Jun 232012
 

Extended Fifth Wave in NZDUSDMy recent medium-term update on the NZDUSD has evoked some interesting discussion (see comments section for that post). This is a follow-up post, and should serve to answer some of those questions. First of all, I would like readers to understand that my approach to the financial markets differs from many of the other practicioners of Elliott Wave analysis in one significant way. I use the Elliott Wave principle to help me with my trades (or those of my clients). The goal is not to be accurate about the labels, or even the extent of a potential move. The value offered by my approach is it tends to get the direction right on most of the calls, and the entry levels suggested (when I recommend a level) often makes for a low-risk trade. This approach allows me the flexibility to change my counts as the market unfolds, and we all know that the markets are under no complusion to follow what we wish it to do! It will do what it pleases, and when it deviates from the anticipated path, we will make adjustments at our end!

The recent call for NZDUSD to go towards 0.6800 is like looking at a map of the world and saying if you wish to go to Antartica, you should head South. Promptly after I wrote that piece, the NZD headed North, and reached a high of 0.8016. But no harm was done, because that post was not a trading recommendation. But looking at the shorter term (hourly charts) this morning, I am able to see the completion of an extended fifth wave from the low of 0.7451. I wish I had seen this last Thursday, because it would have been fairly easy to spot the end of the fifth wave.This is shown in the attached chart, and it follows one of the techniques I have described in detail in my book “Five Waves to Financial Freedom”

Yet, it is not too late because the downside targets for the correction that follows the completition of the extended fifth wave is not only predictable, but in the case of the NZDUSD still lies some distance away. I am inclined to think that we are in the process of completing the first leg of a complex correction down from 0.7990. If that plays out well, we will get a recovery as an X wave to the mid 0.79s. There exists a slight chance that we revisit the prior top (0.8010/15 area!). Irrespective of which way the next move unfolds, we will get a swift sell off later on to around 0.7715. Now that is valuable information. If you get lucky to see the Kiwi around 0.8000 levels, you should take the trade with an affordable stop. (note, this will work even if we get a slight throw over above 0.8016). But as of now, I think the odds favor the development of a corrective X wave to 0.7930/50 followed by a steep decline to 0.7715.
Good luck.

  35 Responses to “Fifth Wave Extension in NZDUSD makes for an interesting trade”

  1. Hello Ramki!
    Thank you for very interesting lesson again!
    If I understood correctly your medium-term target for Kiwi is still the same. Isn’t it? But because of decline from 0,8460 to 0,7450 (wave A) wasn’t a 5-wave move (as you originally planned), it’s reasonable to adjust the target for B from around 0,79 to somewhere 0,8250 or even higher. Only after that the price is ready to fall to 0,68? Did I read correctly “your thoughts between the rows”?

    • Hi Stani, The medium term outlook sets the tone. The actual trades will have to be fine tuned as the market unfolds. This is what I am trying to do. Specific targets will be decided once the C wave commences. But the key point is NO ONE KNOWS THE FUTURE. But WE have a model, and we follow that till proved wrong.

  2. Hi Ramki,
    I am a bit confused. I believe first you said we exepct a B wave up from 0.74ish and then we expect a further fall towards 0.68ish in wave C to finish that correction.
    Now suddenly the wave from 0.7451 is a 5-wave up, does this mean we have a new uptrend or am I missing something?
    Thanks,
    Heiko

    • Hello Heiko, I can understand your confusion. I wonder if you have read my book? The way I approach the market is to first crystallyze my thoughts about which direction the market is going in the big picture. As of now, I still think we will get a large downmove. The 0.6800 target is just a ‘lighthouse’ that guides a ship in the high seas. It tells us the direction for the journey. Along the way there are rocks which show up as unexpected moves. Then we adjust our short term direction. This is what I have doen. But the adjustments have to be done within the framework of what Elliott has prescribed. You will notice that my new labels are faithful to every tenet of EWP. This way I can continue to be alerted if I make another mistake. I suggest that you get a sound understanding of the rules and guidelines so that you can compare what I wrote earlier with the revised version and you can understand the subtle differences. Good luck

  3. Hello Ramki

    Do you not think it counts better as a 3 wave ABC bounce? as the rejection in 3 waves from the 0.7454 June 2012 lows, counts better as a potential X wave, and now about to see lower levels towards 0.7300

    The rejection just above 0.8000 i think is more important than many are realizing, as it came back to test important resistance

    So you may get that 0.6800 target after all

    Take it easy

    Nouf

    http://i1177.photobucket.com/albums/x342/Wavepatterntraders/ter7.png

    http://i1177.photobucket.com/albums/x342/Wavepatterntraders/ter8.png

    • Hello Nouf, Thank you for the comment. Yes ofcourse. I havent been able to see the image you sent but everyting depends on which point you start your count from. I suspect you started from the immediately preceding low around teh same level. I chose the second low because it was fractionally lower than the first one. Maybe it was a bad tic (ie not a real price). We will not know till later which is the correct count. HOwever, this is true for just about ANY count. No one will know till the move is over. It is essential to be able to TRADE one’s views, otherwise everything becomes academic. WaveTimes is different because of that. Good luck!

  4. Hi Ramki,
    Your site is the best proof that EW is often open for different interpretations. My count for NZD/USD are 5 waves up from June 1st as follows. June 1st rise is 1st wave. June 4th pullback is 2nd and the five wave move to June 11th is 3rd (being 1.618 of wave 1). Then retracement to June 12th is wave 4 (being 38.2% of wave 3). Then wave 5 extends to the 0.80 level being equal to wave 1 throu 3. If you look at a 5 min. chart the consolidation between June 19th and June 21th is a small triangle wave iv (inside wave 3). The top at 0.80+ completes the 5 waves journey. Beware the quite large head&shoulders top if 0.75 gives way (but thats another story).

    • Hi John, Thanks for your comments. Actually I tend to agree with your count as it gives better symetry. You will notice how I have placed my target for the anticpated retracement at 0.7715 which is actually the 2nd wave level of the extended fifth of YOUR count. I have frequently said in WaveTimes and in my seminars that it doesn’t matter how we count so long as we achieve our objective, that of calling the next move correctly and of getting a low-risk entry and making money out of the analysis. Good luck, my friend.

  5. As many comments are reporting, I’m not so sure about the bigger picture.
    $ Index and many pairs show a missing 5th or C.
    The market is showing no interest in completing that though.
    Thank you.

    • Hi Luca, Always remember the old maxim: when in doubt, stay out. You need to be comfortable with any wave count so that you can enter with confidence. If your counts confuses you, you can take a break and look at some thing else! The markets are going to be around tomorrow, next week, and next year, presenting you with high confidence trades

  6. Respected Sir,

    is it ok .79300 as stop loss.

    kindly reply sir.
    Thank you Sir.

  7. HI RAMKI,
    I can only,agree with HEIKO very very confusing the predictions seem to be changing as we go along. Can you show a chart of NZD/USD where the mistakes have been made.There was mention of an exstended fifth where some are commenting on and yet it seems we are heading for double top to reverse at about O.8O level?
    only glad i am not trading large sums otherwise total wipe out again.
    regards.
    peter.

    • Hello Peter, Can I suggest that you take a break for a couple of days, and read my book carefully again. Also, all my old charts are there in the blog, including where I have changed my counts. I also recommend that you stick to any one count from start to end, because there will be as many counts as there are analysts (including the dozens of people who come up with counts that dont follow Elliott’s tenets!). We will only know later on whether a count is right or wrong. Your best bet will be to either do your own analysis based on what you have learned or follow someone whom you trust. As I am not giving trading recommendations on WaveTimes, my suggestion is you learn the art yourself! Good luck.

  8. Hello Ramki,

    Please let me your view on US Dollar- Sterling & US Dollar- Euro.
    Thanks

    • HinDinesh, there’s no change to what I have written about EurUsd and gbpusd in my last update.

      • Hello Ramki,

        Have been reading your comments/articles,.
        I will appreciate if you could start giving trading advice on stocks .
        Regards
        Dinesh

        • Hi Dinesh. Thank you. WaveTimes is a hobby for me, and I am not seeking to make money from it. I have a full time job that keeps me extremely busy. Offering a subscription service is not currently in my plans. EVen the book that I have written sells for a mere $10 because that was just an attempt by me to leave my mark in the financial markets. Appreciate your reaching out! Best.

  9. HI RAMKI,
    Just arrived in to see NZD/USD awesome again nearly spot on mid 0.79 you are a legend,managed to return what i have lost very happy to see this method work more than others,yes i will continue with your book trying to read prechters book as well.
    Please could you have a look at EUR/AUD weekly am i correct in sayin from high to low full 5 wave count also be nice to see double bottom.
    regards.
    peter.

  10. Hola Ramki
    Llevo poco tiempo en esto, hace una semana llegue a tu página y he seguido de cerca el análisis que has hecho con las ondas al NZDUSD, se han ido cumpliendo los movimientos esperados, lo encuentro magnífico, es interesante ver y aprender poco a poco a visualizar cada onda en su momento y espacio, te felicito y agradezco el que puedas compartir tu experiencia. Saludos de CHILE (translated into English reads: Hello Ramki Llevo a little time in this, one week ago comes to your page and I have continued closely the analysis that you have done with the waves to the NZDUSD, the awaited movements have been fulfilled, I find it magnificent, it is interesting to see and to learn to visualize little by little every wave in his moment and space, I congratulate and am grateful to you the fact that you could share your experience. Greetings of CHILE)

  11. Hi Mr. Ramki, I’m confused with tonight’s movement, I was thinking that the high of 28/06/12 was the X wave, but right now, NZDUSD is higher than yesterday’s high, and it looks like kiwi is forming some kind of triangle.

  12. Ramki, you have been right more times than wrong, and I admire your work.
    However on this occassion, I think we are heading for 8130/50 before a significant
    turn, based on a down-trend line on the Daily chart. Just my 2 cents, FWIW.
    I hope that I am wrong, as I have opened a small short.

    Cheers

    • Hi Patel, Thank you for the comments. Of course I have been wrong before and will be wrong again! When it comes to ‘Trading’ the view, you have to employ certain tactics, including money management tactics. In my post, I alluded to the possibility of a visit to .8015, and potentially even an overthrow. Ideally, one should wait for the first sign of reversal and then join in. That way, he can place a nearby stop. If you sell as the markets are rallying, you are no longer following a low-risk strategy. The matrkets are still strong, and it will take a few days for sentiment to change. When it changes will be a good time to join in. As of now, there is no change to the big picture view that the NZD will head lower, but as traders we need to survive to see that day, don’t we?

  13. Hi Ramki,

    I agree 100% with you advice re. Money Management when it comes to trading and how important this is to a Trading strategy – in-fact it’s undoubtedly THE most important skill there is to learn as a trader. If possible, I would like your advice about spotting ‘the first sign of reversal’. Given that the interpretation of the direction of ‘the trend’ is dependent on the time-frame used, how does one determine with high confidence that ‘a reversal’ has happened in the context of the bigger picture.
    The widely taught method is to look for ‘higher highs and higher lows’ in an uptrend, and vice versa in a downtrend. In this particular example, if we close today above 8016 (the last highest close on the ‘Daily’), then obviously this could be viewed as ‘highly bullish’ and considerably delay the formation of a reversal pattern. My question to you is would the resulting delay lessen the probability of the price conforming to your analysis. To put it another way, what would the price have to do (and within what time-frame – x days/weeks etc.) to negate your current Elliott-wave analysis and targets ? I am a complete newbie to Elliott-wave and I apologize for not having spent the time to read more about it to date (I do intend to eventually … I have taken the first step and downloaded the electronic version of your book !).
    Thank You.

  14. Thank you Sir, I shall await with anticipation. In the meantime, I hope that you can update this thread as the price unfolds either affirming or changing your present bias at
    critical junctures – however I do appreciate that you have limited time but many students.
    Cheers

  15. I am in short from 0.8013 stop now at .7903 just above 4 hour 200 ema and target per your analysis at .7715 thanks for your insight

  16. Dear Sir,
    The NZD/USD is taking a confusing trend, over few days. I feel the daily charts is more clear , indicating we are finished with set of 5 waves, and the A wave, currently in the wave B, heading to the start of the wave A, awaiting for the wave C to unfold dramatically. I am seeing it touching .8075 levels before unfolding as wave C.

    It would be greatly appreciable if you could add your valuable comments. I am just waiting for your update on NZD after your last post on the same.

    Regards,

    Sushil
    Chennai

  17. ‘Confusing’ to say the least. Agree with you … an update from the Wave-master would
    be great !

  18. Ramki, Sir I would very much appreciate an update of the Elliott- counts for this pair,
    if possible. Does the continued bullishness mean that this is one analysis which does not look likely to be a correct one ?

    • HI Patel, When I posted the last analysis on 22 June, I was looking at the HOURLY charts and suggested we could recover to 0.7930/50 and come down quickly to 0.7715. On 28 June, the Kiwi made a high of 0.7966 and went down quite quickly to 0.7835. Unfortunelately, there wans’t any follow through. Ideally we should also follow some money management practice when trading. When we get over a 100 pip move in our favor, the stops should be moved lower. The reading in the bigger picture looks to have an upward bias for now.

  19. Hello Mr. Ramki. are you so kind to update NZD? As you know, last highs has been broken, and I am not sure how to count this wave.

 Leave a Reply

(required)

(required)