Elliott Wave Analysis

[Trader Skillset]

USDCHF Wave Count

We did indeed see a three wave rally from the wave 1 or A low, and last week’s action makes it seem like our top count is on track. We’ll look for a short term corrective bounce, followed by further declines regardless of whether or not the larger count is bullish or bearish. We are showing the point where wave 3/C would be equal to wave 1/A, and the 161.8% line. The equality measurement is really the dividing line between the two counts, since weakness below there increases the probability of the 1, 2, 3 versus the A, B, C.


Similar to other pairs, a small dollar rally would likely be an opportunity here too – for the bears. The decline from the wave 2 or B high isn’t a complete impulse yet, though, but we do think the path of least resistance is lower.

 

[Trader Skillset]

GBPUSD Wave Count

We began last week with the pound, and we're kicking this week off the same way, because of the clear action. Last week we wrote, "the impulse here is clear. A corrective decline is due to start the early part of the week, and we’ll be looking for corrective downside action to hold the 1.4800 area which is near long term support and the wave iv of (iii) low." Well, that's exactly how it played out this week as a decline on Monday was almost fully reversed on Tuesday. Monday’s decline retraced 38.2% of the prior rally, and it held our cited support around 1.4800. In addition, we got a clear reversal signal which confirmed our momentum and context analysis. We alerted followers to our bullish posture on Tuesday via Twitter. If you're not following @TraderSKillset and @Nagyferenczi please do so for our most up to date commentary.

You will notice that prices are now testing the down trendline that has defined the decline from last summer. It would be reasonable for prices to pause a bit here prior to breaking on through, but if our larger count is correct, this line won't reject prices.

A small pullback to start the week in wave iv of (iii) would be an opportunity for the bulls. Ideally, prices will remain above the 1.5100 area, while critical support for the short term count is the wave i of (iii) high. As long as that's intact, we'll remain aggressively bullish.

 

[Trader Skillset]

EURUSD Wave Count

We didn't see anything terribly interesting in EURUSD last week, and the same thing goes this week. With the potential for “headline risk” out of Greece, many traders may just be playing GBPUSD for dollar weakness rather than hopping on board the euro. We’ve said it before, though, a Greek default isn’t necessarily bearish for the euro. Regardless, the pair bottomed on Tuesday, but didn’t gain much ground until Thursday. The early week decline was corrective, though, so there’s some potential for EURUSD to follow GBPUSD higher, possibly in a “c” wave.

We’re still showing the alternate count which calls for a wave (iv) triangle, and prices would be rallying in wave c of (iv) now there too. Above 1.1052 would eliminate that possibility.

Technically, critical support for a near term bullish view is 1.0665, but if prices are headed higher, they have no business breaking, or even testing, the up trendline. We don’t anticipate trading this pair again this week, but the clarity on GBPUSD does give us a slight bullish bias here too.

 

[Trader Skillset]

AUDUSD Wave Count

Aussie also had an early week pullback that was fully retraced by the end of the week. The early week decline was a bit scary for the bulls, especially since the initial rally up from the low isn’t impulsive. But, by the end of the week prices closed firmly above the down trendlines, and RSI remained entrenched above 50. There’s some room to run to the upside before resistance from the prior fourth wave extreme as well as structural resistance from .8000-.8300.

We’re likely to see higher prices, but notice that the last four times prices have rallied towards the .7900 they’ve failed. That being said, prices also failed to break .7600 on a sustained basis to the downside, like we pointed out last week. Our bias is to the upside, in part based on near term RSI action which hit “sustainable bullish” territory on the 240-minute chart, and the last two pullbacks have remained above the “sustainable bear” territory. But, we surely prefer the impulsive nature of GBPUSD’s initial rally off the low, than that of the Aussie’s.

 

[Trader Skillset]

NZDUSD Wave Count

It looked like NZDUSD completed a small corrective decline on Tuesday here too, as prices reversed and retested the 4/17 high on Wednesday. But the dramatic downside reversal put a delay on any further rally. But, notice the behavior of daily RSI. It was barely able to breach the 50 level on Wednesday’s action, and it remained above the trendline too. That’s bullish behavior, so we’re maintaining our near term bullish count.

In fact, there’s a possibility for an explosive rally this week for Kiwi. One could argue that we’ve seen coiling ones and twos up from the March 11 low. A push above last week’s high would also push prices above some structural resistance from the wave (iii) low and wave (iv) correction, which could unleash significant short covering and find new found bulls joining the trend.

 

[Trader Skillset]

USDJPY Wave Count

Action continues to favor our top count. After a substantial bearish divergence into the March 9 high, prices have been unable to find their footing. In fact, we haven’t seen anything impulsive on a daily chart since late last year. Based on last week’s action we’ve taken the bullish alternate count off, and have replaced the top alternate with the idea that wave (4) is still underway. Under that alternate, prices are either in wave E or C of a very large wave (4) triangle.

We still see the top count as best, though, and a break below 118.30 puts prices within reach of the wave A low at 115.56. Below there, and many “long Nikkei, short yen” trades will start to feel pain, and that’s one of the most crowded trades on the street right now. Long term we are very bullish USDJPY, but a final pullback for wave II is preferred prior to the real yen collapse.

 

[Trader Skillset]

USDCAD Wave Count

The Canadian dollar has remained strong, only allowing USDCAD a small bounce this week. We were ideally looking for a stronger push up to test resistance, but a clear three wave rally failed at the underside of a recently broken base channel line, and prices sprinted lower. With RSI back in sustainable bear territory for the second time, that suggests lower prices are to be expected, per the top count. We can’t rule out a slightly larger bounce to complete wave b, or perhaps some support from the lower line of the base channel, but any bounce is an opportunity for the bears. There’s quite a bit of overhead supply now, and structural support isn’t until the 1.1400 area.

 

[Trader Skillset]

USDCHF Wave Count

Wave (ii) did extend a bit, but it’s a clear three wave rally. That means, of course, that the larger trend is down. We’re looking for prices to reach the .9228 level at a minimum, which is the point where there will be two equal waves down from the 1.0129 peak. More downside potential exists, though. We’ll be looking to join the bears on any early week strength.

On the 240-minute chart we can clearly see the flat correction for wave (ii), which was comprised of a three wave rally for a, three wave decline for b, and impulsive rally for c. The wave (ii) high at .9719 represents critical resistance for our count and the bearish view.

 

[Forexmospherian]

Please feel free to add your Elliott wave counts, questions and thoughts.

I've been using Elliott wave as my main technical analysis tool since 2005. Although it's not a stand along trading system, I feel it gives me a feel for what's probable.

Hi Trader Skillset

I enjoy reading your EW analysis but will admit have never been a great EW fan in isolation.

There is so many different ways to read the waves and counts that inevitably so many EW traders will disagree.

The fact that you have been using it for what approximately 10 years shows - as you are not afraid to forecast again the general trends and the views of the "Banksters" and other commercial groups - who maybe have their own agenda's etc.

I note your recent update for this week on the EU and although you feel it is in still a bullish bias - you are not looking at trading it this week.

I find this strange - because even if you are a typical 4 hr / daily trader looking for moves of 150 -300+ pips and RR's over 3 or 4+ - you are missing so many intraday opportunities - that can still returns similar profits off tight stops - with maybe even higher win ratios.

With your experience - do you also do any intraday trading - but maybe not using EA as your main indicator etc ??

Good Trading to you and keep the EA forecast going


Regards


F

 

[Trader Skillset]

Hi Trader Skillset

I enjoy reading your EW analysis but will admit have never been a great EW fan in isolation.

There is so many different ways to read the waves and counts that inevitably so many EW traders will disagree.

The fact that you have been using it for what approximately 10 years shows - as you are not afraid to forecast again the general trends and the views of the "Banksters" and other commercial groups - who maybe have their own agenda's etc.

I note your recent update for this week on the EU and although you feel it is in still a bullish bias - you are not looking at trading it this week.

I find this strange - because even if you are a typical 4 hr / daily trader looking for moves of 150 -300+ pips and RR's over 3 or 4+ - you are missing so many intraday opportunities - that can still returns similar profits off tight stops - with maybe even higher win ratios.

With your experience - do you also do any intraday trading - but maybe not using EA as your main indicator etc ??

Good Trading to you and keep the EA forecast going


Regards


F

I had some success the first few years trading with Elliott in isolation, but there were a lot of ups and downs. Now, the system I trade uses Elliott to identify "Ideas." It's the first step in the process. Then, my partners "Momentum Zone Principle" screens out bad Elliott counts, or at least lower probability ones. Then, the third step in my process is the "Signal." I only look for those in ideas that have passed the first two screens.

I don't trade intraday all that much, my average holding period is slightly over two days, but I'm in some of my winning trades much longer than that. I will occasionally take advantage of intraday scalps, but I prefer not to stare at screens all day long.

The reason I won't be focusing too much on EURUSD is that I'm very long GBPUSD from last week, and I'll look to get longer. In addition, I'm long NZDUSD, and will look to get longer there too. When I like a trade I tend to pyramid it, looking for opportunities to trade around a core position.

Thanks for the kind words, and Happy Trading!

 

[Trader Skillset]

EURUSD Wave Count

Our bullish bias proved correct, as the euro had a powerful rally versus the dollar this week, up 350 pips at one point. The steep ascent this last week leaves our top count on solid footing, which is calling for a flat correction, with wave (c), or C, underway. This c wave should unfold in five waves, and so we can raise critical support for that count to the wave i high at 1.0849. We will look to turn bullish soon after the wave iv low is struck in the early to middle part of next week.

We should also point out that RSI reached into “Sustainable Bull” territory per our Momentum Zone Principle. That helps to confirm our idea that a decline that takes place will be corrective (in this case wave iv).

Our alternate count does have wave (a) in a slightly different spot, although waves (b) and (c) are the same. The red A, B, C labels are simply meant to show that the rally may be one degree higher than the top count. Since the bounce is now the largest, in terms of price, since last summer’s top, we’re comfortable with either one. Lastly, prices almost reached the 23.6% retracement of the entire decline since the 5/8/14 top, and it’s hard to say if prices are going to have a more “normal” correction up towards the 38.2% retracement (1.1816) or to the prior fourth wave (1.2247-1.2570). The “normal” correction is our preferred view, but we’ll take our clues from the market’s pattern.

Here we’re showing the shorter term view and the clear five wave rally up from the wave ii low. Critical support is the wave i high, but realistically prices should remain inside the trend channel. Ideal support is the confluence of the channel support along with former support/resistance near 1.1046, which also happens to be the 38.2% retracement of the wave iii rally.

 

[Trader Skillset]

GBPUSD Wave Count

There’s a saying on Wall Street, “It’s better to exit a trade too early than too late.” That certainly was the case for GBPUSD this week. On Tuesday afternoon, we exited both GBPUSD and NZDUSD for two reasons. One was that both trades had advanced tremendously, with the pound reaching our equality target at 1.5348. The second was due to the early US GDP announcement which we expected could elicit some volatility. Prices spiked again after the announcement, only to give that up, and then some, on Thursday and Friday. RSI did reach “Sustainable Bull” territory, but we have our doubts whether there’s any steam left here.

One reason we have our doubts is the angle of the decent off the C/3 top. We’re quickly approaching critical support at the wave A/1 high, at least for the idea that there’s an impulse tracing out to the upside from the low. The nature of the decline suggests bearish action, and notice that RSI quickly went into “Sustainable Bear” territory. At this point, we think a rally is going to be corrective, and we can use the wave .i low as critical resistance. Given the erratic nature of RSI, flipping from bull to bear on both charts, we’re going to be nimble with any GBPUSD trades this week.

 

[Trader Skillset]

AUDUSD Wave Count

We were indeed looking for an impulsive rally to complete wave , and the market action seems to be confirming. Notice that we cited structural resistance from the prior fourth wave from .8000-.8300, and prices reversed on Wednesday after reaching into that zone. Also, notice that RSI tried to enter the “Sustainable Bull” zone, but it didn’t quite make it. Given that, it’s possible that the corrective action, while shallow, is complete.


The most important feature of this short term chart is the five wave decline from Wednesday’s high. We would prefer to see one more small wave down to better complete wave .v, but it’s not 100% necessary, if wave .iv was a running flat. So, we’re looking for a three wave bounce into the .7900 area next week to turn bearish, at least for another five wave decline, if not more.

 

[Trader Skillset]

NZDUSD Wave Count

Here too, the rallied staged a reversal on Wednesday. We came into the week bullish Kiwi, with the idea that maybe it had been coiling ones and twos. Fortunately, we took bullish positions off prior to the GDP and Fed meeting on Tuesday, which we Tweeted out. Please follow us on Twitter to get real time updates like this gem on the Turkish lira from last week (@Traderskillset and @Nagyferenczi). Notice that daily RSI has been unable to reach Sustainable Bull territory, despite a 500 pip rally. With the last two signals “Sustainable Bear” there’s little reason to be a bull here.


The sharp decline from resistance is apparent here, and prices have broken the short term up trendline to boot. We’ll be looking to turn bearish into any small bounce next week. Often, failed breakouts are important signals in the opposite direction.

 

[Trader Skillset]

USDJPY Wave Count

We’ve been citing the 118.30 level in USDJPY for some time now, suggesting that a drop below that spelled the end of this rally. Mid week it looked like a breakdown just might be in store, but after breaking below 118.55 briefly, prices reversed sharply. Such a false breakdown, the opposite of NZD’s false breakout, is a bullish signal. We’re now bullish against 118.49 looking for new highs. Keep in mind that RSI remained above “Sustainable Bear” territory the entire sideways correction, which is not action that suggests lower prices. We’ve left the “topped” count as an alternate, but it’s a distant alternate as of now.

Often thrusts from triangles can appear to be one straight wave, with small, sideways corrections rather than something more “normal.” That’s what we’re looking for here, although the 120.70 has been stiff resistance for some time now. We’re looking to turn aggressively bullish into anything resembling corrective action. Critical support is 118.49, but prices have no business below 119.10 if our count is correct. Notice the behavior of RSI here too, where it hit Sustainable Bull territory on Friday, after bottoming above bear territory into the wave E bottom.

 

[Trader Skillset]

USDCAD Wave Count

Prices found support here too on Wednesday, but not before some significant deterioration in the bullish picture. We’re still viewing the action down as corrective in wave (4), and while it’s possible that it is in place at this week’s low, the balance of the evidence suggests otherwise. RSI reached Sustainable Bear territory, and while the base channel did provide support, we’re significantly below the former key support, now key resistance, at 1.2400. We’ll look elsewhere this week most likely.

 

[Trader Skillset]

USDCHF Daily Wave Count

The action continued lower as expected this week. In fact, late in the week, as the dollar was gaining against many pairs, it couldn’t muster any strength against the franc. That leaves us in search of the wave (iii) low, and any bounce is likely to be corrective, especially while in the downward sloping channel. Critical resistance is the wave (i) low, although any push outside the channel would be an early warning that prices had other ideas than testing the equality measurement near .9229, or something lower. We still like the idea of franc strength, and we’ll look to turn aggressively bearish into any small bounce.

 

[Trader Skillset]

EURUSD Wave Count

The euro fulfilled our forecast for a push to a new high this week, which completed a five wave rally. The push higher failed very near three levels of resistance created by the 23.6% retracement of the entire decline since last summer, the prior fourth wave, which also happens to be the apex of a triangle. Often prices will return to the apex of a triangle, as originally indicated by Edwards and MaGee in Technical Analysis of Stock Trends. In addition, a small bearish divergence was present into Thursday’s top.

This completes a three wave relief rally from the low, which is either the first wave of a flat for (A), or combination for (W) according to our top count. However, our alternate count says that the low near 1.05 was actually wave ((A)) of (((Y))), which means wave ((C)) down is still due (Even if wave ((B)) up could still trace out a more complex pattern to the upside.). The upshot is that alternate counts point in opposite directions. We won’t want to fight any weakness below what should be support around the 1.1050 area, which would also break the up trendlines off the low and the lows of wave (ii) and (iv).



We only have three waves down from the suspected wave (v) high, so we can’t rule out one more wave up in wave (v) to complete wave C. A drop below 1.1005 will make that much less probable, though, and we actually prefer the “topped” count. That doesn’t mean prices have to collapse to a new low directly, a decline in wave (B) or (X) which would very likely end near 1.06-1.07 is preferred. Regardless, we will be looking for opportunities to sell euros this week, and with the potential for big news out of Greece early in the week, volatility will likely be here. Some type of loan extension from the IMF which causes euro strength would be an opportunity to fade a rally.

 

[Trader Skillset]

GBPUSD Wave Count

The most important observation on this week’s daily chart is the successful retest of the topside of the broken trendline that contained the entire drop from last summer. Tuesday’s bullish engulfing pattern was a sign that GBPUSD had bullish intentions. Holding above the wave A/1 high suggests using the 1-5 count as opposed to the ABCXABC. Prices are now testing structural resistance from the wave 4 top and wave (iii) of 3 low. With a small push higher, GBPUSD will have returned to levels not seen since November of last year.



Two items here speak loudly about what’s expected early in the week. First, notice the very clear three wave decline which we’ve labeled wave (iv). While three wave declines can always turn more complex, it says the one larger degree trend is higher. In addition, notice RSI hit a new peak into “Sustainable Bull” territory into Thursday’s top. Both of these suggest quite powerfully that we’ll see higher prices early in the week. Critical support for new highs is the wave (i) top at 1.5241.

 

[Trader Skillset]

AUDUSD 240-min Wave Count

Our top view is the same as last week, in that it’s focused on the five wave decline from the wave top. This week’s rally is likely an expanded flat for (ii) or (b) with a big decline coming next week. However, 240-minute RSI did spike into “Sustainable Bull” territory on Wednesday, so any push back above .8005 will activate the alternate count. That view calls Monday’s low another (x) with prices pushing higher in c of (z) before topping in the .82-.8300 area. Ideally, we’ll turn lower from the get go Sunday night to at least pressure last week’s low.