Highlights of this Week's Elliott Wave Analysis
This weeks daily Elliott wave analysis provide some good insight into the price action across the markets we follow.
The Dollar is in correction mode against the major currencies at the moment and the wave patterns are suggesting that, what comes next is where the action lies.
Lets get into it shall we.
It was the week of the relentless grind upwards for EURUSD.
Time after time over the last few weeks EURUSD has made overtures to turning back into trend, but after every drop a new rally brought prices to a new high.
From a purely technical perspective, the price action qualifies as a corrective rally, there is no homogenous momentum move that propels price into a positive trend.
There is just the grind!
But on Thursday evening I noticed a completion of a possible large ending diagonal in wave 'c' brown.
I said; "the divergence between this grinding rise and the falling momentum indicators is now striking. The 4hr RSI again crossed below the centreline today, and the MACD has crested. All of this points to an exhausted market rally. The time is right to look to the downside"
On Friday the price was down in what could be the beginning of that larger move I have been expecting.
The current wave count and technical price action is pointing to the resumption of the larger downtrend. We will be there when it does.
It was the week of the ending diagonal!
Cable has been tracking higher in a possible ending diagonal in a minor timeframe.
On Wednesday I introduced that possibility;
"The action off the recent low labelled wave iv, is possibly an ending diagonal. Ending diagonals usually appear at significant turning points. So a similar turning point could be on the cards here. It is now a waiting game to see if the price turns down impulsively."
The price stood at 1.2656 at that point.
The price topped at 1.2704 a few hours later and by Friday evening the price had dropped in an impulsive fashion and closed out the week at 1.2479, down 225 points from the high.
We will see over the next few days how the short term action develops, but the signals are coming thick and fast that the turn is in.
On Friday the 27th I wrote that USDJPY had reached a significant point in the wave structure.
"but the price is now nearing on that target at 115.60 which will create a double top. From that point a lower high will signal a turn to the downside in wave (c) green. Preliminary targets for the completion of wave (c) are between 108.00 and 110.00."
The price reached 115.37 and turned down from there for the whole of this week.
By Friday the price closed at 112.60, down 277 points from the high.
There is a holding pattern in play right now which will result in the completion of the larger pattern that is in operation in USDJPY. The next weeks trading should see that pattern complete.
The DOW is in the final throws of a bull market that now qualifies as one of the biggest of all time. But this does not excite me, My main focus from now on is on how far this market is likely to fall after the completion of this final leg up!
But of course, the world and its mother can only see blue skies and rising prices, at exactly the point when the storm clouds are gathering!
On Thursday I put out this chart showing a possibly completion of wave (ii) grey.
"The DOW has declined in three waves off the wave 'i' high at 19960, and since the low has rallied again. The market is primed to rally if this current wave count is correct."
By Friday evening the market had rallied to a close at 20055, and is now likely rallying in wave (iii) grey.
In the short term we should see a series of new all time highs over the next month or so to complete the larger pattern. at that point things will get interesting.
On Monday I published this analysis;
"GOLD gave us more evidence today that wave (ii) is complete and the corrective phase is over for a while. Wave (iii) blue should take prices into the 1350 region, and do most of the heavy lifting in this C wave rally. Wave 'i' is complete at todays high and wave 'ii' is under way."
Gold never looked back from that point, and the price rallied to a close at 1219 up $25 dollars.
The larger pattern is still bullish and should remain that way for some time.
I will be tracking it every step of the way.
Have a great week.