Elliott Wave Analysis Daily & Weekly XJO Updates Disclaimer

To read these updates in the correct order, please read from the bottom to the top.       

30/04/07

No change today, we're still in this small consolidation pattern.

With interest rate news out this week, this may be the excuse to 'jump' out of it.

27/04/07

Today's decline would still fit as a sideways moving wave 4, as the small green wave 2 was a sharp decline (the rule of alternation).

Looking at the hourly futures chart, 5 waves have formed in this pattern, so if this thinking is correct we should see prices push higher next week.

Perhaps Wall Street will give us a new record high to inspire the local market on Monday?

The weekly chart has been updated to show the revised count.

Link to Daily chart: charts/XJO_20070427.JPG

26/04/07

I've put the more bullish alternate count on today's chart.

This meandering uptrend just doesn't inspire me with much confidence in Elliott Wave terms. No clear 5 wave structures and waves overlapping.

But, none the less, prices are moving up and continue to do so.

We may well have gone past the Expanded Flat scenario, hence the different count.

Another push higher may be possible from this current small consolidation - Wall Street is up at new highs too, which helps the local market.

Link to Daily chart: charts/XJO_20070426.JPG

24/04/07

The XJO looks like it's hanging on.

With a public holiday tomorrow locally, it'll be interesting to see what happens overseas tomorrow and how it influences us on Thursday.

Link to Daily chart: charts/XJO_20070424.JPG

23/04/07

A wide range day today, but didn't quite manage another new high.

Things are getting volatile and the uptrend is looking like it's stalling. We will have to see how things develop from here.

Link to Daily chart: charts/XJO_20070423.JPG

20/04/07

Prices rallied today, staying fairly well within yesterdays trading range.

I think it's getting more likely that a decline of some sort is starting, but I think further falls are needed to confirm this.

As mentioned previously, whilst the alternative count remains a question mark, the next move down (however it's labelled) should be fairly sizable.

Link to Daily chart: charts/XJO_20070420.JPG

19/04/07

The XJO was down nearly 76 points today.

Is this the start of lower prices or just another bump in the lingering uptrend?

Well time, of course, will tell - but the hourly futures chart has started to break a long term channel, so this may be more of a sign this time.

Link to Daily chart: charts/XJO_20070419.JPG

18/04/07

Up and onward again today.

Nothing much to add until we get a break in trend.

Link to Daily chart: charts/XJO_20070418.JPG

17/04/07

Another reversal day today with a new all time high.

I've added some 'Alternative Count' labels on the chart today (with grey backgrounds). Something to think about, but it doesn't change the direction of the next anticipated wave.

When the next downward wave does occur, its make-up will tell us what to expect next.

I'm thinking that a choppy 5 wave pattern down will eventually lead to higher prices and a final red wave 5. Alternatively, a 5 wave impulsive pattern that ends well beyond the red 'a' and grey 'or 4' labels will indicate that the red wave 5 may have already occurred.

As I said, this is food for thought. Right now, I'm waiting for the next down wave.

Link to Daily chart: charts/XJO_20070417.JPG

16/04/07

Another all time high today.

The trend on the hourly chart looks like it's flagging - we will have to wait and see if this flows on to the daily chart.

Link to Daily chart: charts/XJO_20070416.JPG

13/04/07

Reversal day?

I seem to remember thinking this before, during this choppy uptrend of the last few weeks.

I don't think I'll count the chickens until the eggs have hatched this time - or rather the eggs have broken on the floor.

Link to Daily chart: charts/XJO_20070413.JPG

12/04/07

No new high (for a change!) but we ended toward the top end of the daily range.

Link to Daily chart: charts/XJO_20070412.JPG

11/04/07

There was a new intra-day high today, but prices ended marginally lower.

Nothing more to add at the moment - I'm waiting for the next down move to hopefully clarify things and to confirm the wave count.

Link to Daily chart: charts/XJO_20070411.JPG

10/04/07

We had a large up day today, but I'd imagine many people are still on holiday.

Obviously, with another all time high this will raise questions as to the wave count - it doesn't seem natural to say we're in a corrective wave when we're hitting new highs.

For me the next multi-day down more will be telling.

Link to Daily chart: charts/XJO_20070410.JPG

08/04/07 - Weekend Update

It's interesting looking at peoples views on Elliott Wave theory on the internet. I always think that those wanting a 'quick fix' take a look and figure it's all too hard and move on.

There are others who look into the theory a bit more, they persist, only to think they've found a trading panacea - a 'cure all' for all their trading needs. Then they try and apply it and think it's a load of rubbish since it does predict everything.

Once you get through this, you can start to figure out the parts you do understand, that can be applied to your trading. It's then you can actually use the techniques to make better informed decisions.

Question: If Elliott Wave is predictive how can it predict an interest rate decision or government election result?

One Answer: Well, it can't.

Take the current market action. Assuming the current thinking posted on this site is correct, we're currently in the middle of a corrective wave. So, how does this Elliott Wave work with last weeks interest rate decision - that surely any technical theory couldn't have predicted?

If you look at the various corrective patterns, you'll know that the basic a-b-c pattern can 'be sharp' and by that I mean it can move a large amount of points and retrace the preceding wave quickly in time. A corrective wave can also be more 'sideways moving' - the amount of points it retraces is smaller than the sharp correction, but the pattern lasts longer. Then there are irregular waves that actually move past the high/low of the previous extreme before completing. Other variations include 'combinations' when two or more a-b-c patterns are joined together.

A better Answer: Positive 'news' can cause a correction to be irregular, producing a new high before the correction is over. It could also lead to an extension of an impulse wave.

Similarly, negative 'news' can cause a correction to be sharp and short or lead to a 'failure' of an impulsive wave, causing it to finish earlier.

Conclusion: So, whilst Elliott Wave theory can tell you whether you're in an impulsive or corrective wave and the nature of different types of these waves, you probably need to be aware of market sentiment and any 'news' that could move or influence the market. Then, you can consider which one of the many impulsive or corrective patterns may develop. One that reflects positive news or one that reflects negative news.

Remember, it's often not the news itself that matters, but the markets reaction to it.

05/04/07

Not much action today with the Easter 4 day long weekend starting tomorrow - and probably earlier for some.

We will have to wait for next week to give us some direction.

The Weekly chart, as always, has been updated here.

Link to Daily chart: charts/XJO_20070405.JPG

04/04/07

It's hard to stay bearish at times like these!

Perhaps I should qualify that: I'm bearish on the Elliott Wave count because it says that we're still in a corrective wave.

If you look at the intra-day chart since the move up (the SPI hourly chart is here - I don't have a cash hourly one), you'll see that this is not an impulsive pattern. See the basic Elliott Wave Rules on the Rules page.

These types of corrections, where a new high is reached, are called Expanded Flats. It's an irregular correction, that can be hard to spot and trade because it makes a new high. In this case it's gone beyond the wave 3 high and is also an all time high.

Expanded Flat's typically occur at wave 4 positions, rather than wave 2.

So whilst prices are at all time highs, which can be considered bullish, the pattern still says that prices should correct down for it's completion before significantly higher prices can be seen.

Link to Daily chart: charts/XJO_20070404.JPG

03/04/07

Well, instead of weakness we had strength - and a lot of it.

Considering the market would have been driven by interest rate news today, I think I'll wait for things to settle down.

Looks like we're getting that 'choppy action' I talked about last month - but upwards at the moment.

Link to Daily chart: charts/XJO_20070403.JPG

02/04/07

Well, this may be the crack in the uptrend I've been waiting a few weeks for?

I don't want to assume it's underway too soon (I've done that before), but further weakness tomorrow would help the argument this time around.

Link to Daily chart: charts/XJO_20070402.JPG

One of the most useful aspects of Elliott Wave is to establish if the current trend

is impulsive (likely to continue) or corrective (like to change).

Try not to use it as a crystal ball - to try and predict every twist and turn of the market.

There's no such thing as a crystal ball when it comes to trading.

Disclaimer: This is for educational purposes only and is not trading advice. These are personal views of the author. The reader should always seek professional advice to suit their personal circumstances.