Monthly Archives: December 2015

GOLD Elliott Wave Technical Analysis – 18th December, 2015

This is the last analysis prior to the Christmas / New Year break.

Next analysis will be done after market close for Monday, 4th January, 2016.

May you all have a very Merry Christmas and a Happy New Year!

Continue reading GOLD Elliott Wave Technical Analysis – 18th December, 2015

On Balance Volume

On Balance Volume was originally developed by Joseph Granville in 1976. Today, it is considered the grandaddy of all volume indicators.

Daily data is accumulated. If price closes higher, then volume for that day is added to the prior total. If price closes lower, volume for the day is subtracted from the prior total. If there is no change in the closing value of price, then OBV does not change.

OBV is used in three basic ways:

1. Confirmation of a trend. If over several time periods OBV moves in the same direction as price, then this confirms a trend. If over several time periods OBV does not move in the same direction as price, then the trend is weak and expect a reversal.

2. Divergence. Between highs and lows, if price makes a new extreme and OBV does not, then it indicates weakness in the direction of price, so expect a reversal.

3. Trend lines. It is my experience that this is the best use of OBV. When price is consolidating OBV will find support and resistance at trend lines. OBV is a leading indicator. If it breaks support or resistance, then the direction of the break from OBV is often a warning that price will break out of a consolidation zone in the same direction.

The example from Gold below illustrates all three ideas.

Gold Elliott Wave Chart Daily 2015
Click chart to enlarge.

From July to October 2015, Gold consolidated in a wide price range delineated by the blue horizontal lines of resistance and support. What direction would the breakout be?

The first indication was divergence between the price highs of 24th August and 15th October. While price made a new high OBV did not. This indicated weakness in upwards price movement. Divergence is indicated on price and OBV by green lines.

The final indication came when OBV broke below its pink trend line in 23rd October. Note that this break came prior to the strong downwards movement from price. OBV indicated that price was likely to break out downwards from the consolidation zone and that is what it did.

As price fell strongly from 28th October to about 18th November, OBV also moved strongly lower confirming the price trend. At the end of the trend, OBV again diverged from price. The final low in price at 3rd December did not see a corresponding low from OBV, so this divergence indicated the downwards trend was weak and another consolidation should be expected.

The Trend Is Your Friend

The flip side of the title to this post is “don’t trade against the trend”.

The fact that markets trend is why traders make profits. Price is not completely random. Price tends to move in trends.

Trends are often delineated by trend lines.

When price is consolidating it tends to move in whipsaws about a moving average with choppy overlapping sideways movements. Price tends to move from resistance to support and back again, but not in a straight line. Overshoots of resistance and support can also happen yet price can turn back into the consolidation zone. It is impossible to tell exactly when and where price will turn, so if trying to trade a consolidating market losses are inevitable. Mean reverting systems for trading during a consolidating market are suited for the most experienced and nimble of traders only, not at all for beginners or those with only a few years experience.

When price has been consolidating for a while, then horizontal lines can be drawn to show the upper and lower boundaries of the consolidation zone. It then becomes a waiting game. Waiting for a breakout. When price breaks above resistance or below support on a day with an increase in volume, then a breakout is indicated and the market has begun to trend again.

When price is trending it moves in a clear direction, usually finding support (an upwards trend) or resistance (a downwards trend) at a sloping trend line. The clear direction of price movement is what makes profit easier, so the trick is to identify a new trend early enough to allow for profit to be made and then to identify when it is over early enough to exit the trade with a profit. For less experienced traders, it is advised to wait for a clear trend to be evident and then to only trade in the direction of that trend. Profits should be relatively easy as long as the trend is not exhausted.

If staying with the trend is the easiest way to make a profit, then it makes sense to avoid trading when the market is not trending.

It is often the trades that a trader does NOT take which makes the difference between profit and loss. Cut losses by avoiding consolidating markets.

If there is only one lesson that new traders can learn which will improve trading performance, it is to only trade a clear trend in the direction of that trend.

GOLD Elliott Wave Technical Analysis – 17th December, 2015

A new low below 1,057.4 confirmed the alternate hourly wave count.

Continue reading GOLD Elliott Wave Technical Analysis – 17th December, 2015

SILVER Elliott Wave Technical Analysis – 17th December, 2015

Choppy overlapping movement was expected for the week. This is exactly what happened.

Continue reading SILVER Elliott Wave Technical Analysis – 17th December, 2015

GOLD Elliott Wave Technical Analysis – 16th December, 2015

An upwards day was expected.

Continue reading GOLD Elliott Wave Technical Analysis – 16th December, 2015

GOLD Elliott Wave Technical Analysis – 15th December, 2015

Sideways movement to complete a small green doji fits the expectation of a continuing correction.

Continue reading GOLD Elliott Wave Technical Analysis – 15th December, 2015

Christmas and New Year Holiday Dates 2015 – 2016

Elliott Wave Gold will be closed for two weeks during the Christmas and New Year holiday.

Holiday dates are from Monday 21st December to Friday 1st January.

Last analysis of the year will be after market close of Friday 18th December.

First analysis of the new year will be done after market close for Monday, 4th January, 2016, and will include a video update.

During the two week holiday, markets will be closed for two and a half days and there will be seven and a half days when markets will be open but which will not be analysed.

May all members have a very Merry Christmas and a Happy New Year.

May we all look forward to great profits next year!

US OIL Elliott Wave Technical Analysis – 14th December, 2015

The structure is becoming a little clearer. There is only one daily Elliott wave count this week.

Continue reading US OIL Elliott Wave Technical Analysis – 14th December, 2015

GOLD Elliott Wave Technical Analysis – 14th December, 2015

Downwards movement on lighter volume fits the profile of a continuing correction for Gold.

Continue reading GOLD Elliott Wave Technical Analysis – 14th December, 2015

USD Index Elliott Wave and Technical Analysis – 12th December, 2015

I have only one bullish Elliott wave count for the USD Index.

New updates to this analysis are in bold.

US Dollar Elliott Wave Chart Weekly 2015
Click chart to enlarge.

The US Dollar has been in a bull market since July 2011. So far there is no confirmation of a trend change. The bull market should be assumed to remain intact until proven otherwise.

Ratios within intermediate wave (1) are: minor wave 3 is 24.98 longer than 2.618 the length of minor wave 1, and minor wave 5 has no Fibonacci ratio to either of minor waves 3 or 1.

Within minor wave 3, there are no Fibonacci ratios between minute waves i, iii and v.

Ratios within minute wave iii are: minuette wave (iii) has no Fibonacci ratio to minuette wave (i), and minuette wave (v) is 8.46 short of 0.382 the length of minuette wave (iii).

Within intermediate wave (3), minor wave 3 is 87.36 longer than 4.236 the length of minor wave 1.

Minor wave 3, within intermediate wave (3), shows strongest upwards momentum. MACD supports the Elliott wave count.

Within intermediate wave (3), minor wave 2 was a very deep 0.98 zigzag. Minor wave 4 is a shallow flat correction. There is perfect alternation between these two corrections which increases the probability of this wave count.

Draw a channel about intermediate wave (3) using Elliott’s first technique: draw the first trend line from the highs labelled minor waves 1 to 3, then place a parallel copy on the low labelled minor wave 2. So far this contains all of intermediate wave (3). The lower edge of this channel is proving useful in showing where downwards movement is finding support.

The US Dollar was in a sideways consolidation since mid March. During this sideways movement it is an upwards week which has strongest volume. This indicates that when the consolidation is complete an upwards breakout is more likely than downwards. So far, at this stage, it looks like price has now broken out of this consolidation upwards as expected.

A final support line is shown in cyan.

US Dollar Elliott Wave Chart Daily 2015
Click chart to enlarge.

Minor wave 4 was a flat correction. Minute wave b is a 105% correction of minute wave a, so this is a regular flat. Minute wave c is longer than normal for a C wave within a regular flat. There is no Fibonacci ratio between minute waves a and c.

The sideways consolidation turned out to be a leading contracting diagonal for minute wave i. This was followed by a relatively deep 0.52 flat correction for minute wave ii.

At 12,601 minute wave iii would reach 1.618 the length of minute wave i.

At 13,421 minor wave 5 would reach equality in length with minor wave 3.

This wave count expects a long extension for minor wave 5.

Within minute wave iii, the first wave for minuette wave (i) may now be complete, but it has a slightly truncated fifth wave. This slightly reduces the probability of this wave count and indicates caution. Risk management as always is the key to successful trading. This small truncation indicates traders should be careful to manage risk, if using this analysis for trading decisions.

So far minuette wave (ii) may be a complete quick shallow zigzag, at 0.48 the depth of minuette wave (i). If minuette wave (ii) continues any further, it should find strong support at the lower blue trend line copied over from the weekly chart.

The green base channel is drawn about minuette waves (i) and (ii). If minuette wave (ii) moves lower, redraw this channel. Draw the first trend line from the start of minuette wave (i) to the end of minuette wave (ii), then place a parallel copy on the higher price extreme within minuette wave (i) at the end of subminuette wave iii.

If price breaks above the upper edge of this base channel, then a third wave up would be confirmed. Along the way up, downwards corrections should find support at the lower edge of this channel.

TECHNICAL ANALYSIS

US Dollar Elliott Wave Chart Daily 2015
Click chart to enlarge.

At the weekly chart level, the strongest volume during the sideways range from early March to October 2015, was an upwards week. This indicated price should break out upwards. New highs in November are the result.

On 5th November price made a new high on an increase in volume. This was an upwards breakout, supported by volume.

It is consistently upwards days which show strongest volume since that breakout. This supports the trend. The rise in price is supported by volume and is not suspicious.

Short term, at the low of 10th December, there is slight divergence with price and RSI. On 10th December price made a new low below the prior short term swing low of 3rd December while RSI did not make a corresponding low. This indicates weakness in downwards movement and is very often accompanied by a trend change. In the short term, some upwards movement should be expected from here. This supports the Elliott wave count which labels this downwards correction as a complete second wave zigzag.

ADX is rising and above 15, the red -DX line is above the green +DX line, so a downwards trend is indicated by ADX. ATR disagrees: it is flat indicating no clear trend at this stage. With these two lagging indicators not in agreement with each other and not with the Elliott wave count, caution is advised. The picture here is unclear and may be resolved if price now moves higher for a few days as RSI indicates it will.

The series of blue and pink trend lines are my own technique which I strongly favour when trading. Along the way up, price may find support and resistance at these series of lines; these may assist to time entry points. The first of each series of trend lines is drawn from the price points labelled and parallel copies are placed higher up at various swing lows and highs.

On Balance Volume is bullish while it remains above the trend line.

Overall, the bullishness of volume, OBV and RSI should be favoured over the lagging indicator of ADX at this time. This indicates overall upwards movement from the USD. There will be corrections along the way up, and the third wave expected to begin does not necessarily have to start out quickly (although it may).

GOLD Elliott Wave Technical Analysis – 11th December, 2015

The correction continues as expected.

Continue reading GOLD Elliott Wave Technical Analysis – 11th December, 2015