NZD/USD update

This currency pair seems to have behaved as expected on the previous post. it seems likely that the iii(circle)rd wave down has terminated/ is terminating A wave iv(circle) bounce is expected that will most likely terminate at or bellow 0.8075 handle and will most likely be a zigzag/ contracting triangle. This is a perfect time to scale out some profits for those of you who are short this market, for those who are long and running a loss a move towards the 0.8075 would be a good place ro exit at a smaller loss.

Regards,
Ahmed Farghaly

GBP/USD & NZD/USD Elliott wave update

Looking at a weekly chart of the gbp/usd currency pair. It seems evident that the bearish contracting triangle was breached to the downside as anticipated earlier on this blog, I'm counting the initial decline as a wave 1 of a 5th wave or a wave A of wave 1 of a diagonal 5th wave. In all cases this currency pair is headed lower and will most likely take us towards the 1.25 handle not too long from now. In the following picture we will look at the initial decline in greater detail to aid us in timing the resumption of the declines to lower prices.

Posted above is 12 hour chart detailing the decline from the wave (E) high, as mentioned above it seems that the decline post the wave (E) high was impulsive a textbook 5 wave decline with an extended fifth wave. what occurred after seems to be a correction to the upside. Other than the pattern in formation a simple comparison with the decline from the wave (E) high would classify the move as corrective. It is slow and is moving sideways which are typical of corrective patterns. However looking at the pattern in formation it seems evident that the pattern is a zigzag rally to the upside. we are currently in the wave iii of C which suggests that this rally still has some legs in it before we can conclude that the correction is over. The blog will be updated when that occurs.

It seems likely the the advance on the NZD/USD from the 2000 low is that of a zigzag rally to the upside. The ending diagonal that took place in wave 5 of C would indicate that the upcoming decline would be of one degree higher than the diagonal typically several degrees higher which is why I'm labelling the whole move from the 2000 low as a zigzag an alternate would be a 1-2-i which seems unlikely again due to the diagonal triangle that occurred as the 5th wave. If the labelling is accurate this would indicate that the 2011 high marked the end of cycle degree bear market rally and the upcoming declines will prove very fruitful from a trading/investing perspective.

Posted above is the 4hr chart looking at the declines from the wave (2) high it seems evident that we are still in the iii(circle)rd wave down(notice how we took out the base channel as is typical of 3rd wave behaviour). we still have some further declines to go before we can label minor wave 1 complete. IF already short this market I would suggest holding on to the shorts for a while longer until this pattern proves complete.

Regards,
Ahmed Farghaly

EUR/GBP Elliott wave outlook

The image above shows my preferred count on this currency pair. The declines from the 2008 high seems corrective and we are most likely going to see the 2008 high breached eventually. The count presented above is of a double zigzag decline which concluded as of the 22 july low. A point to note is how the decline took us to the preceding 4th wave zone and rallied from there. It looks like we are rallying impulsively since. the impulsive wave still has one more leg to the upside to conclude as presented above. After which the advance will be labelled 1/A and we'll be looking to long on a corrective set back. But as for now I would suggest holding on to any longs from lower prices in anticipation of a 5th wave rally to new highs.

  This is my alternate count. It suggests that we are currently still in an (X) wave rally correcting wave (W). This is a bearish count and suggests further declines in this currency pair. However the wave (5) of C is still not complete yet which suggests one final higher high before this currency pair turns south.

Regards,
Ahmed Farghaly

Dubai Financial Market, elliott wave outlook

Looking at a weekly chart it seems evident that the move from the 2005 high is a zigzag abc correction completing a decline at least of cycle degree but most probably one of supercycle degree. If we look at the wave relationships we will notice that the wave C(circle) ended at the equality target with wave A(circle) almost to the point. Another interesting thing to note is the ending diagonal that took place in the wave (5) of C(circle) which predicted a swift advance which is what is occurring at the moment. Lets now take a look at a 3 day chart to analyze the bounce that occurred post the 2012 lows.

I have two counts in the short term. First lets look at the count presented above. The third wave apears to have subdivided clearly into a 5 wave advance as labelled in parentheses. this count calls for a decline towards the 2000 mark before any further advance. We are currently flirting with the 1.618x wave 1(circle) target on semi log scale, and we are past it on linear scale. The one thing I dont like about this count is that the volume on the (5)th wave of 3(circle) is higher that its sister wave (3). Usually the 5th wave diverges in volume with the third wave that preceded it which is why I'm presenting the following count.

This count is more optimistic. It suggests that the wave 3(circle) is still in the making. We are currently patching up the wave 3 of (3) of 3(circle) this count suggests a much higher support for the upcoming declines which shall result in further rallies before a significant correction (wave 4(circle))is noticed in this market.

Regards,
Ahmed Farghaly

Is the US bear market back into play?

The DJIA seems clear from a wave perspective, It seems probable that the move the kicked off in March 2009 has completed and the move to the downside has started. Wave (A) of this correction has unfolded into an impulse while wave (C) has unfolded into an ending diagonal. Let us keep in mind that if the ending diagonal count is accurate a swift sharp move is expected to unfold to the downside which shall fully retrace the diagonal in less time than it took to form. The beginning of the diagonal was at 9664 (minimum target). Another point to note is the double divergence/ triangle that formed on the MACD which is typical of an ending diagonal. If indeed the 2nd wave (march 2009 - October 2012) has completed we can expect the decline to take us bellow the march 2009 lows as wave 3 unfolds.

Regards,
Ahmed Farghaly

GBPNZD The end of a 12 year impulse

Looking at this chart that dates back to the early 90's it seems evident that this currency pair experienced a flat correction to the downside. Unfortunately I dont have the data going back further which means the begining of the wave A(circle) to the downside can be something else. What we are certain of however is that the move that kicked off in the year 2000 has clearly unfolded into 5 waves down off the high wave 3 being 2.618 of wave 1 and wave 5 ending slightly bellow the thrust measurment  . The picture bellow shows a more detailed look at the 5 wave decline off the 2000.

The decline was a textbook impulse wave to the downside, the 4th wave unfolded into a running contracting triangle which signals to us that the following move to the downside is the last wave of the sequence and the move to follow would typically make it back to its terminus considering the guideline that states corrections usually end by the terminus of the previous fourth. Thats ofcourse IF the upcoming move is a correction. Also notice the divergence seen on the RSI 14 indicator. also notice the unfolding head and shoulders pattern as visible on the chart. Another point to note is the double bottom that formed on this chart as well. As of now this idea remains a possibility however it would become more probable if the standard chart patterns talked about above give way.

Regards,
Ahmed Farghaly

EURAUD a clear wave pattern

Posted above is a long term chart of the EUR/AUD the pattern that took place since 1999 is that of an expanded flat correction correcting a move dating back to the 70's. Points to note is that the pattern roughly ended and the 1.618x wave A (circle) which is a typical target for wave C of an expanded flat. Also notice that the move lasted 13 years which is a fibonacci number. Looking at the C wave in greater detail we can see that the the 5th intermediate wave was 0.382x the distance traveled from wave (1) through (3). Supposing that this pattern was not an expanded flat we can still expect a significant correction from the move that started in 2009 which lasted 3 fibonacci years. This chart is full of fibonacci time clusters which leads me to believe that the low seen this year is indeed a low of cycle degree and a significant move to the upside can be expected. Another point to notice is the strong divergence between wave (3) and (5) as highlighted on the chart above. also if you look closely into the chart you will notice that rallies of significance in this chart was accompanied by declines in risk sentiment. This currency pair rallied in 2000 as the nasdaq crashed, and rallied as well during the financial crises. All this evidence suggests that we are entering a long waited for risk off mode. Another technical aspect to notice is the potential inverse head and shoulders that is forming as we speak.

 looking at the 2012 rally it very much seems impulsive followed by a text book 5-3-5 zigzag which took us into the 38.2% retracement of the 2012 rally, we also made it back into the wave 4 vicinity of one lesser degree all of which suggest that a continuation of the uptrend shall occur from current levels the alternate count is that the decline is only wave A/W of a more complex correction however R.N. Elliott says that the simplest pattern is typically the right interpretation. A breach of the corrective price channel ( which contained the entire move typical of corrective patterns) on the upside would be the first confirmation of a move to the upside. This currency pair seems the clearest out of all, looking at my analysis on the EUR/USD the eur is expected to decline against the USD which suggests that the AUD/USD (which is not clear from a wave perspective) Shall fall harder and be of the biggest losers typical of a risk off enviroment. However I dont like to trade currencies in which I dont see patterns I recognize hence I would much rather look for clues on this pair for a move to the upside.

Regards,
Ahmed Farghaly

Also view: http://competent-trades.blogspot.com/2012/04/point-to-note-on-gold-and-audusd.html