Tag Archives: s&p500

Volume and Breakouts – Is it Necessary? | 11th August, 2017

This chart was published two days ago. At that time, it was warned that the possible upwards breakout of the 8th of August lacked support from volume and may turn out to be false:

S&P500 Daily 2017
Click chart to enlarge.

That was proven correct. The strong downwards movement from the S&P comes on a day with an increase in volume. This is a classic downwards breakout.

When a downwards breakout has support from volume, that adds confidence in it. Downwards breakouts do not require support from volume; the market may fall of its own weight. Price can fall due to an absence of buyers as easily as it can from an increase in activity of sellers. But when volume supports downwards movement, it may be more sustainable, at least for the short term.

This downwards breakout was predicted by strongest volume during the consolidation being a downwards day.

This volume analysis technique looks at the presence or absence of support from volume on the breakout after a consolidation period to tells us how reliable the breakout may be.

Published @ 12:17 a.m. EST on 12th August, 2017.

Volume and Breakouts – Is it Necessary? | 9th August, 2017

After a consolidation price will break out. The presence or absence of support from volume on the breakout tells us how reliable the breakout may be.

Gold Daily 2017
Click chart to enlarge.

Pennant patterns are one of the most reliable continuation patterns. But in an upwards trend the breakout should have support from volume.

For price to keep rising it requires increased activity of buyers. Upwards breakouts that do not have support from volume are suspicious.

This upwards breakout comes on a day with slightly higher volume, but the balance of volume for the session is downwards. Stronger volume during the session supported downwards movement, not upwards.

The breakout is suspicious and may turn out to be false.

While volume is important for upwards breakouts, it is not so important for downwards breakouts. The market may fall of its own weight.

Published @ 04:47 p.m. EST.

Non Farm Payroll – What Direction for the S&P500? | 3rd August, 2017

A simple classic technical analysis pattern may answer the question of what direction to expect tomorrow from the S&P500 upon release of Non Farm Payroll data. This release is expected to move markets strongly:.

Gold Daily 2017
Click chart to enlarge.

Pennants are reliable continuation patterns. The pattern is supported if volume declines as the pattern forms. Pennants normally appear about halfway within a trend.

The measured rule takes the flag pole which precedes the pattern and adds that length to the expected breakout of the pattern.

If this pattern is correct, then tomorrow may see an upwards breakout to new all time highs for the S&P500.

Published @ 06:28 a.m. EST.

SILVER Elliott Wave Technical Analysis – 19th June, 2014

Movement above 19.824 and then 19.996 invalidated the main wave count and confirmed the alternate.

Silver has now finished its barrier triangle, and the next movement should be a five wave structure downwards. I will use the channels on the hourly chart to indicate when this trend change has occurred.

Click on charts to enlarge.

Silver weekly 2014

The triangle for intermediate wave (B) is now a complete barrier triangle. Within it the overshoot for minor wave E of the B-D trend line indicates that upwards movement is either over here or should be very soon.

At 10.85 intermediate wave (C) would reach 1.618 the length of intermediate wave (A). At 14.07 intermediate wave (C) would reach equality in length with the widest part of the triangle. This gives a wide target zone. When there is structure within intermediate wave (C) to analyse I will be able to use minor wave degree to add to the target calculation and narrow it down. I cannot do that yet.

Intermediate wave (C) may last about 18 weeks, if it is 0.618 the duration of intermediate wave (A).

If intermediate wave (B) moves higher (and the trend change is unconfirmed so it may do so) then it may not move beyond the start of intermediate wave (A) at 34.515.

Silver daily 2014

The triangle structure is correct and now either complete here or extremely close to completion.

I know members and visitors will comment that this wave count does not fit with Gold. I disagree. Gold expects downwards movement for a B wave at minor degree and this may coincide with Silver’s first wave down at minor degree. When Gold expects a following upwards wave for a C wave at minor degree this may coincide with a deep second wave correction for minor wave 2 on Silver. They most certainly can move together. However, Gold and Silver do not always have their highs and lows at the same point in time. Silver tends to lead Gold.

If this wave count is correct then intermediate wave (C) should begin either here or extremely soon. Once there is some indication of this trend change on the hourly chart with channel breaches I would have some more confidence in this wave count.

Minor wave E has overshot the A-C trend line. E waves of triangles most commonly undershoot the A-C trend line, but when they do not then they tend to overshoot the trend line (they do not end right at the trend line). This gives the triangle structure a typical look and indicates it should be ending about now.

While the trend change is not indicated on the hourly chart the invalidation point remains at 22.224. Minor wave E may not move beyond the end of minor wave C.

Silver hourly 2014

Within minor wave E zigzag I have drawn a parallel channel about minute wave c using Elliott’s second technique: draw the first trend line from the lows of minuette waves (ii) to (iv), then place a parallel copy upon the end of minuette wave (iii). This trend channel is overshot by a strong fifth wave which is typical behaviour for a commodity market. When this channel is breached by downwards movement I will have confidence that minor wave E is over and there has been a trend change to the downside.

In the first instance a breach of the channel containing minuette wave (v) would provide earliest indication of this trend change.

There is no Fibonacci ratio between minute waves a and c within minor wave E zigzag.

Ratios within minute wave c are: minuette wave (iii) is 0.081 short of 4.236 the length of minuette wave (i), and there is no Fibonacci ratio between minuette wave (v) and either of minuette waves (i) or (iii).

Ratios within minuette wave (v) are: there is no Fibonacci ratio between subminuette waves iii and i, and subminuette wave v is so far 0.066 longer than equality with subminuette wave i.

The question mark next to the end of intermediate wave (B) indicates that it is not clear yet if this upwards movement is over. I want to see the channels on the hourly chart clearly breached before I have confidence in this trend change. If this wave count is correct then this trend change should happen within 72 hours, probably sooner rather than later.

US Oil Elliott Wave Technical Analysis – 27th August, 2013

Movement above 110.56 has invalidated the main monthly wave count and confirmed the alternate. This upwards movement is not yet over.

Click on the charts below to enlarge.

US Oil monthly 2013

Movement above 110.56 has confirmed this wave count.

Cycle wave b is not over and is completing a double zigzag, with primary wave X within it a contracting triangle.

I have adjusted the wave count within the triangle of primary wave X. It now fits nicely within the triangle trend lines and has a more typical look. Intermediate wave (E) undershoots the A-C trend line.

Extend the triangle trend lines outwards. The point in time at which they cross over may see a trend change, this may be where primary wave Y ends.

We should expect a continuation of upwards movement from oil for some weeks yet. There is not normally a Fibonacci ratio between subwaves W and Y within doubles.

Cycle wave b may not move beyond the start of cycle wave a. This wave count is invalidated with movement above 146.73.

US Oil daily 2013

Within cycle wave Y intermediate wave (A) is a completed five wave impulse, intermediate wave (B) is a completed regular flat correction, and intermediate wave (C) is an incomplete impulse.

At 122.55 intermediate wave (C) would reach 2.618 the length of intermediate wave (A). At 120.84 minor wave 5 would reach 2.618 the length of minor wave 1.

Minor wave 3 is 0.95 longer than 1.618 the length of minor wave 1.

The structure within minor wave 5 is incomplete. It requires further upwards movement.

US Oil hourly 2013

Within minute wave iii the structure is incomplete. The middle of the third wave is nearing its end. Minuette wave (iii) is so far 0.17 longer than 1.618 the length of minuette wave (i). It may not be over there though. It should be over soon, and when it is minuette wave (iv) should move price lower in very choppy overlapping movement.

Minuette wave (ii) was a relatively shallow 47% zigzag correction. Given the guideline of alternation we may expect minuette wave (iv) to be relatively deep. Minuette wave (iv) is likely to end within the price range of the fourth wave of one lesser degree, between 109.32 and 108.64.

When it is complete the upwards trend should resume.

At 119.03 minute wave iii would reach 2.618 the length of minute wave i.

If minuette wave (iii) moves higher then redraw the channel. Draw the first trend line from the highs of minuette waves (i) to (iii), then place a parallel copy upon the low of minuette wave (ii). Expect minuette wave (iv) may find support at the lower edge of this channel.

Minuette wave (iv) may not move into minuette wave (i) price territory. This wave count is invalidated with movement below 107.35.

GOLD Elliott Wave Technical Analysis – 27th August, 2013

Last analysis main wave count expected more upwards movement. The alternate was not confirmed with a red candlestick or any channel breach.

Again I have two wave counts for you today. They differ only in the degree of labeling for most recent movement. The price point which differentiates them is 1,384.60.

Click on the charts below to enlarge.

Main Wave Count.

Gold Elliott Wave Chart Daily 2013

This daily chart focuses on the new downwards trend of primary wave C within a cycle degree wave IV.

Within primary wave C intermediate waves (1) through to (3) are complete.

Intermediate wave (4) so far has lasted a Fibonacci eight weeks and may now be complete. Intermediate wave (2) lasted three weeks and was a deep 66% zigzag. Intermediate wave (4) is shallower at 42%.

I would want to see some confirmation of this wave count before having confidence in it. For confirmation I will look for:

    1. A red candlestick for the current session.
    2. Movement below 1,384.60.
    3. Movement below the channel on the hourly chart.
    4. Movement below the channel on the daily chart.

At 1,151 primary wave C would reach 1.618 the length of primary wave A. At 1,101 intermediate wave (5) would reach 2.618 the length of intermediate wave (1).

Within intermediate wave (5) no second wave correction may move beyond the start of the first wave. This wave count is invalidated with movement above 1,423.92.

*There is a problem with the data I am using from FXCM. On the daily chart the price point at which minute wave iii within minor wave C within intermediate wave (4) begins is 1,315.92 (14th August, 2013). This makes minute wave iii 68.71 in length. Minute wave v is 68.64 in length, just shorter, so the core Elliott wave rule that states a third wave may not be the shortest is met. However, on the hourly chart there is no low of 1,315.92 on 14th August, 2013, instead the low there is 1,316.05. This makes minute wave iii as seen on the hourly chart (below) 68.54 in length, which is 0.10 shorter than minute wave v (and minute wave i is 71.20 long).

GOLD Elliott Wave Chart Hourly 2013

This wave count agrees with MACD, the strongest momentum is within the third wave. There is classic divergence with price trending higher and MACD trending lower, indicating a possible trend change here.

Within minute wave v there are no adequate Fibonacci ratios between minuette waves (i), (iii) and (v).

Draw a parallel channel about minor wave C. Draw the first trend line from the lows of minute waves ii to iv, then place a parallel copy upon the high of minute wave iii. When this channel is clearly breached we shall have some confirmation of a trend change.

Movement below 1,384.60 would invalidate the alternate below and provide some price confirmation of a trend change.

Alternate Wave Count.

Gold Elliott Wave Chart Daily alternate 2013

If we simply move the degree of labeling within recent movement within intermediate wave (4) all down one degree, this structure may be incomplete.

Minor wave C may be incomplete and minute wave iii within it may be extending.

This wave count resolves the problem of the length of minute wave iii within minor wave C being 0.10 too short on the hourly chart, but it still leaves the problem of inaccurate data!

At 1,441 minor wave C would reach equality in length with minor wave A. Minor wave C may overshoot the parallel channel containing intermediate wave (4).

Within primary wave C intermediate wave (4) may not move into intermediate wave (1) price territory. This wave count is invalidated with movement above 1,672.77.

Gold Elliott Wave Chart Hourly alternate 2013

If minute wave iii within minor wave C is extending, then within it minuette wave (iii) is just 0.06 longer than equality with minuette wave (i).

Minuette wave (iv) is likely to be incomplete. It may not move into minuette wave (i) price territory. This wave count is invalidated with movement below 1,384.60.

We may draw a parallel channel about minute wave iii: draw the first trend line from the highs of minuette waves (i) to (iii), then place a parallel copy upon the low of minuette wave (ii). Expect minuette wave (v) to find resistance at the upper edge of this channel.

This wave count would be confirmed with movement above 1,384.60.

The biggest problem with this wave count, and the reason why it is my alternate, is that it does not agree with MACD. The first wave within minute wave iii has stronger momentum than the middle of the third wave.

GOLD Elliott Wave Technical Analysis – 26th August, 2013

Last analysis of gold expected an end to a fourth wave correction to be followed by a sharp upwards thrust to about 1,399.73. This is what happened.

The question now is, is this intermediate degree correction over? Have we just seen a trend change back to the downside for gold?

Click on the charts below to enlarge.

Gold Elliott Wave Chart Daily 2013

This daily chart focuses on the new downwards trend of primary wave C within a cycle degree wave IV.

Within primary wave C intermediate waves (1) through to (3) are complete.

Intermediate wave (4) so far has lasted eight weeks and may now be almost complete. Intermediate wave (2) lasted three weeks and was a deep 66% zigzag.

When the structure on the hourly chart is complete then we need to look for confirmation that intermediate wave (4) is over. If this current daily candlestick closes down, is red, that shall be a strong indicator of a trend change.

When we have confirmation on the hourly chart that we have seen a trend change then I will add to the target calculation for primary wave C at intermediate wave degree. I may be able to do this for you tomorrow.

At 1,151 primary wave C would reach 1.618 the length of primary wave A.

Within primary wave C intermediate wave (4) may not move into intermediate wave (1) price territory. This wave count is invalidated with movement above 1,672.77.

Main Hourly Wave Count.

GOLD Elliott Wave Chart Hourly 2013

This hourly chart a good overall look because within minute wave v minuette waves (ii) and (iv) are nicely in proportion.

Draw a parallel channel about minor wave C using Elliott’s second technique. Draw the first trend line from the low of minute wave ii (you can see this on the daily chart) to minute wave iv, then place a parallel copy upon the high of minute wave iii. Expect minute wave v to end mid way within this channel. When this channel is breached by downwards movement we shall have trend channel confirmation that minor wave C is over, and intermediate wave (4) is extremely likely to be over.

Minute wave iv ended as a zigzag with a slightly truncated C wave, not as a triangle. Within the zigzag subminuette wave b was a time consuming double combination.

Minute wave iii is slightly shorter than minute wave i. This limits minute wave v to no longer than equality with minute wave iii at 1,423.84.

At 1,416 minuette wave (v) would reach equality in length with minuette wave (i).

If minuette wave (iv) is not over and continues further sideways then it may not move into minuette wave (i) price territory. This hourly wave count is invalidated with movement below 1,381.94.

Alternate Wave Count.

GOLD Elliott Wave Chart Hourly 2013

It is possible to see a completed five wave impulse for minute wave v. We may have just seen a trend change at intermediate wave degree.

There is no Fibonacci ratio between minor waves A and C.

Ratios within minor wave C are: minute wave iii is 2.62 short of equality with minute wave i, and minute wave v has no Fibonacci ratio to either of minute waves i or iii.

Ratios within minute wave v are: minuette wave (iii) has no Fibonacci ratio to minuette wave (i), and minuette wave (v) is 1.23 short of 0.618 the length of minuette wave (iii).

We need to see confirmation of this trend change before having confidence in it.

Firstly, movement below 1,381.94 would provide initial indication this wave count may be correct.

Second, movement below the parallel channel here on the hourly chart would provide trend channel confirmation that minor wave C is over and the next wave is underway.

Third, movement below the parallel channel on the daily chart would provide channel confirmation that the zigzag of intermediate wave (4) should be over.

Finally, price movement below 1,348.27 would provide confirmation that the upwards movement labeled intermediate wave (4) is a three wave structure and is corrective, because at that stage downwards movement may not be a fourth wave correction within an unfolding impulse upwards.