By Ramki on March 8, 2010
Quite frequently we come to the office in the morning and see that a big move has happened overnight. Our first instinct is to join the move on any pull back. However, it pays to visit the short term charts before jumping in.
Look for a five wave pattern, and figure out WHERE we are in that sequence. Today’s chart of GBP/USD shows a neat little Elliott Wave pattern that a short term trader can put to use. The 2nd wave was a simple zig-zag and finished just above the 61.8% retracement level. The 3rd wave was SHARP, which is in keeping with that wave’s personality. The 4th wave covered 38.2% of the 3rd wave, and we are in an extending 5th. The internal waves of this tiny 5th shows that its own mini 3rd wave has extended! So we are probably not too far away from an intra-day low. Of course, no one can say where an extension will finish. It can just keep going lower. However, once the extension is finished, look out for a sharp recovery that will take you back to the 1.5075 levels. Good luck.
Posted in GBP
By Ramki on March 2, 2010
In this update, I am going to look at the medium term outlook for Sterling Pound, or GBP/USD. Those who have subscribed to this blog would have seen the last medium term update on cable, (another name for GBP/USD) posted here on 4th August 2009. (here is the link to that post). But the more important medium term update for Sterling Pound was written on 27 May 2009, and I urge you to read that post again. There two updates are pretty good examples of how one could use Elliott Wave analysis to navigate the market. They serve to highlight the fact that we first come up with the direction of the medium term move, and also a ball-park target. As the market unfolds in the anticipated direction, and approaches the said target, we look at fresh clues and adjust the original target to take account of any new information. These tweaks took place over several shorter-term updates which are also documented in this blog. All you have to do is to search under Forex and look for GBP. Over a period of time, we have gone from a monthly chart all the way down to a 10-minute chart! Elliott Wave Principle works in all time frames.
The recent insistance by Mr Mervyn King that the Bank of England cannot rule out fresh quantitative easing only confirms that there are a lot of downside risks for the UK. Clearly this is not supportive for the Sterling Pound. But let us go back to the GBP/USD charts. 
As you can see here, a key support has broken decisively and we are headed towards 1.4700 as a first step. Allow for a few sessions of back-and-forth moves (part of a mini 4th wave pattern) and then fresh selling to come forth again. While we stay below 1.5250 now the Sterling Pound will remain under considerable pressure and gradually ease down to 1.4150 initially, and should the going get tougher (perhaps with a hung parliament), we can even say the original target of 1.3300 area is within reach in the coming months.
Posted in GBP | Tagged medium term outlook for sterling pound gbp/usd cable
By Ramki on February 2, 2010
A correction can sometimes be 100% of the prior move, and this is what we seem to have got in Gold. Take a look at this chart where the Elliott Wave count labels are clearly marked. Gold has retraced 100% of its prior rally and has embarked on a strong rally that we have been patiently waiting for (see update of 15 jan 2010). This move could potentially develop into a third wave of the final fifth wave in the larger degree, (or alternately, if one assumes the top has already been posted at 1226, this will be a “C” wave). In either case, we should expect the rally to continue to at least 1194. Of course, if I am completely wrong in my counts, we will have a disastrous sell off, but currently, I see no reason to worry about this, except to acknowledge that one could be wrong!
Posted in Gold | Tagged elliott wave analysis of gold
By Ramki on January 24, 2010
One of the readers, Jim to be specific, has asked for the internal counts of waves (1) and (3) of the wave count of the Down Jones Industrial Average that I had posted on 17 Jan 2010. He requested this because he wasn’t sure if they looked impulsive. As I have mentioned elsewhere, Elliott Wave Analysis is a flexible tool in the hands of the analyst. Counting the waves is more like art than a science. One could label these waves in a variety of ways and still come to the same conclusion. 
Again, one could count them differently and reach a completely different conclusion. What, then, is the “RIGHT” count? Unfortunately, no one can be sure until the move is all over. The only way to trade the markets using Elliott Wave Principle is to be faithful to any one count until the market signals that you are wrong. I have provided my internal counts of the Dow Jones Industrial Average in the attached chart. There are several Fibonacci relationships that you can observe between alternate and adjacent waves. Also, the three main rules governing wave principle are all respected. Hence, there is a reasonably good chance that I am on the right track. I always grant that I could be completely wrong, and will be more than happy to share my mistakes, not just because no one can claim complete mastery, but also because once I am corrected, at least my next trade on the Dow Jones will be on the right track! Please feel free to share these comments and links with your friends. After all, this blog is meant to share our experiences in the market. With best wishes, Ramki
Posted in Dow Jones | Tagged elliott wave analysis of Dow Jones
Look for a five wave pattern, and figure out WHERE we are in that sequence. Today’s chart of GBP/USD shows a neat little Elliott Wave pattern that a short term trader can put to use. The 2nd wave was a simple zig-zag and finished just above the 61.8% retracement level. The 3rd wave was SHARP, which is in keeping with that wave’s personality. The 4th wave covered 38.2% of the 3rd wave, and we are in an extending 5th. The internal waves of this tiny 5th shows that its own mini 3rd wave has extended! So we are probably not too far away from an intra-day low. Of course, no one can say where an extension will finish. It can just keep going lower. However, once the extension is finished, look out for a sharp recovery that will take you back to the 1.5075 levels. Good luck.
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