Elliott Wave Analysis by EWF

[Elliottwave-Forecast]

Hello fellow traders. In today's blog, we will have a look at Boeing and the recent price action. The Boeing Stock peaked in March,1,2019 and since then have been trading lower in a series of lower lows and lower highs. The following chart is illustrating the view:

Boeing 4 Hour Elliott Wave Analysis 10.21.2019




The Instrument is showing a 5 swing sequence from 3.1.2019 peak into the lows to 8.15.2019. We Elliott Wave Forecast understand the Market Nature and we knew that a flat which is an Elliott Wave structure which allows a wave (B) below the beginning of the previous low and a new high above the previous peak as we showing in the following chart.









Boeing ended the Flat structure and has renewed now the move lower. We believe the instrument will trade lower into the $275.00 area and until then the World Indices will be sideways or lower using what we call second dimension correlation in which instrument agree in swing direction, but not agree on the overall direction. We understand that reaching the $275.00 target will make world indices bullish in 4 hours. The reaction higher from the Blue Box will make others to rally and Indices like $SPY, $SPX, $INDU among others will be making all-time highs.

In the chart below you can see Boeing in the Weekly chart within the Supercycle since lows either from 2003 or 2009. SPY still has not shown any signs of weakness, otherwise, we have been sitting at the highs and even making new highs. The bounces in Boeing from $275.00 will make the Index to extend into the 340-370.00 area before a turn lower can be happening. As we will be explaining in the video below. Boeing can make new highs above 3.1.2019 and will be still within the blue wave (V). Retesting the highs will be enough for the World Indices to extend within the 2009 cycle.



Boeing Weekly Elliott Wave Analysis 10.21.2019

 

[Elliottwave-Forecast]

Amazon (ticker: AMZN) shares price has recovered most of the losses due to the weak earnings. Short Term Elliott Wave view suggests the drop to $1617.71 ended wave II. This drop has ended the entire correction which started from July 11, 2019 high. The stock has started to rally and the move higher from $1617.71 low is unfolding as a 5 waves impulse Elliott Wave structure.

Up from 1617.71, wave ((i)) ended at 1672.12 and wave ((ii)) pullback ended at 1644.80. Wave ((iii)) higher is in progress and soon should end as a 5 waves impulse in lesser degree. Stock should then pullback in wave ((iv)) before turning higher 1 more time to end wave ((v)) of 1. Afterwards, expect the stock to do a larger pullback in wave 2 to correct the rally from October 25 low (1617.71) before the next extension higher. While dips stay above 1617.71 low, expect dips to continue to find support in 3, 7, or 11 swing for more upside.

AMZN 1 Hour Elliott Wave Chart

 

[Elliottwave-Forecast]

Google (ticker: GOOGL) rallies today and should remain supported against the lows on August 2019. The stock is extending within the Super cycle degree wave (III) since the low in 2009. The following chart below shows the current monthly Elliott Wave outlook:

Google Monthly Elliott Wave Chart


The rally from 2009 low is unfolding as 5 waves impulsive Elliott Wave structure. The bullish and extended 5 waves structure does not only appear in Google, but it also appears in other major Indices around the world. At Elliottwave-Forecast.com we believe in the market correlation and One Market concept, We always say that Elliott Wave Theory by itself is not enough, so we have developed other tools to make it better. Market correlation and one market concept allow us to forecast an instrument within the same category which may not look very clear if only looking at it without reference to other correlated instrument.

We look at more than 100 instruments in daily basis so we can forecast with a higher degree of accuracy. We have been calling extension in most of the Indices around the world like the following chart of $SPY

Monthly $SPY Elliott Wave Chart


One group which correlates with Indices well is the Yen pairs. By looking at the chart of $SEKJPY below, we can also get confirmation on the upside bias in Indices



The above chart shows $SEKJPY weekly Elliott Wave sequences. The pair has reached 100% extension from 2017 high as indicated by reaching the Blue Box and it is due for a bounce in Blue 2. $SEKJPY bouncing means a Yen weakness and not a Yen strength. For the Indices to drop, the Yen need to be strong but this is not possible because $SEKJPY has reached the blue box. The bounce in $SEKJPY thus call for an extension in all risk instruments. This analysis and conclusion are based on multi-market correlation and the one market concept.

Weekly Google Elliott Wave Chart

We believe Google has created a nest within wave V. A nest creates the impression of a sideways move and double top when in reality it can accelerate higher with the trend. The right side therefore remains higher as we show in the above chart. Google is in a nest with the acceleration taking place sometimes next month.

 

[Elliottwave-Forecast]

Hello fellow traders. In today’s technical blog, we will have a look at the JP Morgan (JPM) stock.

JPM has been in a big consolidation between 2018 and 2019. The stock was ranging from 91.45 low and 120.05 peak. It was just a matter of time that JPM would break out this range and start the dominant bull trend. During the consolidation between 2018 and 2019, the market formed a very nice technical pattern which is the inverse head and shoulders continuation pattern. With the recent breakout above 120.05 peak which confirmed the pattern the next extension higher has started. After breaking out, JPM accelerated nicely to the upside.


JPM 10.28.2019 Daily Chart



In the chart below you can see the illustration of the theoretical pattern. You can see that in the dominant trend, the inverse head and shoulders pattern is just a consolidation pattern to correct the previous trend. The confirmation comes with the break of the neckline. The potential target of this pattern is the length of the range projected to the upside. In the JPMt case, the potential target would come at around 144+ area. Please be aware that you need way more than the pattern to forecast the market but this shows yet again that the right side in the indices and consequently in individual stocks is to the upside.



Inverted Head & Shoulder Pattern

 

[Elliottwave-Forecast]

The Fed's monetary stance has turned 180 degree this year. Recall last year the Fed talked about shrinking the balance sheet on auto pilot and raising interest rate. The QT (Quantitative Tightening) of $50 billion a month, according to former Fed Chair Janet Yellen, should be boring like watching paint dry. By July this year, the $50 billion monthly rundown has ended. Instead, the Fed embarks in another balance sheet inflation to the tune of 60 billion a month. In mid-September, short term funding in repo market spiked to 10% from 2% overnight. This suggests stress in the financial system as some banks and financial institution can't find necessary cash in the market. The Fed quickly points out this balance sheet expansion is different than asset purchase from years ago. Below is the chart of the Fed's balance sheet. It has dropped steadily from 2017 and reverses higher this year.



Late last year the Fed said they intend to raise interest rate three times. This year, the Fed has instead cut interest rates for the third time. The mounting criticism by President Trump and slowing US economy due to the trade war with China forces Fed's hands. If the Fed cuts interest rates one more times, it would have completely undo the four interest rate hikes in 2018. These actions to boost balance sheet and cut interest rate amount to complete reversal of the Fed policy from a year ago.

The US Dollar has steadily gained strength in the past year due partly to the expectation that the yield spread between US Dollar and other currencies will widen. The Fed is also the first central bank who is able to unwind the balance sheet after the unprecedented global monetary easing in response to the 2008 financial crisis. But as those factors are now no longer present to support U.S Dollar, is it time to start turning?

US Dollar Broke Bullish Channel from 2018 Low


The US Dollar starts to reverse at October 1, around the same time when the Fed says they intend to expand balance sheet again. We can see from the chart above that the Dollar Index has broken below the February 16, 2018 rising trend line in what looks like a wedge pattern. In addition, on Friday's closing last week, it broke below October 21 low (97.14), creating a short term bearish sequence from October 1 high. It's possible that the Dollar Index has ended the rally from Feb 16, 2018 low. If this is the case, then we should see a larger pullback to correct this rally in 3, 7, or 11 swing.

Dollar Index Daily Elliott Wave Chart


Daily chart above suggests cycle from Feb 2018 low has ended as a 5 waves impulse with wave ((5)) internal subdivision as an ending diagonal. Dollar Index should then weaken in next few weeks / months in larger degree in 3, 7, or 11 swing to correct the rally.

 

[Elliottwave-Forecast]

Goldman Sachs (NYSE : GS) is one of the top 5 banks in USA and it's stock is currently up $25% year-to-date. Last year, GS was on the edge of breaking its bullish trend which was established since 2009 but the bulls took over on the right time to re-establish the main path.

The stock created a bullish higher high sequence from December 2018 low aiming for a minimum target at equal legs area $239 -$252 which is currently supporting further rally in the coming few months as GS is close to break above July 2019 peak creating another bullish sequence. June & October lows are expected to hold during short term pullback to allow the stock to continue it's uptrend aiming for a break higher above 2018 peak.



The entire financial sector has turned bullish in the recent month after major stocks like Bank Of America, Citigroup and JP Morgan managed to break out of the consolidation range that took place during the summer correction. Consequently, Goldman Sachs will also remain supported during pullbacks based on the correlation with the rest of stock market and it's own bullish sequence.

 

[Elliottwave-Forecast]

Nikkei incomplete sequence from December 26, 2018 low and August 26, 2019 low, favoring further upside. A 100% Fibonacci extension from August 26, 2019 low comes at 23360 while 100% extension from December 26, 2018 low comes at 23380. Until the Index reaches this area, short term dips likely remain supported in 3, 7, or 11 swing. On the chart below, we can see the pullback to 21070 ended wave ((2)). The Index resumes higher in wave ((3)) with the internal subdivision unfolding a 5 waves impulse Elliott Wave structure.

Up from 21070, wave 1 ended at 21650 and wave 2 pullback ended at 21325. Index then resumed higher in wave 3 towards 22820, and wave 4 pullback ended at 22495. Index should soon complete wave 5 of (1). Afterwards, it should pullback in wave (2) to correct the cycle from October 3 low before the rally resumes. We don't like selling the Index and expect buyers to appear in the sequence of 3, 7, or 11 swing as far as pivot at 21070 low stays intact.

Nikkei 1 Hour Elliott Wave Chart

 

[Elliottwave-Forecast]

A Flat is one of the corrective structures in the Elliott Wave Theory. It is in our opinion the most dangerous and also less reliable structure. The reason is because a Flat allow analysts and traders to force a bias against the trend. Many times the market fails to reach traders' correction target. When the market reacts different to the expectation and breaks into new highs or lows, analysts like to call an expanded flat as a way out. This is the last resource to prove they are not wrong in their original forecast. The structure of expanded flat looks like the following chart below:



As the above chart shows, Expanded Flat structure allows the B wave to break above the beginning of the A wave. This let analysts call an expanded Flat and force the downside when in reality the instrument has broken the previous high and may start a new bullish move. This is the last resort for analysts who do not want to accept that the correction has ended and that the trend has resumed higher.

At EWF, we have added new rules to the Elliott Wave theory. One of them is that we never call a Flat against the trend unless it is supported by sequence or Market correlations. At this moment, this exception does not apply to $SPY or any World Indices. As we said earlier, the Expanded Flat is a very dangerous structure. It is one of the reasons the Elliott Wave Theory gets a bad reputation.

Back in 2010-2012 many analyst around the world were calling the $SPY to break 2009 lows as the move lower from 2008 peak is impulsive. Despite the subsequent rally, analysts forced a flat until 2014, when another 3 waves lower can happen. Today, many analysts also call for another expanded Flat. But first, below is what we believe happen in $SPY:



The Index will extend within the wave V and 340.00-360.00 area will be seen by the Summer of 2020. We believe the Index is nesting and should be breaking with acceleration higher sometimes next month before the powerful wave (III) within the Super cycle degree ends.

4 Hour $SPY Elliott Wave Chart


The chart above shows $SPY 4 Hour view which is a nest or series of 1-2. If we count the swings from 6.2019 low, it has 5 swings which is bullish. However, analysts can force the view of an Expanded Flat from May 2019 high or from July 2019 high. The Elliott Wave Theory allows analysts to call an Expanded Flat without violating any of the rules and that is what makes the Expanded Flat very dangerous because traders and analysts feel like nothing is wrong with the Flat count.

We look at the market correlation like $SEKJPY, $XOM, $CL_F among others and understand that the trend is higher. Based on the holistic view of the market, we think an extension higher in SPY and thus the World Indices is the more probable path. More importantly, we follow the rule of never call a Flat against the obvious trend. At the end, déjà vu all over again with the Expanded Flat.

 

[Elliottwave-Forecast]

In this technical blog we’re going to take a quick look at the Elliott Wave charts of CORN ( $ZC_F) published in members area of the elliottwave-forecast.com . As our members know, CORN ended cycle from the 352'3 low as 5 waves structure. We got 3 waves pull back , when the price reached Equal Legs - Blue Box. Commodity found buyers there as we expected. In further text we’re going to explain Elliott Wave Forecast.

CORN 1 Hour Elliott Wave Analysis 10.25.2019
Corn is correcting the cycle from the 352'3 low. Pull back is unfolding as Elliott Wave Double Three Pattern. Short term pull back looks incomplete at the moment. The price is showing lower-low sequences from the 10/14 peak, missing another short term swing down. We expect pull back to reach 382'2-372'7 ( blue box- buyers zone). As our members know, Blue Boxes are no enemy areas , giving us 85% chance to get a reaction from there. We expected buyers to appear at the blue box for a proposed rally or 3 waves bounce alternatively.



CORN 1 Hour Elliott Wave Analysis 10.30.2019
Eventually Corn made proposed leg down and found buyers right at the equal legs- upper line of the blue box: 382'2 . At this stage we are calling Wave (2) pull back completed at the 382'1 low as Double Three Pattern. However,reaction is pretty shallow so far. We need to see further separation from the low to get confirmation that pull back is completed. Anyway, we expect to get 3 waves bounce at least from the marked Blue Box area.



CORN 1 Hour Elliott Wave Analysis 11.1.2019
382'1 low held nicely during the short term pull back and we got separation from that low. The price has already reached 50 Fibs against the X red high and we got confirmation that cycle from the 10/14 peak is done. As far as the price stays above wave ((ii)) and more importantly wave (2) lows, we expect to get further strength in the commodity. We don't advise forcing the trades at this stage. We would like to see break of 10/14 peak before buying intraday dips.

Keep in mind market is dynamic and presented view could have changed in the mean time. You can check most recent charts in the membership area of the site. Not every chart is Trading Signal. Best instruments to trade are those having incomplete bullish or bearish swings sequences. We put them in Sequence Report and best among them are shown in the Live Trading Room.

 

[Elliottwave-Forecast]

Elliott Wave View on Russell (RTY_F) suggests the rally from October 3, 2019 low is unfolding as a 5 waves impulse Elliott Wave structure. Up from Oct 3 low, wave ((i)) ended at 1510.7 and pullback in wave ((ii)) ended at 1462.70. Index has extended higher in wave ((iii)) with subdivision as another 5 waves in lesser degree. Pullback in wave ((iv)) ended at 1551.02. Index is in the last push higher within wave ((v)). As far as near term pullback stays above 1551.02, Index still can extend higher within wave ((v)).

Alternatively, instead of ending wave (i) of ((v)), Index can end the entire wave ((v)) with 1 more leg higher. In this scenario, it should then pullback to correct the rally from Oct 3 low before the rally resumes. Short term minimum target is a 100% Fibonacci extension from August 26, 2019 low which comes at 1616 - 1653 area. The Index is also close to breaking above the previous peak on May 6, 2019 at 1621.90. If the Index manages to break above this level, it will open up a bullish sequence from December 24, 2018 low which should favor the long side. We don't like selling any of the proposed pullback in the Index.

Russell 1 Hour Elliott Wave Chart

 

[Elliottwave-Forecast]

Elliott Wave View on Dow Jones Future (YM_F) suggests the rally from October 3 low is unfolding as a 5 waves impulsive Elliott Wave. On the 1 hour chart below, we can see wave ((iii)) of this impulse ended at 27079 and wave ((iv)) pullback ended at 26588. Internal of wave ((iv)) unfolded as a zigzag where wave (a) ended at 26876, wave (b) ended at 27088 and wave (c) ended at 26588. Index is now ending wave ((v)) which subdivided in another 5 waves in lesser degree.

Up from 26588, wave (i) ended at 27230, and wave (ii) pullback ended at 26847. Index then resumed higher again in wave (iii) towards 27493. Near term, while wave (iv) dips stay above 26844, expect Index to extend higher 1 more time before ending wave (v) of ((v)). The move higher will also complete wave 1 and end the entire 5 waves up from October 3 low. Afterwards, it should pullback in wave 2 to correct cycle from October 3, 2019 low before the rally resumes. Potential target higher is 100% Fibonacci Extension from August 6 low towards 27945 - 28477.

YM_F 1 Hour Elliott Wave Chart

 

[Elliottwave-Forecast]

AUDCAD Technical Analysis November 3/2019

AUDCAD : There are clear visible bullish market patterns on the weekly chart but traders will still need to wait for more confirmation that a bottom will form. AUDCAD still needs to make another move lower to trigger the dark blue bullish AB=CD pattern. Bulls can possibly be waiting below the 1.27% Fib. level to push price higher and possibly start a new trend to the upside. Oscillators are showing a bullish divergence so a break above the light blue bullish wedge pattern will add more confirmation that the possible reversal/bounce higher has started. If AUDCAD breaks above the wedge pattern it is possible the pair can run higher above the 2012 peak high in the next coming years. For now we should take it step by step and consider any break higher to at least target the 0.50% Fib. retracement level of the 2016 high to wherever the AUDCAD new low will terminate. We have yet to see if the pair will find a bottom and have yet to see if the pair will even respect the AB=CD bullish pattern. So for now traders need to be patient and wait to see if a bounce and wedge breakout happens in 2020.

AUDCAD Weekly Chart 11.3.2019





Of course, like any strategy/technique, there will be times when the strategy/technique fails so proper money/risk management should always be used on every trade.

 

[Elliottwave-Forecast]

FXC Canadian Dollar Trust Long Term Cycles & Elliott Wave

Firstly the FXC instrument inception date was 6/26/2006. The instrument tracks changes of the value of the Canadian dollar relative to the U.S. dollar. It increases in value when the 'loonie' strengthens and declines when the dollar appreciates. In January 2002 the USDCAD forex pair made an all time high at 1.6184. Then it saw a decline into the November 2007 lows at .9059 where it is thought to have ended correcting the cycle up from the all time lows. That translates to the 113.02 price high from November 2007 in FXC that should prove to be a long term cycle high. This was an upward correction of an even larger cycle that should be down in the case of this instrument. This is where the analysis begins on the FXC monthly chart shown below. The analysis continues below the FXC Monthly chart.



Secondly as previously suggested the FXC instrument mirrors USDCAD price highs and lows inversely. The decline from the November 2007 highs in FXC appears to be an incomplete Elliott Wave five wave impulse although it does have some price overlap as would a diagonal. The wave (III) ended in January 2016 then saw a zig zag wave structure that ended in September 2017 correct the cycle from the July 2011 highs. The analysis and conclusion continues below the FXC Weekly chart.



In conclusion: As the FXC weekly chart suggests, the instrument ended a larger cycle lower in wave I at the December 2018 lows. That cycle subdivides best as 3 swings in each of the ((1))-((3)) & ((5)) waves as would a diagonal. From the December 2018 lows, the instrument shows 3 swings higher in a wave ((W)) that ended July 2019. While below there it can see a swing lower in wave ((X)) toward 73.65-73.18. This needs to end before a Fibonacci extension area for wave ((Y)) of II can be defined. I will update this instrument's price movement later when this happens with the defined area for the wave II correcting the cycle lower from the September 2018 highs. Generally a 50% to 61.8% Fibonacci retracement is about right for a wave two in any degree. While price is above the December 2018 lows that area is 76.84-77.94.

 

[Elliottwave-Forecast]

Hello fellow traders. In this technical blog we’re going to take a quick look at the Elliott Wave charts of XLK - Technology Select Sector , published at elliottwave-forecast. As our members know XLK has been showing incomplete bullish sequences in the cycle from the August 5th low. Break of the September 12th peak made ETF bullish against the 77.29 low. So we advised members to avoid selling XLK and keep buying the dips in the sequences of 3,7,or 11 swings whenever opportunity presented itself. In further text we’re going to explain Elliott wave Forecast and trading strategy.

XLK 1 Hour Elliott Wave Analysis 10.15.2019
As we can see on the chart below, the cycle from the 77.29 low is unfolding as a 5 waves structure. The price has already reached important technical area- blue box where buyers will be taking profits. We don't recommend forcing the trades at this moment. We don't like buying it at this stage as the price is already at the extremes from the lows and cycle can complete any moment. On other hand don't like selling as the main trend is bullish. Strategy is waiting for clear 3 waves pull back against the 77.29 low, before we resume buying the dips again in 3,7,11 swings sequences.



XLK 1 Hour Elliott Wave Analysis 10.22.2019
Cycle ended right at the Blue Box area:82.32-83.18 and we are getting pull back-wave (2) blue . We got 5 waves down from the wave (1) blue peak. So, we are assuming that pull back is unfolding as Elliott Wave Zig Zag Pattern. Decline from the peak was only the first leg A red of wave (2) blue pull back. As far as the price stays below B red short term high, and more importantly pivot at 10/15 high holds , we can get another leg down toward Blue Box area: 80.02- 78.58 . At mentioned area we like to be buyers for proposed rally or 3 wave bounce alternatively.
As our members know, Blue Boxes are no enemy areas , giving us 85% chance to get a bounce. The main trend is bullish and we expect to see reaction in 3 waves up from the blue box at least.





XLK 1 Hour Elliott Wave Analysis 10.24.2019
Eventually we got proposed leg down toward buying zone: 80.02-79.5. Buyers appeared right at the blue box and the price made decent bounce so far. As a result members are now enjoying profits in risk free positions. Now, we would like to see break of wave (1) blue high to confirm next leg up is in progress.

Keep in mind that market is dynamic and presented view could have changed in the mean time. Best instruments to trade are those having incomplete bullish or bearish swings sequences. We put them in Sequence Report and best among them are shown in the Live Trading Room. You can check most recent charts in the membership area of the site.

 

[Elliottwave-Forecast]

The $SPY has been trading higher since the summer of 2019's correction. The Index has made new all time high as we have been forecasting at Elliottwave-Forecast.com. It is currently still trading within the Super Cycle degree since 2009 and the expected extension is taking place. Below is the chart of the S&P 500 ETF:



$SPY is trading above the Super Cycle degree trend-line, but every single high is coming with momentum divergence in the RSI. The momentum divergence is typically happening within wave V. When we count the waves since 2009 low, a wave 5 extension can be happening in the Index. 2020 is looking like a very, very interesting year across the market and many extremes can be reached in time and price. The following blog explains our views and why the year of 2020 can be the year where Indices make a huge peak or a temporary peak.

2020 is also an interesting year where something should be happening to create the pullback across the world Indices. We believe the Super Cycle degree from 2009 low ends next year. When it ends, many factors will determine the Elliott Wave counts whether we are ending an ABC from all time lows or we are ending wave (III). One factor for example is the extensions in $SPY and whether the index trades above the 1.618 extension which comes at $319.00. Another factor is where the Yen pairs stand when the $SPY dip in 2020 takes place.

As we always said, the Market trades as a whole and understanding the correlations among instruments and groups are the key. The United States will have a very interesting political year in coming months and year. First of all, the Presidential Election will take place in November of 2020. Secondly, it's going through the impeachment process of the president. We can see as always the technicals calling the Market, but we can see a political reason to justify the biggest pullback since 2009. As we always said, we do not forecast or trade based on fundamentals or news events. However, we understand when The technical side starts sending warnings, there is always a reason for the pullback. In this case, the potential justification is the 2020 elections or the impeachment debate.

 

[Elliottwave-Forecast]

Elliott Wave View on DAX suggests that the sequence in the Index from December 27, 2018 low remains incomplete. On the short term chart below, the pullback to 11878.98 on October 4 ended wave (2). The Index resumed higher in wave (3) and the rally is unfolding as 5 waves impulsive Elliott Wave structure. up from Oct 4 low, wave ((1)) ended at 12097.4 and wave ((ii)) pullback ended at 11933.02. Index resumed higher in wave ((iii)) towards 12682.40 and wave ((iv)) pullback ended at 12603.83. The last leg wave ((v)) ended at 12814.49 and that ends wave 1 in higher degree.

Wave 2 pullback has also ended at 12603.17. Index is now in wave 3 of (3) with internal subdivision as another impulse. Up from 12603.17, wave ((i)) ended at 12986.49 and wave ((ii)) pullback ended at 12792.56. Index resumed higher in wave ((iii)) towards 13300.75 and wave ((iv)) ended at 13144.09. Near term, while dips stay above 12792.56, expect Index to extend higher in wave ((v)) of 3. We don't like selling the Index. If pivot at 12792.56 low gives up, then DAX may have ended wave (3) at 13300.76. In the event that pivot at 12792.56 fails, the Index can see a larger pullback in wave (4) to correct cycle from October 4 low before the rally resumes.

DAX 1 Hour Elliott Wave Chart

 

[Elliottwave-Forecast]

Short term Elliott Wave view suggests the rally in Silver ( $XAGUSD) to $18.32 high ended wave (X) bounce. Down from there, wave (Y) remains in progress & shows an incomplete sequence from 9/04/2019 peak ( $19.64) favoring more weakness. While the initial decline from $18.32 high unfolded in a lesser degree leading diagonal structure within wave ((i)) where wave (i) ended at $17.83. Wave (ii) bounce ended at $18.13, wave (iii) ended at $17.58, wave (iv) bounce ended at $17.95 high and wave (v) ended at $17.56 low. Up from there, wave ((ii)) bounce unfolded as a lesser degree zigzag structure where wave (a) ended at $18.17 high. Wave (b) pullback ended at $17.91 low and wave (c) ended at $18.21 high.

Down from there, wave ((iii)) remain in progress as impulse structure where wave (i) ended at $17.36 low. Above from there, wave (ii) ended at $17.66 high, wave (iii) ended at $16.67 low & wave (iv) ended at $16.97 high. Below from there, wave (v) remain in progress approximately towards $16.59-$16.47 inverse 123.6%-161.8% Fibonacci extension area of (iv) before a bounce in wave ((iv)) could be seen which is expected to fail for another leg lower to complete 5 waves decline from $18.32 high. Only if the pivot at $18.21 high gives up, wave ((v)) lower would be negated and then the decline from $18.32 high should become an Elliottwave zigzag rather than an impulse.

Silver 1 Hour Elliott Wave Chart

 

[Elliottwave-Forecast]

Gold hit a three-month low last Friday as the metal loses its luster with increasing prospect of US-China phase 1 trade deal. Spot Gold was down 3.7% last week, its biggest weekly drop since November 2016. A risk on market caused dollar to surge and US equities to break to all-time high. Earlier last week, there was news that China and US have agreed to roll back existing tariffs as part of the phase 1 deal. It buoyed the stock market earlier last week. However, President Trump's denial on Friday introduced further uncertainty in the fate of the trade deal. Reuters reported that the agreement to roll back existing tariffs face fierce internal opposition at the White House.

Gold this year has risen 14% and one of the reasons is because of the US-China trade war. Investors consider Gold as safe haven during economic and political uncertainties. Quantiative Easing and low (in some cases negative) interest rate also bolster the appeal for Gold. Market is currently pricing in the best outcome from the trade deal between U.S and China. However, is the Phase 1 deal really a big breakthrough to be optimistic about? Unfortunately, the core issues between the US and China still remain unsolved. China refused to discuss domestic subsidies and intellectual properties, a key concern of the U.S. On the other hand, U.S. refused to talk about Huawei and other Chinese firms on the entity list. This is the key issue for China. Phase 1 deal therefore accomplishes nothing of significance. A lot of uncertainties still exist and there are doubts whether both sides can achieve significant progress.

Phase 1 trade deal only stipulates China's agreement to buy certain amount of U.S agricultural products. It also secures China's commitment not to manipulate their currency. In return, the U.S agreed not to cancel further tariff to Chinese goods last month. Even in the current form, there's still back-and-forth negotiation as the Chinese wants to have existing tariff's rollback. Should there be a problem along the way, Gold may regain its appeal as safe haven asset.

Gold Elliott Wave Structure


Gold 4 hour chart above shows the decline from Sept 5 is unfolding as a double zigzag Elliott Wave structure. The first leg of the decline from September 5 high to October 1 low was in 3 waves, suggesting the decline is corrective. A 100% extension from September 5 high can see Gold reaching $1361 - $1422 where buyers should appear for more upside or 3 waves bounce at least.

Gold Daily Chart


Above is Gold's chart and the red line is Exponential Moving Average (EMA) 150. We can see that during the bull phase from 2008 to 2011, although the rally is strong, it is not a 1 way street. The rally has pullback along the way and each pullback found support at EMA 150, as indicated with blue circle. We can at the current stage, Gold is retesting the EMA 150 again around 1435. The 100% extension area from September 5 comes at around $1420. Thus, it's worth to watch the area around $1420 - $1430 for potential support.

 

[Elliottwave-Forecast]

Elliott Wave View on Russell index suggests that the rally from 10/03/2019 low is unfolding as a 5 waves impulse structure favoring more upside to take place. While above 10/03/2019 low, wave 1 ended at $1510.7 high and a pullback in wave 2 ended at $1463.8 low. Index has extended higher in wave 3 with the subdivision of another 5 waves in lesser degree cycles where wave ((i)) ended at $1530 high. Wave ((ii)) pullback ended at $1500.8 low, wave ((iii)) ended at $1582.9 high and wave ((iv)) ended at $1551 low. Up from there, a rally to $1613.6 high ended wave ((v)) and also completed wave 3 in red.

Down from there, the pullback in wave 4 is taking place to correct the rally from 10/09/2019 low ( $1463.8). The internals of that pullback are unfolding as double three structure where wave ((w)) ended at $1586.9 low. Wave ((x)) bounce ended at $1610.6 high and wave ((y)) has managed to reach the $1584-$1567.2 100%-161.8% Fibonacci extension area of ((w))-((x)). Thus suggesting that as far as a pivot from $1463.8 low stays intact, soon index is expected to find buyers looking for more upside or should do a 3 wave bounce at least. Alternatively, the pullback from the peak could become a Flat structure as well & may do 2 more lows within the blue box area before resuming higher. We don't like selling the index in a proposed pullback.

Russell 1 Hour Elliott Wave Chart

 

[Elliottwave-Forecast]

In the recent months, we have seen US Indices like $SPX $NQ_F $YM_F and $ES_F making new all time highs but Russell is the one which has been lagging and has not yet made a new high. It is on par in terms of percentage gains with other US Indices but has not made a new all time high and has not even made a new high above May 2019 peak yet. In this blog, we would take a look at whether it would follow other US Indices in breaking to new all time high and also highlight the key level it needs to break in order to make a break to new all time high more likely.

Russell Cycle from 12.26.2018 low
Chart below shows Russell put in a strong rally from 12.26.2018 low to 5.6.2019 peak which was follow by a 3 waves pull back to 8.26.2019 low. Since then, we have so far seen a 3 waves rally which has held just below 5.6.2019 peak. 100% Fibonacci extension of the rally from 8.26.2019 low comes at 1617.01 which is still below 5.6.2019 peak. However, ES_F and NQ_F have already made new all time highs and in addition, we have DAX and Eurostoxx already showing incomplete bullish sequences from 12.26.2018 low with more upside to come before they reach the minimum targets for the cycles from 12.26.2018 low which supports the idea of Russell Futures also extending higher.

5.6.2019 is the key level that Russell Futures need to break to open a move towards new all time highs. Break above 5.6.2019 low would create a bullish sequence from 12.26.2018 low and 1810.66 - 1898.29 would the ideal target area for the cycle from 12.26.2018 low to end. This is above the current all time peak and hence a break above 5.6.2019 peak would trigger a move to a new all time high.



Russell Futures overlay with NQ_F and ES_F