 0% as price of oil and energy drag it down. At the last reading in November 2015, Japan’s inflation rose 0.3% year-on-year while core inflation (excluding food) rose only 0.1% year-on-year.



The BOJ has since postponed their 2% inflation target to the six months through March 2017. They have also started to introduce a new measure of inflation which strips out food and energy, called the core-core inflation. Without the energy, the core-core inflation rose 0.9% in November 2015, but it is still well below their 2% target.

Since the last inflation reading in 2015, oil price has dropped another 30%, and further decline still can’t be ruled out. Nikkei and global stock market have declined in double digit territory. The Japanese Yen has strengthened 8% versus U.S Dollar from the peak last year at Y125.85.

All this new development is going to further undermine BOJ’s goal of creating virtuous cycle from higher inflation expectation to higher wage growth, to positive inflation, to greater consumption, and so on. BOJ Governor Haruhiko Kuroda has said many times that he’s ready to do whatever it takes to beat deflation. He has also said that BOJ can do the QQE as long as necessary and act more if needed.

However, latest report by IMF (International Monetary Fund) points out that BOJ can’t continue to buy government bonds at the current pace as they will soon run out of willing sellers, and they may need to start tapering bond purchases in 2017 or 2018. Indeed market participants are starting to be skeptical with BOJ’s willingness and ability to continue the asset purchase program and BOJ’s meeting this week will test the credibility of the institution.

On the surface, the condition looks to be in place for BOJ to ease further. After being relatively quiet for the first two weeks in 2016, BOJ governor Haruhiko Kuroda last week sounded more vocal with his rhetoric that he is prepared to take bolder action and “do everything we can”. However, with the constraints explained above, it remains to be seen if BOJ will actually pull the trigger. If BOJ does not take additional action this week, they risk giving the impression to the market that they are out of ammunition, and this may create further Yen strengthening and risks their inflation goal being unmet. On the other hand, further easing may entail other risks explained above and that doing more of the same may not necessarily solve the problem.

It’s worth to mention that Mr. Kuroda has not given any hint for further stimulus in his interview at Davos last weekend. But then again he also gave an optimistic economic outlook just before he announced asset purchase expansion in 2014. Either way, it will be a tough decision for BOJ to make this coming Friday.

Pair to watch

Should the Bank of Japan decide to expand the asset purchase program this week, it’s likely that Nikkei and Yen pairs could see strong relief bounce.
Interesting pairs to watch this week is $GBPJPY:



As the chart above shows, $GBPJPY is a pair that likes to do a 3 swing move where the third swing is equal to 1.618 extension of the first swing. From June 2015 peak, it has made a 3 swing move with third swing reaching 1.618 extension of first swing. If BOJ takes more action this week, this pair may see further bounce to at least correct the decline from November 2015 peak.

If you want to know further how to use this information to trade Nikkei, $USDJPY, $GBPJPY, or other forex pairs and Indices using Elliottwave technique, sign in today for a limited 14 days FREE trial to see our Hourly, 4 Hour, Daily and Weekly Elliott wave chart and find inflection areas to trade.

$CADJPY forecasting the decline and selling the rallies

For the last few months Canadian Dollar is one the weakest currencies in the market. It has been constantly showing the weakness against the all other currencies and our cycle analysis were suggesting the same – furhter collapse of Canadian Dollar. At the same time Indexes were doing pull backs in weekly charts, and we were aware that by the fact $Nikkei and other Indexes need more downsides, Japanese Yen is going to be suported (as the currency is inverse correlated to the Indexes). Consequently, strong Yen currency means more downside in all JPY pairs, so selling $CADJPY looked like a very good trade.

Besides selling the dips in $CADJPY we were making profits from its weakness by selling $CAD even against $USDX and $EUR.

In this blog we’re going to take a quick look at $CADJPY Elliott Wave charts from the beginning of December, to see how we were guiding our members through the price structure.

From the 12/03 2015 date the price has made approximately 1300 points decline.

$CADJPY 12.03.2015 London Update: The best reading of the cycles suggests that pair ended wave ((x)) recovery as Expanded Flat Structure at 92.77 high. While below that high and more importantly while below 93.16 high, the pair is expected to decline toward new lows during wave ((y)).



$CADJPY 12.15.2015 NY Update: The pair gave us nice decline from marked area. We got approximately 500 pips decline and currently wave ((iv)) recovery is in progress toward 23.6-38.2 fibonacci retracment area that comes at 88.787-89.553. There CADJPY should ideally complete wave ((iv)) before decline makes new lows.



$CADJPY 12.23.2015 NY Midday Update: It has given us nice decline from the 0.236 fib zone and now the pair is showing 3 waves from the lows, correcting the cycle from the 88.909 high, another good opportunity to short the pair again at 87.29-87.47 area.



$CADJPY 1.8.2016 NY Update: The pair has resumed sideways to lower from 87.29-87.47 area as expected. It gave us triangle consolidation and further drop from 87.041 high after the Triangle has ended. Current view suggests the pair has corrected the cycle from the 87.04 high and X red bounce has ended at 84.305 . The view resumes to be bearish and further decline toward new lows is expected.



$CADJPY 1.19.2016 NY Midday Update: The price made decline, reached important technical area 80.11- 79.55 and bouncing from there in wave ((x)) bounce, correcting the cycle from the 83.409 high. As the chart is showing, the price is approaching important technical area at 81.697-82.002 , another opportunity to sell the pair.



$CADJPY 1.20.2016 London Update: The pair turned lower from the marked area above and now it is expected to make a bounce from 79.56-79.02 area against the 81.81 high. Further path could be found in membership area of EWF.



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XAU (GOLD) Short-Term Elliott Wave Analysis – January 27, 2016

Short term Elliottwave structure suggests the rally from 107.31 is unfolding in a double three where wave ((w)) ends at 1109.6, wave ((x)) ends at 1092.29, and wave ((y)) is currently in progress. Internal of wave ((y)) is also unfolding as a double three where wave (w) ended at 1117.64, and wave (x) pullback is proposed complete at 1109.56. Short term pullbacks now are expected to stay above 1109.56, but more importantly above 1071.31, for continuation higher towards 1130.57 – 1139.62 area. We don’t like selling the proposed pullback.



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CADJPY Short-Term Elliott Wave Analysis – February 02, 2016

Short term Elliottwave structure suggests decline to 78.93 at 1/20 ended wave ((W)). From this level, wave ((X)) bounce is unfolding in a double three structure where wave (W) ended at 84.12, wave (X) ended at 82.17, and wave (Y) is in progress towards 87.3 – 88.55 area to end the cycle from 1/20 low. Near term, while pullback stays above 84.84, but more importantly above 82.17, pair is expected to continue higher towards 87.3 – 88.55 area to complete wave ((X)) before it turns lower at least in 3 waves to correct the rally from 1/20 low. We don’t like buying the proposed push higher.



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UK’s demands addressed this month: How will it impact Pound sterling?

We argued in our article on Dec 30, 2015 titled Will Euro Referendum and Brexit affect GBP that Pound sterling can perform poorly in 2016 due to the domestic and political uncertainty surrounding U.K’s membership in the European Union (Brexit). For brief background about the Brexit issue, you can read the old article from the link above.

In the same article, we pick $GBPJPY to extend lower due to the 5 swing move from 2015 peak and this proved correct as the pair continued to drop 7.4% after we published our article from 177 to 164 before the Bank of Japan helped the pair to regain some of the losses.

In fact, other than New Zealand dollar, Pound sterling is one of the weakest currencies in January 2016 as table below shows



February however can be an important month for Poundsterling as the UK Prime Minister David Cameron starts the negotiation with European leaders on UK’s relationship with the European Union. UK’s demands consist of 4 points:

1. Allowing Britain to opt-out the European vision of the “ever closer union”
2. Giving greater powers to UK and other EU members outside Eurozone to block unwanted EU proposals.
3. Restricting welfare benefits to EU migrants until they had been working in the UK for four years.
4. Securing recognition that the Euro is not the only currency in the European Union, and UK does not need to contribute to Eurozone bailouts.

Out of the 4 demands, the most difficult one right now is the welfare benefits as it breaches the EU’s principle of non discrimination against EU citizens. Cameron made it clear that he will support and campaign for UK to remain in the EU once they secure a compromise.

If Cameron can secure a deal this month, then the referendum can take place as early as June, but if the negotiation drags longer, then the referendum likely will take place in September. Both parties understand it’s in their best interest for the UK to remain in the EU and try to settle this issue as soon as possible.

There are two important dates to watch this month. February 5 is the first date where senior officials from all 28 members in the EU begin discussion on the proposal. This is going to be the first test to get an idea how far the differences between the two camps are. Second date is Feb 18-19 European summit, which is the deal’s target date.

Pair to watch

It’s still not known at this point whether a deal can be made this month. However, even if there’s no deal, if there’s enough encouraging progress with the discussion, it’s still possible to see Poundsterling reacts positively to the development. In the event of a good news with the talk on Feb 5 or Feb 18-19, interesting pair to watch is $GBP/AUD below



From the peak at 8/24 last year, this pair has made a 7 swing lower, which is a corrective sequence. Although a marginal low still can’t be ruled out to complete swing #7, this pair may start to rally to correct at least the cycle from November 2015 peak if there’s good news coming out from the negotiation.

If you want to know further how to use this information to trade $GBPUSD, $GBPJPY, $GBPAUD, $GBPNZD or other forex pairs using Elliottwave technique, sign in today for a limited 14 days FREE trial to see our Hourly, 4 Hour, Daily and Weekly Elliott wave chart and find inflection areas to trade.

$DJUSRE (Dow Jones Real Estate Index, US) A Six years buying Investment coming

The Dow Jones Real Estate Index measure the values of the Real Estate in the United States of America through the value of Real Estate companies. The Index, as every Global Index, has a Bullish trend and is within a double three aka WXY Elliott wave structure off the all times lows. As of now, the cycle from 2009 ended and current pull back is a great chance to buy Real Estate and own it for another 6 years. Time, in every investment, is they key which is why we pay a lot of attention to the timing cycles besides the price cycles. The cycle from 2009 lasted 6 years and it is likely the current pull back ends in 2016 and the Index resumes the up trend, that means it could then remain Bullish until 2022 (which is when the two cycles from 2009 lows would be equal legs in time) we see a Bullish Real Estate until 2022. Then, there would be the possibility of a pull back of same or equivalent magnitude as of 2008.

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Weak NZ Inflation in 4Q 2015 may force RBNZ to cut rate

In December 9, 2015, the Reserve Bank of New Zealand (RBNZ) delivered a cut to the Official Cash Rate (OCR) by 25 bps to 2.5% but surprisingly $NZD/USD rallied on that same day from 0.6565 to 0.6759 (2.9% daily range) before closing at 0.6713 (2.3% increase). In subsequent weeks, $NZD/USD continued to rally further to 0.688 before finally turning lower in December 29.

At that time, the reason for New Zealand dollars strength is attributed to the hawkish statement by RBNZ in their Decembers Monetary Policy Statement (MPS) which says that the bank expects to achieve their inflation rate target (1 3% target range) with the current interest rate setting. The statement also mentions the high house price inflation in Auckland as the chief worry for RBNZ as it poses financial stability risk. Thus, even though the Decembers statement does include a qualifier that the Bank will reduce rates if circumstances warrant, market interprets the overall statement as hawkish and conclude RBNZ will likely hold firm the cash rate in the foreseeable future.

Since then, further data came out and the latest quarterly inflation rate was released in January 19, 2016 showing a 0.1% inflation rate yoy in the fourth quarter of 2015. This is the lowest inflation rate since 1999 (in 17 years), and it was below RBNZs own forecast for fourth quarter inflation of 0.4 percent. Although fuel price drag is expected, the downside surprise also came from tradables and food price, which both managed to undershoot expectation.



Eight days after the quarterly inflation data was published, in January 28, 2016, RBNZ had a monthly meeting to decide the OCR and they opted to keep the OCR steady at 2.5%. However, Reserve Bank Governor Graeme Wheeler issued a statement that may pave the way for further rate cut this year. Wheeler says that Headline inflation is expected to increase over 2016, but take longer to reach the target range than previously expected. He also says Some further policy easing may be required over the coming year to ensure that future average inflation settles near the middle of the target range. Wheeler cites uncertainties in global economy, weaker growth in developed world, concerns about China and other emerging markets, as well as continued weak price in oil and commodity to keep global inflation low.

A lower inflation starting point compared to RBNZs forecast, and the last leg lower in oil, should push out the normalization of inflation rate to even later period, and it increases the probability that RBNZ will act to cut rate again in their March 9, 2016 meeting. Going into the date of the meeting, speculation of a rate cut may give some pressure to New Zealand Dollar.

Pair to watch

Theres a possibility that RBNZ may cut OCR in their next March 9 meeting, and speculation of a rate cut may give pressure to the New Zealand Dollar. A pair to watch is $NZDJPY



Pair is showing a 5 swing sequence from Oct 23, 2015 peak with first 3 swings unfolding as a FLAT (3-3-5) structure. A five swing is not the same as five impulsive waves, but it is an incomplete sequence, as explained in our Elliottwave Swing Structure and Sequence seminar, and suggests that the pair may extend further.



Trading however is not only about knowing the right direction. Even more important is the correct trading execution, that is trading in the right inflection areas with a logical entry and defensive plan. EWF is proud to offer members not only professional-grade Elliottwave forecasting service, but also 24 hour chat room support moderated by our technical analysts and two live sessions everyday to let members get the most updated market cycle.

For further information on how to find inflection areas to trade $NZD/JPY and other $NZD pairs using Elliottwave and our unique trading method of 3-7-11, sign in today for the limited time only FREE 14 Day Trial to see our Hourly, 4 Hour, Daily and Weekly Technical Analysis.