A break below support from On Balance Volume indicated more downwards movement. After that bearish signal that is what has happened.
Downwards movement continues as both Elliott wave counts expect. The short term target remains the same.
This video was recorded on 18th September, 2017.
The video shows how I developed an Elliott wave count and checked subdivisions within minor wave 1 upwards, which ended on the 8th of September, 2017.
Channels drawn using Elliott’s techniques, outlined here, cannot be drawn until a reasonable amount of a wave has completed. There are two techniques to draw a channel about a new movement earlier.
1. BASE CHANNELS
This is the earliest channel that can be drawn about a new movement. This channel was drawn at the end of minor wave 2.
Base channels have two main purposes:
1. As the wave progresses the edge which is opposite to the main direction of movement should provide support or resistance. Here, the wave is down and the upper edge should provide resistance to bounces along the way down. It is the opposite for a bull wave; the lower edge should provide support for pullbacks along the way up.
A sloping trend line offering support or resistance can be used to place trailing stops.
2. A third wave may be identified or confirmed if it has the power to break through the base channel in the direction of the trend. A third wave should have the power to break above resistance at the upper edge of a base channel for a bull wave. Here, minor wave 3 should have the power to break below support at the lower edge of the base channel.
2. ACCELERATION CHANNELS
Later on in the development of a wave the base channel may be redrawn as an acceleration channel. This may be done after a third wave shows enough power to break out of the base channel in the direction of the trend, or it may be done earlier.
Acceleration channels are redrawn each time price makes a new extreme in the direction of the trend.
When a third wave is complete, then this channel is an Elliott channel (drawn using the first technique).
Acceleration channels have one main purpose:
1. To show where corrections within the trend find support or resistance, on the side opposite to the trend.
The side opposite to the trend may be used to place a trailing stop when trading the trend.
Published @ 06:22 a.m. EST.
Yesterday’s hourly charts for both Elliott wave counts had a target at 1,316 for a bounce to end and then expected downwards movement to show some strength as a third wave began. This is exactly what happened. Upwards movement reached 1,315.81, just 0.19 short of the target, before turning and moving strongly lower.
A small inside day sees the target for one of the two Elliott wave counts adjusted. This new target is now closer to the target for the other Elliott wave count.
A new high above 49.42 has invalidated last week’s Elliott wave analysis.
Two new Elliott wave counts are considered this week.
With price closing below a long term bear market trend line, the analysis is today again changed.
Upwards movement was expected after last analysis. Friday completed a higher high and a higher low, but a deep pullback at the end of the session closed the candlestick red. Price remains above the invalidation point on the hourly chart.
This is my favourite trade set up. Here’s what to look for and why.
To begin, look for a trend line which has strong technical significance. In deciding how strong or weak a line is use these guidelines here.
This trend line on Gold’s monthly chart is drawn as a bear market trend line as illustrated here.
Zooming on at the daily chart level to see exactly where the line sits, we can see that price is not sitting perfectly upon it. That may be because this trend line extends so far back, to September 2011. The general idea does appear to be working here today though.
This is the trade set up:
Look for a breach of the trend line. If this is achieved on strong volume, then have more confidence in the breach. StockCharts data does show very strong volume for the 5th of September, which is the daily candlestick on their data that would have been the day of the breach.
Look for price to curve around and back test support at prior resistance (or in a bear market resistance at prior support). Enter in the direction of the larger trend when price tests the trend line.
This set up takes time. In this case a wait of 7 to 8 days after the initial break above the trend line.
Today, the long lower wick and bullish engulfing candlestick pattern offer a little more confidence in this set up.
Why is this such a good trade set up?
With a technically significant trend line, the set up offers an entry point to a trend which traders may have confidence in. The more significant the line, the more significant the breach.
Stops may be set quite close by. Allow a little room for overshoots, and for longer held lines slightly larger overshoots, but stops may be closer than the last swing low or high. This reduces risk.
Published @ 01:15 a.m. EST.
More upwards movement was expected to about 20. Price moved slightly higher after last analysis before turning at 18.207.
A little more downwards movement was allowed for and was expected to find very strong support at a long term trend line. This is what appears to be happening today with price bouncing strongly up off the line.
Overall sideways movement was expected for the week. So far price has moved a little lower, now finding support almost exactly at a long term trend line.