Validating
the Wave Principle
by its Own Operation
GOLD
(c) ELLIOTT today
The chart
shows my Elliott labeling of Gold on January 27, 2007:
Chart: stockcharts.com
ELLIOTT today, January 27, 2007:
Seven month of sideways action in the Goldmarket has most observers convinced that it is only a matter of time before the market breaks out to new all-time highs. However, I have some doubts about the bullish count (though it is an alternate), but due to the cyclic picture, I expect a downwave about to begin in the first week of February 2007. A study of the cycle shows why. Wave a bottomed in June 2006, wave (b) bottomed in October 2006 (four months) and the next cycle low is due in February 2007. Second, at the recent high the wave (e) traveled 58.2 points, which is 0.618 of the length of wave (c).
A close below $603 would confirm that the next legt down [wave (c)] in Gold is underway. Another support for the bearish count comes from several opinions in chat forums, especially one who cries out loud, "Gold, nothing but Gold." This is an extreme outcry of optimism, which from a contrarian point of view is considered bearish, at least for the short term outlook.
EUR/USD
Weekly Chart
(c) ELLIOTT
today
02/18/2007
Chart: Futuresource
Figure 1
B-Wave?
(c) ELLIOTT today, Jan 10, 2007
Rather than labeling the upmove in 2006 as a w-x-y corrective structure, I decided to label the
structure since Intermediate wave (a) as an big expanded flat correction. A ML drawn from the
low of Intermediate wave (4) from June 2005 points to 1.3600 but I think the market already has
reached its final subdivisions, wave (v) of c of (b). Due to the extreme bearish sentiment toward
the USD (see media clippings), a change of trend is only a question of time.The Elliott wave analysis posted on January 10, 2007 is still valid. The prefered count for the EUR/USD
displays an expanded flat for wave [b]. The five-wave upmove from the low of 1.1700 can be counted
as wave (c) of [b] which already complete. However, there is a possible alternate count worth noting,
in fact as long as the latest lows hold. The first upleg from the low of 1.1700 is either wave 1 or a
(expanding diagonal triangle, leading dt). In case of wave a the possibility is that an ongoing diagonal
triangle (ending pattern) for wave (c) is still in force with the final wave 5 underway. Figure 2 shows
the internals of that pattern.
EUR/USD daily chart
(c) ELLIOTT today
02/18/2007
Chart: Futuresource
Figure 2
The overall pattern shows the characteristic overlapping of waves one and four and the convergence
of boundary lines into a wedge shape. The subdivisions into "threes" including the impulse waves
support this outlook. A rising wedge is bearish and is usually followed by a sharp decline retracing
at least back to the level where the diagonal triangle began. Key for this interpretation to be valid,
is the low of wave 4 at 1.2850. Note: ML-2 did a very good job to identify a possible low in place.
Prices touched the ML-2 two times, at wave (a) and (c) of 4, slightly penetrating the ML-1 channel
line but reversed quickly up. As said before, key is the low of wave 4. A penetration of wave 4 would
eliminate that pattern. An early warning of an ongoing decline (though not expected) would be a drop
below the lower channel of ML-1 currently at 1.3025.
U.S. Treasury Notes
(c) ELLIOTT
today
06/14//2007
Chart: Futuresource
Bullish Fed outlook shoots Dow up 187
Stocks jump after the Fed's Beige Book report suggests decent growth, little inflation. The gains come after the government reports a surprising retail rebound in May. Interest rates ease off recent highs. Apple tumbles on profit-taking. msn.money, June 14,2007
The recent collapse of bonds and notes has brought prices back to the level of July 2006. The Median line technique did a very good job to identify the high of 109.16 along with the EWP as prices surged into that high what Elliott called "a thrust out of the triangle." Since triangles take place in fourth waves, those who are familiar with EWP knew in advance that the last leg up was underway. The following decline into early 2007 retraced 0.618 of the preceeding advance. The wave structure from the high of 109.16 is best counted as a double zigzag labeled a-b-c x a-b-c. Price level alone should only occasionally be the catalyst for a decision, but I think the market is due for a rebound most likely into the 106.00+ area. Watch the ML-2 channel.
U.S. Treasury Notes
(c) ELLIOTT
today
01/17/2007
Chart: Futuresource
Recall ELLtoday's EW-analysis of June 29, 2006, almost seven months ago:
The decline from the high of 110.08 looks impulsive, a five-wave decline most probably
wave i down of another wave (a). Near term, a countertrend correction to 109.08 is likely.That's exactly what happend. Near term, the a-b-c rally in 10-year notes topped and reversed.
Note how well Elliott waves and the Median Line technique works together, as the wave C high
pushed exactly into the red-dotted ML drawn from the low of June/July 2005. Currently, the market
hit another ML, namely ML-2 (blue-dotted line). The market actually trades in a smaller wave four
and after completion I expect prices to drop below the ML-2 in wave five.
U.S. Treasury Notes
(c) ELLIOTT
today
10/30/2006
Chart: Futuresource
The bond market has reached an important near-term juncture. Since the low of June 2006 the market has staged a rally which can be counted as a five, indicating an impulse wave underway. As can be seen on the chart, the ML-1 did a pretty good job and in turn that line "catched" every major low in the last two years with stunning precision. While subdivisions of the last leg down allow for several interpretations the preferred count shows that in June a bigger pattern has been completed, a double-three. The market pushed back to the ML-1 and now trades where the index was a year ago.
Gold- Bull Market
© ELLIOTT today
Count#2
First presented on November 11,2004
Updated December 30, 2005, April 7, 2006
open chart
Chart: futuresource.com
The weekly chart displays the bullish count for Gold. With respect to the bullish (1)-(2), 1-2 labeling, Gold
may be in a third-of-a-third to the upside probably exceeding the high of Sept 1980 at $720. (see bullish alternate count). More important, however, is the fact, that sentiment readings reached another extreme optimism toward Gold and especially Silver. At 86,9%, Market Vane's 21-day Bullish Consensus has been higher only three times in the past 18 years. The last two, in February 2006 and December 2005, are part
of gold's latest peaking process. The other accompanied gold's February 2003 high, it was followed by a
17% decline. At this point however, silver sentiment hit a peak reading of 98% bulls on April 19, 2006.
That's almost unbelievable.Returning to objective market analysis, Gold could hit $720 as that level marks the 0.786 Fibonacci retracement of the distance from $850 to $252. But consider this, a trend line drawn below the lows of 1985 and 1999 and the parallel line drawn from the high of $720 points to exactly the recent high of $667. There
is more: Gold's own parallel trend channel and the rising 2x1 Gann- line from the low of 1976 both pointing
to the same level right now! Five waves up can be counted as complete, though I do not know if the near vertical rise in Gold goes on further but attention should be placed on the bearish alternate count presented
in this issue. A correction of 38.2% from the recent high ($667) points to $509, a level that matches the highs of 1983 and 1987. The form (structure) of the correction will tell us more about the future of the price of gold.
Back in November 7,2004 ELLIOTT today also said,
"If gold finishes Primary wave [1] of a new bull market, the ensuing correction should hold above the $300-$325 level and the structure of the corrective moves should be either an (a)-(b)-(c) or a variation. A move above $480 or better $520 will favor the odds that indeed a new bull market in gold is in force."