Nov 202008
 

The easiest way to make money in any market is after a fifth wave extension. While identifying the precise end point of an extension is often a challenge, you can become quite rich by joining in once the correction starts. Typically, a market comes down to the level of 2nd wave of the just completed 5th wave (as wave ‘a’), corrects higher (as wave ‘b”) and thereafter collapses as wave ‘c’ to reach the 4th wave bottom (or lower!). In the last 3-4 months, there have been innumerable instances where we have seen this happen. Regular readers of this blog have been alerted to the opportunities. Today, I am going to review those trades so that you can have a permanent record in one place of how fifth wave extensions should be used to our advantage. Let us start with Oil.
If you had been on my mailing list before this blog was started in October, you were warned when Oil was above $140 that we will go down to $50. As recently as 5th October, and on this blog, you saw this post.

Today Oil is trading close to $52 as shown in this chart.

Now let us look at the S&P500. On 3rd April, I emailed several of you that we could recover from the current level of 1367, but failure to stay above 1415 could trigger a sell off to around 1050. Here is the chart of April 2008, followed by the chart of 20th November 2008 (today).

For those of you who are interested in GOLD, this chart should open your eyes! Just a few weeks ago, on 8th October, I wrote in your favorite blog that this precious metal was ready to collapse. That was when the commodity was trading at 910, and analysts at Credit Suisse put out a bullish report on Gold. Take a look at this chart below and judge for yourself. Gold has traded well below $700 before recovering recently.

Let us look at a specific US Stock. Bank of America! This blue chip was at $26.61 back on 30th June when I alerted you that we will see it down to around $18. In fact, some of you will remember we bought the stock near there and made between 40 and 65% in a matter of days! (that was the ‘b’ wave rally). Here are two charts for your study.

Next, let us take a look at the Euro dollar. The EUR/USD was trading at 1.3560 on 12th October when I warned you that we are on our way down to 1.25. Sure enough, it has gone there already.

Are you an emerging market buff? Then this chart of the Bombay Sensex should be revealing.

What is the lesson here folks? Technical analysis can be used to considerable benefit. Yes, when it comes to pulling the trigger we all are scared. (Honestly, I made money in only some of these recommendations because my stops were too close! And even then I could not risk a very large sum. But those who had the staying power made millions. One of my clients saved over $7 million by shifting his GBP deposit into USD just before the collapse. But coming back to the average Joe (the plumber :) or trader) we should definitely take small risks at the end of fifth wave extensions. Please bookmark this post andshare with your friends. With best wishes. Ramki

Related S&P500 links:

Was that the stock market bottom?
SNP500 revisited
S&P500 and Citi

What is a significant rally in the stock markets?

Harmony in markets: S&P500

S&P 500: Potential Ending Diagonal Triangle

Ending Diagonal Triangle in S&P500?

S&P500 Elliott Wave update

S&P500 index: is a top already in?

S&P 500 update: where is the top?

S&P500 continues its rally

S&P500 remains resilient

S&P500 ready to dive?

S&P500 Update: May 19, 2009

S&P500 Elliott Wave update:21 May 2009

S&P 500 breaks higher: update 2 June 2009

  17 Responses to “Fifth wave extensions can make you rich!”

  1. Certainly a library material. Thanks.

  2. hi ramki,
    i really enjoy your trading style and can only regret that commence receiving your update very recently
    in regards your last post, please can you have a look on USD/CHF as i have a feeling that this, what you have said about the fifth wave extensions, is slowly developing in this pair
    once the 5 wave reach the top, can anticipate to come back as A up to about 1.1600 – 1.1700,
    than B – lets say, up to somewhere below the top and C – all the way to 1.07 !!!!
    it will be my pleasure to receive your comments
    thanks and good luck in your trading
    with best regards

  3. Dear Ramki,

    thank you for explaining the waves in such worth seeing way. I am fascinated by Elliott Waves but not able to count them by myself. The basic tenets are quite easy to use, but there are a lot of specific features, like failure fives, irregular flats or even double and triple threes.
    You count the SPX high in 2007 as an overshooting B wave. Other wave counter label this as a wave 5. I am really interested to know how to identify such overshooting B waves. Would you like to explain, what makes you count this SPX high in 2007 as a B Wave?

    Thank you

    WaveWatcher

  4. Hi

    getting interested in your work, could u be kind enough to chart australia BHP and CBA

    thanks – rgds

  5. I need to understand the wave with respect to DPworld. I also need to understand it for the Dubai and Abu Dhabi financial market.

    Thanks.

  6. Hello Amal, I will take a look on Sunday (May 17th) and post my comments.

  7. Dear Ramki, hope all is well. I want to thank you first for this wonderful site and the tremendous work that you do. I know you are busy, but a quick question.. The Dubai index is undergoing a sharp correction, after a 5 wave pattern. I was reading ‘fifth wave extensions can make you rich’, trying to figure out a relative safe entry point and thought i’d ask your opinion.. i’m thinking 1750-1850-1950 are the possibilities, but i could really use some expert opinion. Best regards, and thnx

  8. Hi Farah, while it is true that the Dubai Index has seen a smart bounce, I am not entirely happy with your labelling the final wave of the PREVIOUS decline as an extended fifth. I am of the view that the low of 1427 was either the end of a ‘normal’ fifth wave, or more likely the end of an extended third wave. Consequently, the upside targets as wells as the speed of the recovery will need to be reviewed.

  9. Hey Ramki, now that the potential head-and-shoulders turned out to be a bear trap, do you think we just saw a short-term fifth-wave extension in SPX? It the fifth-wave extension was of minor iii, do we have to wait for a (triangle) minor iv and another five before the selloff?

  10. Hi Kevin, The trouble with elliott wave analysis is one could label the waves in a variety of ways. No one can know which is the right wave count until a move is over. I am sticking to my original count from the beginning because that count has not been violated. Sure it has taken a lot of time for the move to finish, but a serious set back is going to happen in the not too distant future. What will trigger the move I dont know. Sometimes, even a good news can trigger a sell off, perhaps because the market was anticipating good news and it was already built into the price. Sometimes, an insignificant news can cause a huge move, just like the last straw that broke the proverbial camel’s back.Let us see what happens, and it will be a great learning experience for everyone who has been following wavetimes.

  11. hi ramki,
    are there any 5th wave extensions currently for any of the following pairs:
    eur/usd; gbp/usd; gbp/jpy; eur/jpy; aud/jpy; usd/jpy; usd/chf;
    usd/cad; aud/usd; eur/gbp; Do You offer a recommendation service where You would suggest entry and exit points? If so, how much is this service?

    • Hello PJ. That is an interesting question. I am currently not offering any recommendation service because I am still employed full time as a Treasury Manager. Elliott Wave Analysis is just a passion, and I am sharing these charts just to remain in touch with fans like you. I am offering seminars and lectures, and if invited, will consider such requests.

  12. [...] price of Crude Oil from the $140 level to $50 in 2008. (see old posts in Wavetimes, especially how Fifth wave extensions can make you rich!). The main reason for my bearish call was we had completed an extended 5th wave at $147. You are [...]

  13. [...] Elliott Wave analysis of Deutsche Bank’s stock price chart suggests that the decline into January 2009 finished with an extended fifth wave. Of all the patterns that one can use to anticipate future moves, an extended fifth wave is probably the most reliable. (See for example, Fifth wave extensions can make you rich) [...]

  14. Sir, could you possibily comment (Email me) on a extended 5th wave upside breakout from a broadening triangle.This seems to me to be a unique and rare pattern, are there any things that one can predict from this pattern.
    Volume/Momentum indicators would seem to work well with 5th waves.
    An admirer from the UK,

    • Hello Jeremy, A complex fourth wave can take several forms, including a triangle. An expanding triangle could conceivably one such variation. Should the fifth wave (that comes after the expanded triangle fourth wave) undergo an extension, you will still anticipate the correction after the fifth wave finishes to come back to wave 2 of the fifth itself. Your question will become more interesting if the weakness takes the price deeper. How far can it go? Can it reach the bottom of the last leg of the triangle? It is possible, but I would try to see if any fibonacci projection takes the C wave of the correction to the apex of the triangle, and if it does, that will be my first obj.

  15. So much easier to see after the completion of the 5 wave pattern…but very hard to determine during.

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