Short update today as I'm fighting a cold and want to crawl back into bed. The above 8hr EUR/USD chart shows that the move is incomplete, and that a wave 5 is due soon that will draw the pair to a new low before rallying in a longer and deeper rally. This pair is the practically the mirror opposite of the US Dollar Index, so just flip this chart upside down to get a picture of the dollar as a whole.
The stock market's surge to a new high today looks like the start of a "blowoff top" to me. We had several weeks of sideways action, not quite looking like a triangle but the same concept. We are now thrusting from this consolidation which is a terminal move. Thrusts tend to be sharp and quick, but are quickly completely reversed. The wave count is not clear right now in the short term, but I think the bulls are getting impatient and want to push the S&P to 2000 soon to fulfill their prophecies that the worst is over and the bull run is back on. The past several weeks of sideways action has frustrated them and they are now going to throw everything they have left in on this final thrust upward. But it will be the final sprint of a marathon that the bulls will lose. I'm practicing patience now and am waiting for signs of a reversal. Until, I think the best thing is to get out of this rally's way and wait for the market to give up the goods to the downside in a manner thought would be very opportunistic for the bears.
PLEASE NOTE: THIS IS JUST AN ANALYSIS BLOG AND IN NO WAY GUARANTEES OR IMPLIES ANY PROFIT OR GAIN. THE DATA HERE IS MERELY AN EXPRESSED OPINION. TRADE AT YOUR OWN RISK.
2 comments:
Todd - Hope you shake the cold off soon. Can ou provide a reference to learn more about the WXY pattern? I see it referred to a lot but I am not up to speed on how it works. Thanks!
Hi Dave, the best source for solid EWP rules is Prechter and Frost's book, "Elliot Wave Principle: Key to Market Behavior". They go into great detail of rules and guidelines for all of EWP and you kind find extensive coverage of WXY corrections.
WXY corrections are called "double zig-zags". They are simply composed of two ABC corrections. So wave W will be made up of an abc correction, then wave X occurs, then wave Y is made up of another abc correction.
There's also a "triple zig-zag" which is a WXYZ correction and consists of three abc corrections. It appears we are in that type of correction right now in the stock market, and we are in wave Z right now.
You can also access Elliott Wave International's free tutorial on these types of corrections in the Basic Tutorial, Lesson 5.1 on Corrective Combinations at:
http://www.elliottwave.com/club/EWI-basic-tutorial/original.aspx
Good luck!
Todd
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