It's been a while since i posted, but the last post was about gold against the us dollar and things turned out as expected, perhaps just a little deeper end of wave (A), but still against valid fib targets, 150% for wave C (more common is 100%) of a complex double three (3-3-3), and wave C was a flat wave (3-3-5) with wave c of C being 161.8% of wave a of C.
Since the wave (A) low at 1180, price has gone up in what appears to be a corrective way, which is what I am looking for since price is in a wave (B). The decline from 1433 is possibly allready finished because price is at a 61.8% fibonacci retracement and wave c is 76.4% of wave a, but could very well go lower one more time to test the 76.4% fib retracement and the wave c is 100% of wave a level.
Price followed the count very well. The triangle had smaller waves D and E than i expected, but nonetheless price went lower, and how ! The big support level around 1550, which held for the last 2 years or so, was broken causing a very big and quick sell off. Elliott wave analysis tells us that this could very well be a wave 3 inside a wave C, alternatives are possible, but the direction is clear. 1400 remains the target, after that price could slow down and rebound to retest the big support turned resistance around 1550 in the form of wave B. Yes, this means i believe gold is in a long term bear market and could go as low as 1000 in 2014/2015.
Price has come down nicely as expected, but has found some support around 1.567, a fibonacci extention level. This was probably the end of a first corrective wave down from the 1795 top. The next wave could turn out to be a triangle wave B. If this is correct the downtrend will remain strong for the next couple of weeks/months untill price reaches 1400.
The previous count i had for the sp500 is no longer valid, so here is the new count. There are still other counts possible but looking at the MacD we can see a clear bearish divergence. In this count wave (C) is 61.8% of wave (A), a classic flat pattern with wave C as an ending diagonal. The alternative is that the max price level for wave 5 of the ending diagonal at 1554.05 gets broken, turning the ending diagonal into a double three combination. In other words, wave 1 becomes wave W, wave 3 and 5 becomes wave Y.
In the previous xau/usd ( or Gold ) post, price was at the high of the channel. Since then price has come down nicely, but has done so in 3 waves which is corrective. This means that price is most likely in a wave Y, the third leg in a double three combination. The 3 waves down from the wave X top are finished and price had a small rally which is also corrective. It is possible that this countertrend rally is allready finished, since we are in a strong downtrend, but it could transform into a bigger corrective pattern ( watch the alternative on the chart ).
The count presented in the previous aud/usd post, a complex double three from the top, is still valid but a triangle count becomes more probable because wave y would take much more time than wave w. A triangle always offers a choice since it can transform easily into another corrective wave, either another triangle or a complex double three, sometimes even into an ending diagonal. My choice is the bearish triangle because of the bigger timeframe count. But we have to keep an open mind for this pair and play the shorter timeframe waves since the offer more tradable opportunities.
The big thing that happened in the SP500 is the break of the ending diagonal triangle trendline. Since that break price has rallied back to retest this trendline. Price is now showing signs of reversal (daily shooting star through the 61.8% fib retracement). Even a smaller trendline is breaking, with 2 possibilities, either the rally is a wave 2 and price cannot go above 1435.61 or this is a wave B which can allow higher prices. No matter what count is correct a powerfull wave lower is coming, which, if the longer term count is correct, will only be the start of a much bigger decline.
In the last post i showed a possible ending diagonal, where a small thrust above the upper trendline was needed after which price had to reverse. This is exactly what happened and i now believe chances are really high that SP500 has put in a top that will not be retested for a very long time.
On the 4 hour chart, counting is a little less certain. One thing is clear, price action from the top is corrective. This has made me change the top at 1474 to an X wave top, which puts price in the beginning of wave Y. We will have to wait and let price decide if price action from 1435 is corrective or impulsive. For the impulsive count, price cannot go above the red line at 1407.
The corrective count allows for a bigger corrective rally.
I was born on July 20th 1983. I have been trading since 2007 and using Elliott Wave analysis since 2008. I also use trendlines, fibonaci, candlesticks and various indicators to determine a future direction of price.