Tag Archives: elliott wave

Amazon Trend Lines | 21st November, 2017

Unlike Google, Amazon does not have a neat a trend line.

AMZN 2017
Click chart to enlarge.

The solid yellow trend line is Amazon’s equivalent to the Google Forever trend line. The bottom line is that we should assume that Amazon remains in a bull market while price remains above this trend line.

The more recent red channel is an attempt to show where price is more recently finding support and may find resistance.

Note that during this bull market volume has shown a fairly steady decline, at least since January 2009 and probably before that. A bull market which is rising on light and declining volume is unsustainable, theoretically. The fact though is that Amazon has been rising on declining volume for years now.

This decline in volume may indicate that eventually when a high is found the next bear market may be very fast indeed. There would be very little support below to halt a fall in price because volume is so light.

Published @ 01:03 p.m. EST.

The Strongest Technical Signal for Google | 31st October, 2017

In keeping with the KISS principle, this trend line is very simple. I call it “Google’s Forever Trend Line”.

GOOG 2017
Click chart to enlarge.

This trend line has very strong technical significance. It is very long held and has been tested multiple times. It does have a reasonably steep slope, but because the entire history of Google price remains above this line a breach of the line would still offer a very strong bearish signal.

We should assume the upwards trend remains intact while price remains above the line. Each time price comes close to the forever trend line, and remains above it, then a low risk high reward entry opportunity to join the upwards trend is offered.

Published @ 01:51 a.m. EST.

Setting Targets Using Elliott Wave | 17th October, 2017

When is it appropriate to use targets that are longer than 1.618?

S&P500 2017
Click chart to enlarge.

SUMMARY:

It is appropriate to use targets calculated using Fibonacci ratios greater than 1.618 (following ratios in the sequence) when:

1. A first wave is very short, and a target calculation using only 1.618 would see the third wave not move far enough for a ratio using a higher degree to be reached.

2. Price reaches the first target using 1.618 and keeps moving through it. Then the next Fibonacci ratio in the sequence should be used.

3. The particular market analysed often exhibits extreme Fibonacci ratios such as 6.854 and 11.09. Bitcoin is an example of such a market. This behaviour can be determined by Fibonacci analysis of completed waves.

EXAMPLE:

The chart above shows a fairly typical example of a third wave for Gold.

Here, minor wave 1 was relatively short. The first target using 1.618 for minor wave 3 would have been reached about 1,488. The structure was not complete there, unless the end of minute wave i was labelled as minor wave 3. But it did not exhibit a very strong increase in downwards momentum, so although that could have been the end of it (and was suggested to me at the time) that would not have looked right.

Intermediate wave (3) exhibits an extreme Fibonacci ratio to intermediate wave (1). Intermediate wave (1) was very short. As intermediate wave (3) unfolded, it could have been labelled complete at the low labelled minute wave iii. The strongest argument against such labelling would have been that selling climaxes are usually the end of a third wave within a third wave, and not often the end of a third wave of a larger degree.

Both of the fifth waves to end minor wave 3 and intermediate wave (3) exhibit ratios of equality in length with their counterpart first waves.

Published @ 02:11 p.m. EST.

3 Elliott Techniques For Drawing Trend Channels | 20th September, 2017

The three basic Elliott Wave channels are:

1. FIRST TECHNIQUE – IMPULSE

Gold 2017
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Once enough structure is complete to begin to draw an Elliott channel (about one third to halfway through a wave) use the first technique.

A trend channel drawn using this technique may show where the fourth wave may end. If the fourth wave is contained within the channel, then the fifth wave usually ends either midway or at the opposite edge of the channel. While most markets behave this way, commodities can be different. Commodities often exhibit swift and strong fifth waves which overshoot channels, as in this example.

When the channel is breached by subsequent movement in the opposite direction, it indicates the wave is over and a trend change may have occurred.

2. SECOND TECHNIQUE – IMPULSE

Gold 2017
Click chart to enlarge.

If the fourth wave is not contained within a channel drawn using the first technique, then redraw the channel using Elliott’s second technique.

This redrawn channel may show where the fifth wave may end: either mid way or about the side opposite the fourth wave.

When the channel is breached by subsequent movement in the opposite direction, it indicates the wave is over and a trend change may have occurred.

3. TECHNIQUE FOR A CORRECTION

Gold 2017
Click chart to enlarge.

If the movement is expected to be a correction, then it may be contained within a channel. Most corrections are contained within channels, but a few such as expanded flats are not.

The channel may show where wave C ends, either mid way or at the edge of the channel.

When the channel is breached by subsequent movement in the opposite direction, it indicates the wave is over and a trend change may have occurred.

Published @ 06:16 a.m. EST.