Possible Trade with an Excellent Profit/Risk Correlation (USD/JPY)
Preview
The release of EWA forecasts is going to be renewed this weekend. Possible scenarios for USD/JPY One of the possible scenarios of the Japanese yen is a horizontal triangle IV, for the first time released by me at the beginning of the year 2004 (picture 1, below).
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Figure 1. Wave counting on the monthly chart for USD/JPY.
If the supposition is true, the ending wave of triangle of IV may be assuming the shape of ordinary zigzag (A)-(B)-(C), wave (B) of which preferred the shape of expanded flat (picture 2, below).
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Figure 2. Wave counting on the weekly chart for USD/JPY.
Judging by mutual correlation of waves inside the supposed expanding flat (B) of , its shape is close to ideal, as both price breaches out of the first wave A of (B) are practically equal to each other.
Besides the price reached 78% of the retracement depth for wave (B) of supposed zigzag of IV, which is a limiting value for an ideal zigzag, while wave structure of the ending wave C of flat (B) of appears to be fully completed (picture 3, below).
Here possible targets in the context of the accepted scenario are plotted as well — 113, 119 and 126, which were calculated proceeding from the size of the first leg (A) of zigzag of IV and the depth of retracement (B) of . Supposedly the price may reach the second target (119) by the end of July — beginning of August 2008.
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Figure 3. Wave counting on the daily chart for USD/JPY.
Indeed, the supposed diagonal triangle C of (B) is almost completed. Moreover, as its third wave is shorter than the first one, it isn’t difficult to calculate the maximum possible size for its fifth wave and maximum distant point of its ending— 103.91. This level is critical for the accepted scenario.
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Figure 4. Wave counting on 120 min chart for USD/JPY.
We can’t be yet sure for 100% that zigzag (a)-(b)-(c) of of C of (B) is already completed, as there is as always the alternative scenario of the ending impulse (c) of development.
But everything that was said above doesn’t exclude that the downward price movement will end in the near-term and a new upward trend will begin. The availability of the exact critical level, possible targets and positive swaps for long positions in the pair USD/JPY, lets to calculate the possible profit and estimate fully the risks.
Let’s suppose we decided to open a long position immediately (USD/JPY=106.20;though optimal value for opening such a position — not worse than 105.95) and hold it at least up to reaching the second target (119). It is logically to place the initial protective stop below the critical level (103.91).
In this case the maximum risk per 1 lot and constitutes ~ $2250 ($9.37 * 240). I.e. the trader’s deposit must be ready for a possible drawdown.
At the same time the expected profit on the exchange rates differentials may constitute ~$11300 ($8.91 * 1270), and by means of swaps it can give in half a year an additional profit in the amount of ~$1700 ($9.09 * 185). Total income — ~$13000. Profit/risk ratio = ~ 5.78. Not bad at all.
Notes. 1. Basic data for calculations were taken from the trader’s calculator, but the price of one point for calculating profit ($8.91) was calculated as average value for the trade’s extreme points. All calculations were made for 1 lot without considering possible positions build-up.
2. After the price confirms the completion of impulse (c) of of C of (B), it will be possible to move the initial protective stop to the break-even area.
3. In case impulse (c) of of C of (B) develops according to the alternative scenario (it is plotted in the lower part of the picture 4), the position averaging is possible in the area of 104.50.
4. Who is not ready to place orders in advance, may place a buy-stop order at the level ~ 107.20. In this case it is logically to put the initial protective stop below the ending of wave (c) of of C of (B).
5. I haven’t consider here the case when interest rates will change in the course of half year, changing the size of swaps. Supposedly the size of swaps in the pair USD/JPY for long positions within the coming half year will only increase.
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Figure 5. Wave counting on 480 min chart . Variant 1.
For the last month a practically horizontal but ambiguous knot has formed allowing different interpretations.
If price fixes above the confirmatory level it will be a confirmation of this level. But a stockade of wave that formed within a month a practically horizontal knot allows its alternate interpretation (refer to the Figures below).
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Figure 6. Wave counting on 480 min chart. Variant 1a.
It isn’t ruled out that the ending wave of diagonal triangle hasn’t completed yet. Such a variant doesn’t contradict the expectations set out in the article Possible trade with an excellent profit/risk correlation .
But in this case traders who opened positions on the basis of the above mentioned article should be ready for price decline to the ~ 104 mark.
In this case each trader in accordance with the parameters of his account and accepted trading strategy should choose on his own what to do: wait out a possible price decline (it is good that swaps are positive), close positions now with considerable profit (refer to the Figure below) and reopen positions when price rises again or simply trail protective stop to the breakeven area.
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Figure 7. The current value for long positions.
Long positions were open a month ago after the article Possible trade with an excellent profit/risk correlation was released and in accordance with the recommendations given in it.
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Figure 8. Wave counting on the daily chart. Variant 1.
Possible scenario of diagonal triangle C of (B) forming is given in the Figure above.
Reference:
[*]Imaginary Skewer[*]Check point. USD fall may continue till May 2007[*]Never-ending Ascension (EUR/JPY)[*]Nearest Projections of GBP/JPY (+EUR/JPY)[*]CAD Possible Weakening till the Mid of 2009 (USD/CAD) [*]Alternate but Real Weakening of the Dollar till the End of the Summer (or the End of 2007)[*]EUR/JPY, GBP/JPY[*]Let's Analyze Zigzag Wave Construction[*]The Impulsive Decline of the Dollar as One of the Possible Scenarios[*]FOREX Forecast for 2007[*]FOREX Forecast for the 2nd Half of 2007[*]Wave Analysis for December 2007[*]Wave analysis[*]Wave Counting Marking[*]Methods of Price Movement Projection (EWA)[*]How to Apply EWA Forecasts
Dmitry Voznuy
forDmitry@yahoo.comJanuary 16, 2008When using any part of the article for publication or analytical materials reference to the author and Alpari is obligatory.
The Impulsive Decline of the Dollar as One of the Possible Scenarios
The continuous decline of the dollar since the beginning of 2006 has been constantly accompanied in forecasts from one key point to another. After the price broke the last key point at the beginning of June 2007, it became obvious that the greenback would continue falling. It was reflected in Annual-07(2) , published at the end of June. The variants of wave counting conceding a scenario in the form of continuous global impulse for the European currencies (see fig. E4, G4, C5) were given there.
But the nature of the decline itself on its last part has been ambiguous and has allowed interpreting the dollar’s fall since the end of 2005 as a corrective structure as well as an impulsive structure. Both variants of movement were considered in the article Let’s Analyze a Zigzag Wave Construction. In this article a conclusion was made that by the end of summer of 2007 the wave construction couldn’t be a completed impulse. It was rather an uncompleted correction, and this supposition formed the basis of the accepted scenarios.
Indeed, further decline of the dollar confirmed partly my suppositions. However the strength of this fall appeared to be closer to the impulsive but not corrective nature of movement. In order to assume such a supposition one only have to look at the current monthly chart of the currencies under consideration (pictures 1, 5, 9 and 13 below).
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Figure 1. Wave counting draft on the monthly chart of EUR/USD.
Of course one can’t always make the final conclusion about a forming wave pattern and its phase of development judging only by the external appearance of the impetuous price movement. That’s why let’s look at a smaller weekly time frame in order to consider the inside structure of the latest upward trend (wave (5) in the picture 2).
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Figure 2. Wave counting draft on the weekly chart of EUR/USD. Scenario v.imp.1.
Unfortunately when prolongations in an impulse are forming it is impossible to say exactly in advance how many inclusions will form the prolongation, where and when the trend will reach completion. But additional tools both in the form of various types of graphical analysis, and in the form of the trend strength indicators (momentum, for example) suggest that its completion may be still a distant prospect.
Based on the current wave structure and the supposition that the dollar will continue falling the wave counting draft, given in the picture 2, was made.
Note. Taking into account possible impulsive nature of the trend abbreviation imp for impulse was added in the marking of these scenarios in order to distinguish them from the scenarios supposing the corrective nature of the decline, that haven’t been cancelled yet.
If the supposition is true the next significant top of this impulse may form in the second half of spring 2008 (this key point is determined by the method of the pulse key points). It is difficult to say so far if this top will be reversal for the global trend. But the fact that it will be a significant bifurcation point, which will either confirm or disapprove the possible corrective nature of the dollar’s decline, is the most probable.
Please note that in the picture 2 wave 3 of (5) is 2.618 times longer than wave 1 of (5) and is broken down into two equal parts by internal wave of 3, which is typical for impulses. The last impetuous impulse of 5 is also 2.618 times bigger so far than the first wave of 5, which is also typical for the third waves of an impulse. Besides it is practically fully completed with waves (see picture 3, below).
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Figure 3. Wave counting draft on 480 min chart of EUR/USD. Scenario v.imp.1.
In fact there are reasons to suppose that impulse is close to its completion. At the same time it may easily continue its ascent forming nested prolongations. In such a case its wave (iii) of may be only half way to its completion (alternative at the top part of the chart).
The only thing we can do is to wait patiently for a confirmation or disproof of the considered scenario.
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Figure 4. Wave counting draft on the weekly chart of EUR/USD. Scenario v.imp.2.
In the context of the supposed impulsive upward trend but as an alternative we may consider the variant of the completion of the whole global trend in the near term (picture 4). However some disproportion of waves of 3 and of 3, which isn’t observed in the previous variant, as well as the fact that the completion of the whole impulse isn’t confirmed by additional tools, don’t allow bringing this variant to the forefront.
Similar considerations can be applied to the charts of other European currencies, that’s why comments to the following pictures will be a little shorter.
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Figure 5. Wave counting draft on the monthly chart.
The surge of the pound doesn’t exclude that the global upward impulse will continue to form.
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Figure 6. Wave counting draft on the weekly chart. Scenario v.imp.1.
Rather questionable and ambiguous but possible variant of wave counting is given in the picture 6. Impulse of 3 of (5) looks somewhat clumsy, but picture 7 makes my point of view clear.
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Figure 7. Wave counting draft on the daily chart. Scenario v.imp.1.
Skewed triangle (iv) of of 3 looks unusual and somewhat non-natural. But it is interesting that there are no breaks of the rules!
If this scenario proves to be true this skewed triangle will add my collection of offbeat patterns.
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Figure 8. Wave counting draft on the weekly chart. Scenario v.imp.2.
On the analogy with the picture 4 (EUR/USD) a possible alternative conceding that the global upward trend is over was found. The critical and confirming levels for these scenario are plotted on the chart.
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Figure 9. Wave counting draft on the monthly chart.
The chart of USD/JPY differs somewhat by the nature of its movement from the charts of the European currencies. But for the last half of the year the dollar has been steadily declining here as well.
I suppose that now the question is what shape wave (B) of will assume— a flat or an expanded flat.
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Figure 10. Wave counting draft on the weekly chart . Scenario v.imp.1.
If we synchronize the forecast for the yen with the suppositions for the European currencies, then wave (B) of may have formed in the shape of an expanded wave flat by summer 2008. This variant seems to be the most proportional.
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Figure 11. Wave counting draft on 720 min chart. Scenario v.imp.1.
Here are possible variants of wave counting of almost half yearly decline of the dollar on the chart of USD/JPY.
At the same time it is possible that the global decline of the dollar will complete in the near term (see picture 12).
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Figure 12. Wave counting draft on the weekly chart. Scenario v.imp.2.
In such a case we get not quite proportional but a admissible downward impulse C of (B), that ends correction (B) of zigzag .
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Figure 13. Wave counting draft on the monthly chart.
The downward global impulse of the Swiss franc isn’t so impetuous as of the euro and pound. But it is seen clearly that last month the dollar's decline received additional downward impetus and it is hardly the end.
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Figure 14. Wave counting draft on the weekly chart. Scenario v.imp.1.
There are several variants of wave counting of the supposed downward impulse (5), one of which is given in the picture 14. You may see the other one in the picture 6 in the article Let’s Analyze Zigzag Wave Construction .
But in the both cases the further development of wave 5 of (5) is supposed to be uncompleted so far. Thus we shall wait for the key point at the beginning of spring 2008 in order to make the final decision about the further movement of the Swiss franc.
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Figure 15. Wave counting draft on 480 min chart. Scenario v.imp.1.
The last impulse may be close to its completion. We have grounds for such a supposition. But as the impulse of EUR/USD from picture 3, it may be easily continued downward as a prolongation (the alternative in the lower part of the chart).
The only thing we can do is to wait patiently for a confirmation or disapprove of the considered scenario.
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Figure 16. Wave counting draft on the weekly chart. Scenario v.imp.2.
The less possible (and unconfirmed) scenario doesn’t exclude that the downward global trend will complete in the near term.
Thus, at present the supposition that the USA dollar will continue falling at least until the second half of spring remains the most probable. Besides lately the impulsive but not corrective component of such a decline has been prevailing, and this will be reflected in the accepted scenarios. At the same time taking into account the guile of the FX market I wouldn’t shrug off the alternate scenarios until they are completely cancelled.
Reference:
[*]Imaginary Skewer[*]Check point. USD fall may continue till May 2007[*]Never-ending Ascension (EUR/JPY)[*]Nearest Projections of GBP/JPY (+EUR/JPY)[*]CAD Possible Weakening till the Mid of 2009 (USD/CAD) [*]Alternate but Real Weakening of the Dollar till the End of the Summer (or the End of 2007)[*]EUR/JPY, GBP/JPY[*]Let's Analyze Zigzag Wave Construction[*]FOREX Forecast for 2007[*]FOREX Forecast for the 2nd Half of 2007[*]Wave Analysis for November 2007[*]Wave analysis[*]Elliott’s Code: Wave Analysis of the FOREX Market[*]Wave Counting Marking[*]Methods of Price Movement Projection (EWA)[*]How to Apply EWA Forecasts
Dmitry Voznuy
forDmitry@yahoo.comNovember 22, 2007When using any part of the article for publication or analytical materials reference to the author and Alpari is obligatory.
Let's Analyse Zigzag Wave Construction
Intriduction
Several beginners in their letters asked to explain why I prefer the scenario v.3 for the European currencies [Annual-06 ]. In order to understand my point of view let’s analyse the trend movement against the dollar that the European currencies have been demonstrating since the end of 2005.
1. General view of the trend movement against the dollar In January 2006 my explanation why the dollar’s decline will last at least until May 2007 was published (см. Annual-06). That’s why since October 2006 when a significant extremum formed on a weekly chart I have always wondered if the long-term trend against the dollar had been over or not. After the price passes control points and the current wave picture is analysed the answer to this question is at times given in Wave Analysis.
At the end of July (and for the CHF at the beginning of August) the main dollar’s pairs formed another extremum. If we consider the current trend on a weekly time frame it will be easy to single out 9 main waves (see the pictures 1..3 below). Each of the action waves of this 9-wave trend (1, 3, 5, 7, 9) represents some variation of a zigzag (single or double), and only some of them with certain strains may be treated as an impulse (or wedge) in whole.
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Pic. 1. General view of the uptrend EUR/USD
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Pic. 2. Gemeral view of the uptrend GBP/USD.
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Pic. 3. General view of the downtrend USD/CHF.
Such number of the main waves inside the trend is typical:
[*]either for completed impulse structures,[*]or for incomplete corrections.That’s why let’s analyse this trend not only from the both main point of views but from the intermediate one as well.
2. Completed impulse?At first let’s analyse the possible completed impulse structure (see pictures 4..6, below).
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Pic. 4. Completed upward impulse (5) of of the euro.
The current uptrend of the euro may be interpreted as a rather well-shaped and proportional impulse (5) of with minimal strains, without breaking the rules, and alternation guidelines between corrective waves 2 and 4 will be followed. Its final wave 5 of (5) is represented in the shape of regular contracting diagonal triangle, though rather large comparatively to the whole size of the impulse (5).
The last-mentioned fact is the only alerting, but not a prohibitive factor.
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Pic. 5. Completed upward impulse (5) of of the pound.
For the GBP this upward structure also may be interpreted as a similar global impulse (5) of with little strains. But its ending diagonal triangle 5 of (5) would be with the shortest third wave (wave 7 in the picture 2 is shorter than the wave 9 by more than a figure). And the second wave 2 of (5) of this “impulse” would be a horizontal triangle (wave 2 in the pictures 2 and 5). Unfortunately such breaches are exceptions from the rule.
Of course we may carry over the beginning of the wave 4 of (5) of the GBP to the point 4? in the picture 2, but in this case the ending diagonal triangle 5 of (5) would be without overlap of its main waves and , which also happens not so often (picture 5). At the same time the ending wave 5 of (5) in the shape of diagonal triangle would fit the definition of the extension in the impulse at all parameters. But an extension in the shape of a diagonal triangle without overlapped waves and is rather an exoticism than a norm.
Note. For further study of this question it is logically to suppose that developing of a fifth wave extension in the shape of a diagonal triangle in the impulse may result in minimization or complete liquidation of a common deep overlap between the fourth and first waves of the diagonal triangle.
That’s why the supposed horizontal triangle in the second wave of the impulse as well as the exotic in size and parameters diagonal triangle cast some doubt on such variant of wave counting.
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Pic. 6. Completed downward impulse (5) of of the CHF.
In case with the CHF the current overlaps between main waves of the downtrend on the contrary are so big that the only way to treat this trend as a global completed impulse is in counting its fourth wave 4 of (5) of as a horizontal triangle. But the duration of this triangle is several times more than the duration of the wave 2 of (5), which is an alerting factor.
Such impulse hardly can be named well-shaped. Besides, truncation of 3 of (5) and, rather corrective, than impulsive structure of its wave 5 of (5), especially in its ending part, are the very strains that mar the whole picture. The fact that the wave (5) of though is not a truncation, strictly speaking, but failed to pass over the top of the wave B of (4) doesn’t add any optimism as well.
Thus, from the three variants of counting discussed above only the impulse in the EUR/USD can be considered to be a full-fledged impulse with minimum strains. Exotic combinations and exceptions from the rules in other currency pairs make such variants pale into insignificance.
Besides as I mentioned many times in my articles the USD currency pairs at the same period of time tend if not to copy then at least to reiterate in exterior form and interior structure common patterns and wave constructions, though with special features. It is this characterisitic that helps sometimes to understand a complicated structure of one pair with the help of another or to find a scenario acceptable for all the pairs.
That’s why it is unlikely that a large corrective wave is forming in the GBP and CHF when a regular impulse is developing in the EUR. But precisely such picture we have been watching on the charts since the end of 2005.
In this case following the majority logic principle (2 of 3), we may suppose that the global trend against the dollar since the end of 2005 is not a completed impulse structure, i.e. the dollar’s decline most likely will continue in corrective style.
This supposition can be disaproved only in case of such dollar’s strengthening, when the price at first fixes beyond the trendline of the channel and then breakes the confirming level (i.e. if it falls below the ending of the wave 4 of (5) of in the pictures 1 and 2; for the euro it’s the 1.2482 mark, for the pound it is 1.8089).
3. Completed correction?And now let’s consider the intermidiate almost improbable variant, i.e. the possibility that in July-August the corrective wave (B) of ended, despite 9 main waves of this trend.
In principle, any significant extremum of the current trend could be treated as a possible ending of the wave (B) of . Many wave analysts, in fact, did so in 2006-2007. Streactly speaking there are no hard and fast rules in this respect except wave patterns described in literature and common sense. That’s why many wave analysts shuffle zigzags, included in such trend in variety of exotic ways trying to get a sensible wave picture.
Some examples of such shuffling you may see in the pictures 7..9 below, when the structure under consideration is represented in the form of a completed correction. Examples are given only for the pair EUR/USD, as the picture for the other pairs is practically identical. Action waves are shown with the red lines, reaction waves are shown with the green lines.
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Pic. 7. Completed upward correction (B) of . Alternative 1.
The disadvantages of this variant of counting are the artificial «pulling apart» of the local correction in the central part of the chart into various components (waves X, of Y, of Y), and the shortest wave Y.
As an advantage it is necessary to mention approximate equality in the length/duration of peer to peer corrections.
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Pic. 8. Completed upward correction (B) of . Alternative 2.
In the next variant of counting the local correction in the central part of the chart is presented as a whole. But a sharp difference in the length and duration of the peer to peer corrections of this triple zigzag strikes the eye at once, which may be considered a serious disadvantage.
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Pic. 9. Completed downward correction (B) of . Alternative 3.
A more proportional variant of counting implies that that wave (B) has taken the form of a double zigzag. But the zigzag itself is lacking external symmetry, as it consists of double zigzag W and triple zigzag Y Annual-07(2)].
In the context of Wave Principle variants considered above have right to exist, and there are no grounds to wicker them. However due to the mutual disproportion or exoticism of the components as well as in consequence of the dissemetry of the patterns and 9 main waves I’m in no haste to bring them to the forefront without acute need.
4. Incompleted correction For the dessert let’s consider the last and the most probable from my point of view variant — incompleted correction.
4.1. Lyrical deviation
Why is it the most probable? To the brief negative conclusions in the previous sections I can add that any wave pattern tends to be proportional and to some extent symmetrical. I suppose that zigzag nonlevel corrections if not conform at least try to follow some regularities in their forming, giving some hint to a wave analyst. Examples of proportion of the main waves of a big triple zigzag (A) of are given below for each of the currency pairs under consideration (pictures 10..12, below).
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Pic. 10. Correlation of the main waves of the triple zigzag (A) of of the euro.
Note. Symbol T in the pictures from 10 and further denotes the duration of a wave (T-Time). I.e. T2 denotes the duration of the wave 2, Txx denotes the duration of the wave XX.
Please note the mutual proportion of the peer to peer corrections both in the length and duration. In the pictures 10..12 corrections may not coincide with the whole corrective wave pattern and include the ending part of the impulse structure, but they mark clearly the ending and the beginning of a straightlight continuous trend. As a result we get two equal rectangles of corrections of smaller degree and mutually proportional corrective waves X and XX.
Note. Equal rectangles insistently suggest common use of the notion «area of correction».
Everything that was mentioned above relates to the other two USD pairs — the GBP and CHF (see the pictures 11 and 12, below).
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Pic. 11. Correlations of the main waves of the triple zigzag (A) of of the pound.
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Pic. 12. Correlations of the main waves of the triple zigzag (A) of of the CHF.
The number of main waves (11) for all the pairs under consideration on the given section of the chart only underlines the completion of this corrective pattern. Let’s try to apply such proportion to the main waves of our trend too.
4.2. Let’s project a zigzag correction
Having justly supposed that 9 main waves can mean incompletness of the corrective structure I’ll try to project schematically the general view of the supposed correction and its final objectives (pictures 13..18).
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Pic. 13. Incompleted upward correction (B) of of the euro. Projectios.
It is logically to take the largest in duration correction in the central section of the chart for the first correction of major level X. As a result we will get not only approximately equal in length (in overall height) and duration corrections of smaller degree 1 and 2, but also approximately equal in the length and duration double zigzags W and Y. Indirectly it proves that we are on the right way and we may expect that a triple zigzag (B) will continue to form.
In this case it is logically to suppose that the obtained proportions will be preserved and in the subsequent waves XX, Z and 3, projections of which are plotted on the picture 13.
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Pic. 14. Incompleted upward correction (B) of of the euro. The survey picture.
These were the reasons by which I was actuated publishing the scenario v.3 Annual-07(2) ].
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Pic. 15. Incompleted upward correction (B) of of the pound. Projections.
We may observe the similar picture in case with the GBP. We also get approximately equal in the length (in total height) and duration corrections of the smaller degree 1 and 2, and approximately equal in the length and duration double zigzags W and Y. If we are right we may expect that the triple zigzag (B) will continue to form. By the way, the supposed horizontal triangle 1 in this case doesn’t raise any doubts, as it is on the «right» place.
In this case we may also suppose that the obtained proportions will be preserved in the subsequent waves XX, Z and 3, projections of which are plotted on the picture 15.
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Pic. 16. Incompleted upward correction (B) of of the pound. The survey picture.
These considerations were reflected in the scenario v.3 Annual-07(2) ].
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Pic. 17. Incompleted downward correction (B) of of the CHF. Projections.
The CHF differs slightly from the previous currencies in the general wave picture, but in other respects, especially in the duration of alternate corrections and action waves, proportion is preserved.
The correction in the central part of the chart ( of X) should be correlated with the population of waves, which are not united by a single wave pattern: (x)-(y) of + . And the wave W should be correlated with the population of zigzags - + (w) of .
As the supposed global pattern (B) is a double zigzag with a wave-link X in the form of a skewed triangle it is logically to suppose that the waves W and Y, as well as 1 and 3 are approximately equal in the length and duration.
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Pic. 18. Incompleted downward correction (B) of of the CHF. The survey picture.
These considerations are reflected in the scenario v.3-alt2 Annual-07(2) ].
Conclusion
In conclusion it should be noted that if the preferred scenarios v.3 for the European currencies prove true then the whole global corrective pattern will consist of 11 main waves. I.e. after their ending we will be able to say with high probability that the corrective wave (B) of is completed.
This is the ground of my preference of the scenario v.3 for the European currencies over other possible variants. But it doesn’t mean that it will be exactly so ;)
Addition d/d 30-31.08.07Wave flat XX, shown in the pictures 13..16 is only one of the possible variants for the wave XX. The continuation of the current up trend may lead in future to forming of an expanded horizontal correction (refer to the tables 3-1 and 3-2 of my book), for example, skewed or running triangle or triple three.
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Pic. 19. Wave counting of the daily chart of the EUR/USD. Variant 3-alt.
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Pic. 20. Wave counting of the daily chart of the GBP/USD. Variant 3-alt.
Addition d/d 02.09.07The survey wave pictures of the currencies under consideration are given below, in which I try to make a long term schematic forecast in the form of a synchronous price movement. For convenience of comparison the currencies are divided into direct and reverse dollar pairs.
Direct dollar pairs
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Pic. 21. Possible projections of the EUR/USD. Variant 3.
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Pic. 22. Possible projections of the GBP/USD. Variant 3.
The euro’s and pound’s rise on the back of the dollar’s decline has formed since the end of 2005 an impetuous upward pattern, supposedly a triple zigzag.
In this pattern the sections of the dollar’s rise (green lines), which are reactionary, corrective relative to the dominant price movement prove to be isolated centers of resistance to the prevailing trend.
Reverse dollar pairs
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Pic. 23. Possible projections of the USD/ CHF. Variant 3-alt2.
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Pic. 24. Possible projections USD/ JPY. Variant 2.
Please note that in the JPY and CHF the sections of the dollar’s rise (heavy green lines), which are reactionary, corrective relative to the dominant price movement have formed a united corrective pattern of a higher degree.
In the CHF it is the wave-link X of (B) in the shape of a supposed skewed triangle that divides the large double zigzag into halves. And in the JPY it is the wave B of (B) of a supposed expanded wave flat.
Reference:
[*]Imaginary Skewer[*]Check point. USD fall may continue till May 2007[*]Never-ending Ascension (EUR/JPY)[*]Nearest Projections of GBP/JPY (+EUR/JPY)[*]CAD Possible Weakening till the Mid of 2009 (USD/CAD) [*]Alternate but Real Weakening of the Dollar till the End of the Summer (or the End of 2007)[*]EUR/JPY, GBP/JPY[*]FOREX Forecast for 2007[*]FOREX Forecast for the 2nd Half of 2007[*]Wave Analysis for August 2007[*]Wave analysis[*]Elliott’s Code: Wave Analysis of the FOREX Market[*]Wave Counting Marking[*]Methods of Price Movement Projection (EWA)[*]How to Apply EWA Forecasts
Dmitry Voznuy
forDmitry@yahoo.comAugust 17, 2007When using any part of the article for publication or analytical materials reference to the author and Alpari is obligatory.
EUR/JPY, GBP/JPY
Introduction
This article continues and specifies long-term forecasts, published in April 2007 (Never-ending Ascension of EUR/JPY) and in June 2007 (Nearest Projections of GBP/JPY).
1. EUR/JPY.
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Figure 1. Wave counting on 480 min chart of EUR/JPY.
The ending of the third wave 3 has overcome the edge of the projected area by 50 points, showing its bullish power (see Never-ending Ascension of EUR/JPY). But in the long run the trend reversed downwards and downtrend formed a completed and quite a proportional zigzag --.
It is not confirmed yet that this zigzag has completed, though we may suppose it judging by its right proportions. Unfortunately, it is not clear yet whether its ending is the extremum of wave 4 or it is just its first main wave of 4 (see the next chart).
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Figure 2. Wave counting on the daily chart of EUR/JPY.
I am sure that the minimum requirements for the fourth impulse waves have been fulfilled:
[*]completed downward corrective pattern, zigzag or 4, has been formed;[*]retracement of 26% depth (fibo) has been formed, it alternates with the second wave 2 by the depth (66%);[*]the price has reached the lower edge of the trend channel of global impulse (5);[*]MACD 5-34-5 has been in the negative area for a long time.Thus, the ending of the downward zigzag may be the extremum of the fourth wave 4. At the same time it may be just the beginning of the extended horizontal correction of 4.
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Figure 3. Wave counting on the weekly chart of EUR/JPY.
The fact that RSI approaches its resistance level may serve as an additional argument in favor of uptrend soonest beginning.
If the supposition is correct we can specify the projected area of completion of the final wave 5 of the global impulse (5) for the weekly time-frame, red-yellow ellipse in the picture. Otherwise, I will have to recalculate the projected area for this time-frame once wave 4 completion is confirmed. The upper edge of the projected area, calculated on the basis of the waves in the monthly chart, is given in grey in this chart (see the next picture).
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Figure 4. Wave counting on the monthly chart of EUR/JPY.
The projected area of the uptrend completion for this time-frame remains unchanged.
2. GBP/JPY.
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Figure 5. Wave counting on 720 min chart of GBP/JPY.
On the whole, GBP/JPY movement is equal to the one of EUR/JPY. The ending of the third wave has overcome the edge of the projected area by 25 points showing its bullish power (see Nearest Projections of GBP/JPY). Though just like in case of EUR/JPY the trend reversed downwards and then a completed and quite a proportional downward zigzag (a)-(b)-(c) formed.
It is not confirmed yet that this zigzag has completed, though we may suppose it judging by its right proportions. Unfortunately, it is not clear yet whether its ending is the extremum of the fourth wave or it is just its first main wave (a) of (see the next chart).
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Figure 6. Wave counting on the daily chart of GBP/JPY.
It should be noted here that the minimum requirements for the fourth impulse waves have been fulfilled:
[*]completed downward corrective pattern, zigzag (a) or , has been formed;[*]retracement of 28% depth (fibo) has been formed;[*]the price has almost reached the lower edge of the trend channel of global impulse C;[*]MACD 5-34-5 has been in the negative area for a long time.Thus, the ending of the downward zigzag may be the extremum of the fourth wave . At the same time it may be just the beginning of the extended horizontal correction (a) of .
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Figure 7. Wave counting on the weekly chart of GBP/JPY.
The fact that RSI approaches its resistance level may serve as an additional argument in favor of uptrend soonest beginning.
If the supposition is correct we can specify the projected area of completion of the final wave of the global impulse C of (Y) for the weekly time-frame, red-yellow ellipse in the picture. Otherwise, I will have to recalculate the projected area for this time-frame once wave completion is confirmed. The upper edge of the projected area, calculated on the monthly chart, is given in grey in this chart (see the next picture).
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Figure 8. Wave counting on the monthly chart of GBP/JPY.
In this time-frame everything remains the same.
Addition (August 16, 2007Unfortunately, suppositions that the downward zigzag for EUR/JPY and GBP/JPY may remain incomplete, were confirmed. Supposed (and probable) ending of the zigzag turned out to be just th first wave of the final impulse of this zigzag. Now we should wait for the downward correction completion to be confirmed. Adjusted wave counting markings are given below.
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Figure 9. Wave counting on 480 min chart of EUR/JPY.
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Figure 10. Wave counting on 720 min chart of GBP/JPY.
Note
Given possible trading plans are purely informational purpose only and they should not be considered as trading guides or an invitation to make a transaction.
Reference:
[*]Imaginary Skewer [*]Check point. USD fall may continue till May 2007[*]Never-ending Ascension (EUR/JPY)[*]Nearest Projections of GBP/JPY [*]CAD Possible Weakening till the Mid of 2009 (USD/CAD) [*]Alternate but Real Weakening of the Dollar till the End of the Summer (or the End of 2007)[*]FOREX Forecast for 2007[*]FOREX Forecast for the 2nd Half of 2007[*]Wave Analysis for August 2007[*]Wave analysis [*]Elliott’s Code: Wave Analysis of the FOREX Market [*]Wave Counting Marking [*]Methods of Price Movement Projection (EWA)[*]How to Apply EWA Forecasts
Dmitry Voznuy
forDmitry@yahoo.comAugust 12, 2007 When using any part of the article for publication or analytical materials reference to the author and Alpari is obligatory.
Alternate but Real Weakening of the Dollar till the End of the Summer (or the End of 2007)
Introduction
Yesterday GBP broke the critical level of the main variant of wave counting. This fact is a unique signal of the scenario change for GBP only. Though it is possible that we observe the beginning of a new stage of great USD weakening till the end of summer or even the end of 2007. At least, the current wave counting of the main currency pairs supposes such a variant is possible.
That is why two possible scenarios of USD weakening are considered below. These variants are gaining momentum.
1. EUR/USD
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Figure 1. Wave counting on the weekly chart of EUR/USD. Alternate variant.
It is possible that the second part Y of supposed double zigzag (B) or (X) is assuming the shape of the triple zigzag. In this case its completion is possible above the key pulse point at the end of August. The area of the projected values is marked with red-yellow ellipse.
Moreover, if this triple zigzag Y is treated as a diagonal triangle (this scenario is not considered here) price should not overcome 1.4063.
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Figure 2. Wave counting on the weekly chart of EUR/USD. Alternate variant 2.
The next alternate variant, specified in Annual-07, supposes that wave (B) or (X) is assuming the shape of the triple zigzag. In this case its completion should be expected after the end of 2007 and the area of the projected values should be calculated once wave XX of (B) completes.
2. GBP/USDhttp://www.alpari-forex.com/files/pic/docs/4/27238_3571.gif
Figure 3. Wave counting on the weekly chart of GBP/USD. Alternate variant.
According to this variant the second part Y of supposed double zigzag (B) or (X) is assuming the shape of the triple zigzag. In this case its ending may be expected above the key pulse point at the end of August. The area of the projected values is marked with red-yellow ellipse.
Moreover, if this triple zigzag Y is treated as a diagonal triangle (this scenario is not considered here) price should not overcome 2.0569.
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Figure 4. Wave counting on the weekly chart of GBP/USD. Alternate variant 2.
The next alternate variant, specified in Annual-07, supposes that wave (B) or (X) is assuming the shape of the triple zigzag. In this case its completion should be expected after the end of 2007 and the area of the projected values should be calculated once wave XX of (B) completes.
3. USD/JPYhttp://www.alpari-forex.com/files/pic/docs/4/27238_3573.gif
Figure 5. Wave counting on the weekly chart of USD/JPY. The main variant.
Scenario given in Figure 5 is the main one at the moment. Supposedly, wave is almost completed and in the nearest future downward wave of 3 of C forming is expected. This wave ending may be expected above the key pulse point at the end of August.
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Figure 6. Wave counting on the weekly chart of USD/JPY. Alternate variant.
According to the alternate variant wave (B) is assuming the shape of the running or extended flat, which wave B is almost completed. In this case completion of supposed wave C of (B) should be expected after 2007, its length may make from 78% to 127% of wave B of (B) length.
4. USD/CHFhttp://www.alpari-forex.com/files/pic/docs/4/27238_3575.gif
Figure 7. Wave counting on the weekly chart of USD/CHF. Alternate variant.
Wave Y of (B) or (X) may be assuming the shape of the horizontal triangle or triple three, turning wave (B) into a double three. In this case completion of this triangle may be expected above the key pulse point at the end of August. The area of the projected values, specified through correlation of the main waves of a triangle, is marked with red-yellow ellipse.
Moreover, if we treat wave Y as a horizontal triangle only price should not fall below 1.1993.
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Figure 8. Wave counting on the weekly chart of USD/CHF. Alternate variant 2.
According to the next alternate variant currently double zigzag Y of (B) may be forming, its wave of Y is assuming the shape of the horizontal triangle or triple three. In this case wave (B) ending may be expected after the end of 2007, the area of the projected values should be calculated once triangle of Y completes.
5. USD/CADhttp://www.alpari-forex.com/files/pic/docs/4/27238_3577.gif
Figure 9. Wave counting on the weekly chart of USD/CAD. Alternate variant.
Supposed USD weakening may affect CAD. In this case chances of the earlier considered alternate variant increase greatly (see article Possible CAD Weakening till the Mid of 2009 ). Supposed wave may complete above the key pulse point at the end of August. Though the area of the projected values for impulse completion should be calculated once wave 4 of (5) of is completed.
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Figure 10. Wave counting on the weekly chart of USD/CAD. Alternate variant 2.
According to the next alternate variant continuous forming of supposed wave 4 of (5) of should be expected, global impulse should complete after the end of 2007. The area of the projected values for impulse ending should be calculated once wave 4 of (5) of is completed.
Supplement (June 25, 2007)Thus for each currency pair under consideration three possible variants are almost equally probable.
For EUR/USD:
[*]the previous main one, described in the daily forecasts recently (e.g. see Daily-220607),[*]alternate and[*]alternate 2, considered here.For GBP/USD:
[*]preliminary, described in the daily forecasts recently (e.g. see Daily-220607),[*]alternate and[*]alternate 2, considered here.For USD/JPY:
[*]the main, described in the daily forecasts recently (e.g. see Daily-220607) and[*]alternate, considered here.For USD/CHF:
[*]the previous main one, described in the daily forecasts recently (e.g. see Daily-220607),[*]alternate and[*]alternate 2, considered here.For USD/CAD:
[*]the previous main one and[*]alternate, described in Possible Weakening of CAD (USD/CAD) till the Mid of 2009 and[*]alternate 2, considered here.Each variant has some advantages and disadvantages but they are quite realizable.
The previous main variant for the European currencies is doubtful as it has been already annulled for GBP and there is a steady trend for EUR and CHF price to move towards the critical level in the impulsive mode.
The alternate variant described here for the European currencies is quite good especially if the mentioned but not described variant with the diagonal triangle is realized. But combination of the constitutive waves of a smaller degree in the shape of the double and triple zigzags in the supposed double zigzag is quite rare.
At the same time the wave patterns tend to be symmetrical in their external shape and from my point of view the variant «alternate 2» is the most symmetrical one among the alternate variants. Moreover it is quite obvious that at the very beginning the direction and shape of the price movement within the variant «alternate 2» may coincide with the movement in accordance with the «alternate» scenario.
That is why in the daily forecasts for the European currencies I will consider the variant «Alternate 2» (for USD/JPY — «alternate») as the most preferable one.
Note
Given possible trading plans are purely informational purpose only and they should not be considered as trading guides or an invitation to make a transaction.
Reference:
[*]Imaginary Skewer[*]Possible nearest perspectives of the main currency pairs (EWA)[*]Check point. USD fall may continue till May 2007[*]Check point. Normal flight.[*]Possible Perspectives of the European Currencies for 2007[*]CAD Nearest Projections (USD/CAD)[*]Never-ending Ascension (EUR/JPY)[*]Check Point, Intermediate Results and Nearest Perspectives[*]Nearest Projections of GBP/JPY (+EUR/JPY)CAD Possible Weakening till the Mid of 2009 (USD/CAD) [*]FOREX Forecast for 2007[*]Monthly-0607[*]Wave analysis[*]Elliott's Code: Wave Analysis of the FOREX Market[*]Wave Counting Marking[*]Methods of Price Movement Projection (EWA)[*]How to Apply EWA Forecasts
Dmitry Voznuy
forDmitry@yahoo.comJune 23, 2007When using any part of the article for publication or analytical materials reference to the author and Alpari is obligatory.
CAD Possible Weakening till the Mid of 2009 (USD/CAD)
Introduction
In February's article Several Words about CAD (EWA of USD/CAD) two possible variants of further movement were forecast. Price reversed downwards just in the projected area. Then the price began to fall successively. The result is given in Figure 1.
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Figure 1. Final daily chart of the forecast for the 1st half of 2007.
For illustrative purposes projections of expected price movement 4-month ago are given in the chart.
Current wave counting http://www.alpari-forex.com/files/pic/docs/4/27229_3552.gif
Figure 2. Wave counting on the monthly chart. The main variant.
From my point of view there are two most probable scenarios, which differ in the price upward reversal point and some wave counting details.
According to the main variant such a reversal has already happened, wave B of (4) is completed and the first waves of upward wave C of (4) are forming, whereas wave (4) is assuming the shape of the extended flat.
Its ending is possible above the key pulse point in May-June, 2009 (intermediate check point — January-February, 2008).
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Figure 3. Wave counting on the weekly chart. The main variant.
If the supposition is correct it is quite logic to expect that wave (4) in the shape of the flat will follow alternation guidelines for flats (see table 4-2 of my book). In this case it is more probable that wave C of (4) will assume the shape of the wide diagonal triangle having given Complex-Simple-MostComplex shape to the whole flat.
Currently waves correlation within the supposed flat corresponds to the optimum one (B=~A*1.27). Wave B of (4) ending is the critical level for the main variant.
Though legs correlation of zigzag B of (4) is far from usual (=~*4.236), that is why the price may follow the alternate scenario.
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Figure 4. Wave counting on the monthly chart. Alternate variant.
According to the alternate scenario global impulse is almost completed. Its high will indicate the price upward reverse for the expected long-term uptrend.
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Figure 5. Wave counting on the weekly chart. Alternate variant.
Chances of this scenario are as high as those of the main one and the main arguments in its favor are violence and proportions of wave 3 of (5) of , as well as the fact that the price is within the narrow trend channel of impulse .
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Figure 6. Wave counting on 720 min chart.
That is why the scenario will be chosen in the knot which is forming now. Supposedly, upward wedge (i) or (a) forming is almost completed. According to the rules after correction (ii) or (b) either upward impulse or diagonal triangle (iii) or (c) should form.
If the critical level is not broken and expected impulse (iii) forms and exceeds the length of wedge (i) 1.618 times and more it is logic to expect that the main scenario will prevail.
If upward zigzag (a)-(b)-(c) forms with almost equal legs and/or the critical level is broken chances of the alternate scenario will increase greatly.
We should wait what scenario the price will choose.
Supplement (June 23, 2007)http://www.alpari-forex.com/files/pic/docs/4/27229_3579.gif
Figure 7. Wave counting on the weekly chart of USD/CAD. Alternate variant.
Supposed USD weakening may affect CAD (see article Alternate but Real Weakening of the Dollar till the End of Summer (or the End of 2007). In this case chances of the earlier described variant increase significantly. Supposed wave may complete above the key pulse point at the end of August. Though the area of projected values for impulse completion should be calculated once wave 4 of (5) of completes.
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Figure 8. Wave counting on the weekly chart of USD/CAD. Alternate variant 2.
According to the next alternate scenario continuous forming of supposed wave 4 of (5) of with global impulse completion not earlier than at the end of 2007 may be expected. The area of the projected values for impulse completion should be calculated once wave 4 of (5) of completes.
Supplement (June 27, 2007) http://www.alpari-forex.com/files/pic/docs/4/27229_3651.gif
Figure 9. Wave counting on 240 min chart.
One of possible scenarios of the wave counting marking of this area of CAD supposes that upward wedge (a) has formed (within the frames of the wave counting marking according to scenario «alternate-2»). Once correction (b) completes it is quite logic to expect that upward impulse (or diagonal triangle) will keep forming.
Forming of waves (a) and (b) fits the three scenarios under consideration. But once correction (b) completes price will have to choose one of the three most probable from my point of view ways in the supposed point (c) of .
Supplement (June 28, 2007)http://www.alpari-forex.com/files/pic/docs/4/27229_3691.gif
Figure 10. Wave counting on 240 min chart.
According to a possible marking variant of this area of CAD movement forming of upward impulse (or diagonal triangle) (c) of may be expected once correction (b) of completes.
Waves (a) and (b) forming fits the three described scenarios. Once correction (b) completes the price will have to choose one of the three most probable from my point of view variants in the supposed point (c) of .
Supplement (July 17, 2007)Supposedly the price has chosen the alternate scenario, considered in details in this article. In accordance with this scenario global impulse is almost completed. Great chances of this scenario were based on the wave structure, waves correlation and impetuous price fall.
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Figure 12. Wave counting on the daily chart.
Impulse may be almost completed. The basis of this supposition is shown on the next chart.
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Figure 13. Wave counting on 240 min chart.
May be wave 5 (or wave of 3 of the possible alternate variant) has assumed the shape of the diagonal triangle with the longest first wave of 5. If the supposition is correct it provides us with the limit level at 1.0394 which should not be broken by the price (wave should not be the shortest one). Otherwise, the current wave counting will be adjusted.
Supplement (August 9, 2007)http://www.alpari-forex.com/files/pic/docs/5/27229_4301.gif
Figure 14. Wave counting on 240 min chart.
According to a possible variant of CAD wave counting global downward movement may be completed. Supposedly, after diagonal triangle 5? upward zigzag W is forming. If the supposition is correct survey wave counting may look as it is shown in the next picture.
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Figure 15. Wave counting on the daily chart.
Global impulse completion may be confirmed by price rise and fixing above 1.12 (ending of supposed wave of 3 of (5) of ). Till that time its fourth wave 4 of (5) of may be forming.
Supplement (September 20, 2007)Currently price Currently price fluctuations remain within the forecast (see pictures 16 and 17 below).
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Figure 16. Final 240 min chart of USD/CAD.
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Figure 17. Final daily chart of USD/CAD.
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Figure 18. Wave counting on the daily chart of USD/CAD.
Supposedly, final wave 5 of (5) of global impulse is forming. Possible levels of its completion are marked in the chart. The projected area of wave of 5 of (5) of completion should be specified once wave of 5 of (5) of finishes.
At the same time according to the alternate variant wave 4 of (5) may keep forming in the shape of the running or extended flat.
Supplement (October 3, 2007)CAD is moving in accordance with the forecast.
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Figure 19. Wave counting on the daily chart.
Supposedly, the final impulse 5 of (5) of is forming. Possible targets are given in the chart. The area of the projected values of wave 5 of (5) ending should be adjusted once wave of 5 of (5) completes.
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Figure 20. Wave counting on 240 min chart.
In the picture one of possible variants of wave counting of the final wave 5 of (5) is given. Correction of 5 may have started forming (if wave (v) of does not begin to lengthen). If the supposition is correct it is most probable that wave of 5 ending won't surpass 1.02 level.
Supplement (October 15, 2007)CAD is moving accprding to the forecast.
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Figure 21. Wave counting on 240 min chart.
In the picture two possible variants of marking of the final wave 5 of (5) are given. Wave (v) of of 5 may have decided to lengthen (it was mentioned in the previous supplement to the article). If the supposition is correct it is most probable that wave of 5 ending will not overcome 1.02 level.
Supplement (October 24, 2007)http://www.alpari-forex.com/files/pic/docs/6/27229_5830.gif
Figure 22. Wave counting on 360 min chart.
In the picture two possible variants of marking of the final wave 5 of (5) are given. Limits for wave (v) of of 5 lengthening are almost over. If the supposition is correct corrective wave of 5 may start forming in the nearest future. It will aim at 0.99 level, though it should not overcome 1.02 level.
http://www.alpari-forex.com/files/pic/docs/6/27229_5831.gif
Figure 23. Wave counting on the daily chart.
Possible survey marking of the final wave (5) of of CAD is given in picture 23.
Note
Given possible trading plans are purely informational purpose only and they should not be considered as trading guides or an invitation to make a transaction.
Reference:
[*]Imaginary Skewer[*]Possible Nearest Perspectives of the Major Currency Pairs[*]Check point. USD fall may continue till May 2007[*]Check point. Normal flight.[*]Possible Perspectives of the European currencies for 2007[*]CAD Nearest Perspectives (USD/CAD)[*]Never-ending Ascension (EUR/JPY)[*]Check Point, Intermediate Results and Nearest Perspectives[*]Nearest Projections of GBP/JPY (+EUR/JPY)[*]FOREX Forecast for 2007[*]Monthly-0607[*]Wave analysis[*]Elliott's Code: Wave Analysis of the FOREX Market[*]Wave Counting Marking[*]Methods of Price Movement Projection (EWA)[*]How to Apply EWA Forecasts
Dmitry Voznuy
forDmitry@yahoo.comJune 22, 2007When using any part of the article for publication or analytical materials reference to the author and Alpari is obligatory.
Nearest Projections of GBP/JPY (+ EUR/JPY)
Introduction
At the end of summer 2004 I forecast further movement of EUR/JPY (see 25+ figures are possible (GBP/JPY wave survey)).
2 years later, in autumn 2006 the projected target was reached having confirmed the correctness of the calculations. The price has covered about 30 figures before the projected target.
The price kept rising. Unfortunately, the wave theory does not give us a unique answer about the maximum length of such a powerful movement, thought it lets us specify possible boarders of the pattern completion (see Methods of Price Movement Projection ). I will try to do it in this article.
Current variant of the wave counting
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Figure 1. Wave counting on monthly chart.
The survey wave counting remained the same. Supposedly, upward double zigzag (W)-(X)-(Y) is forming. With correlation of zigzags (Y)=(W)*1.618 completion of the whole pattern may be expected around 251. Let's specify the area of possible projected values on smaller time-frames.
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Figure 2. Wave counting on weekly chart.
According to the current variant of wave counting upward movement may continue as the second leg of zigzag A-B-C may be not completed yet. The nearest projected targets of this zigzag completion is around 250 (C=a*2.0). The projections should be adjusted only once the fourth wave of C is completed.
Let's continue consideration of the details of the wave counting marking of the final impulse C of (Y).
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Figure 3. Wave counting on daily chart.
In Figure 3 one of possible variants of wave counting on the daily chart is given. Supposedly, wave of C is almost completed. The nearest area of the projected values of its completion is given in the chart (red-yellow ellipse). The price has already entered this area (244.32).
Let's consider the final wave (v) of on the smaller time-frame (Figure 4 below).
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Figure 4. Wave counting on 480 min chart.
The values of the area of projected values on this wave degree are shifted a bit upwards in comparison with the similar area of the higher wave degree (red-yellow ellipse), the price is a figure and a half away from it (244.32), that is upward wave v of (v) of may keep forming. It is better to keep in mind the adjusted values still taking into account the previous calculations.
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Figure 5. Wave counting on 60 min chart.
According to the wave structure of the last upward movement we may supposed that wave v of (v) is not completed yet. Supposedly, a pair of waves ( and of v) is required for it to be absolutely completed. These waves may reach the area of the projected values (red-yellow ellipse).
It is more reasonable to adjust the projections on this wave degree only once wave of v of (v) is completed.
Thus, scenarios of possible nearest price movement and guides for its further rise are specified. Though it should be remembered that this is one of possible scenarios of GBP/JPY movement.
EUR/JPY Supplement
As GBP/JPY and EUR/JPY are «cousins», their movement is similar. That is why I want to speak a bit about EUR/JPY.
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Figure 6. Wave counting on 480 min chart of EUR/JPY.
Supposedly, wave (v) of of 3 is almost completed. Yesterday the price reached the area of projected values calculated more then a month and a half ago (see Never-ending Ascension (EUR/JPY)).
Supplement (June 19, 2007)http://www.alpari-forex.com/files/pic/docs/4/27143_3473.gif
Figure 7. Wave counting on 60 min chart.
Yesterday the price reached the area of the projected values (see Figures 4 and 5).
Supplement (June 25, 2007)http://www.alpari-forex.com/files/pic/docs/4/27143_3596.gif
The price has reached the upper edge of the channel and has overcome the optimum projected area for several pips, the trend downward reverse is highly probable.
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Forming of the supposed fourth wave may last for more than a week.
Note
Given possible trading plans are purely informational purpose only and they should not be considered as trading guides or an invitation to make a transaction.
Reference:
[*]Imaginary Skewer[*]Possible nearest perspectives of the main currency pairs (EWA)[*]Check point. USD fall may continue till May 2007[*]Check point. Normal flight.[*]Possible Perspectives of the European Currencies for 2007[*]Nearest CAD Perspectives (USD/CAD)[*]Never-ending Ascension (EUR/JPY)[*]Check Point, Intermediate Results and Nearest Perspectives[*]FOREX Forecast for 2007 [*]Monthly-0607[*]Wave analysis[*]Elliott's Code: Wave Analysis of the FOREX Market[*]Wave Counting Marking[*]Methods of Price Movement Projection (EWA)[*]How to Apply EWA Forecasts
Dmitry Voznuy
forDmitry@yahoo.comJune 16, 2007When using any part of the article for publication or analytical materials reference to the author and Alpari is obligatory.
Check Point, Intermediate Results and Nearest Perspectives
IntroductionIn Annual-07 it was supposed that the trend may reverse in favor of the dollar. Moreover, possible scenarios and dates of the supposed reversal (check points and limit values) were specified. One of the check points on June 2, 2007 (on the weekly chart dates are always marked by the last day of the week, Saturday) will come in a day.
That is why I suppose that on May 31 we should summarize the results and specify possible nearest perspectives.
Intermediate ResultsOn the charts given below forecast for 2007 of possible price movement for each pair under consideration is marked by the red dashed line (see Annual-07). It is clearly seen that prices are moving in accordance with the annual forecast.
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Figure 1. EUR/USD forecast for 2007.
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Figure 2. GBP/USD forecast for 2007.
As it has been already mentioned in the previous articles in Wave Analysis, the key pulse point sometimes points at the extremum following the absolute one and which is of a smaller wave degree. Supposedly such a picture is observed in Figures 1 and 2.
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Figure 3. USD/JPY forecast for 2007.
Here the price reversed in accordance with the forecast.
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Figure 4. USD/CHF forecast for 2007.
Above the key pulse point local trend reverse was observed. In order to confirm the annual forecast the trend in favor of the dollar must be confirmed.
Possible Nearest Perspectives of the Major Currencies Trend may have already reversed in favor of the dollar as it was supposed in Annual-07. But there it was also specified that:
«…__confirmation of completion of more than annual prices movement against the dollar (that is the fact of completion of wave (B) or (X) of for the main European currencies) is the main event expected in 2007 from the point of view prices movement forecasting __.»
It should be noted it has not been confirmed yet. Up to the present moment the price has not fixed behind the confirmatory levels and has not broken the edges of the trend channels.
That is why supposed and most probable price movement till the end of 2007, given in Figures 5..8 below, is very vulnerable.
Possible patterns which shape may be assumed by the global correction , as well as alternate scenarios, were described in details in Annual-07 and Check Point, Normal Flight.
The only thing we can do is to wait till the price chooses a scenario.
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Figure 5. EUR/USD forecast for the second half of 2007.
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Figure 6. GBP/USD forecast for the second half of 2007.
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Figure 7. USD/JPY forecast for the second half of 2007.
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Figure 8. USD/CHF forecast for the second half of 2007.
Reference:
[*]Imaginary Skewer[*]Possible nearest perspectives of the main currency pairs (EWA)[*]Check point. USD fall may continue till May 2007[*]Check point. Normal flight.[*]Possible Perspectives of the European Currencies for 2007[*]Nearest CAD Perspectives (USD/CAD)[*]Never-ending Ascension (EUR/JPY)[*]FOREX Forecast for 2007 [*]Monthly-0507[*]Wave analysis[*]Elliott's Code: Wave Analysis of the FOREX Market[*]Wave Counting Marking[*]Methods of Price Movement Projection (EWA)[*]How to Apply EWA Forecasts
Dmitry Voznuy
forDmitry@yahoo.comMay 31, 2007When using any part of the article for publication or analytical materials reference to the author and Alpari is obligatory.
Never-ending Ascension (EUR/JPY)
In summer 2004 I tried to specify the shape of the forming horizontal correction and forecast further movement of EURJPY (see Possible 2000-pip Trade).
In autumn 2006 the projected target was reached, having confirmed that the calculations were correct. Research of the skewed triangles (see Skewed Triangles in the FOREX Market) was based on the analysis of the extended horizontal correction, formed in 2003-2005.
At the same time price, having reached the specified target, kept moving upwards, increasing wave degrees inclusion and conquering new highs. Unfortunately, wave theory does not give a unique answer about the maximum limit of such a powerful movement, though it allows us to specify possible boundaries of the final stop. And I will try to do it in this article.
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Figure 1. Wave counting on the monthly chart. Alternate variant.
According to one of possible scenarios upward movement is presented in the shape of the impulse, and its final wave (5) seems to be almost completed with the inner waves. If the supposition is correct then with the help of the Methods of prices movement projection the nearest area of its possible ending may be specified.
As the result of simple calculations (shown on the chart) we get the estimated range between 161.45-163.71 for this time-frame (red-yellow ellipse). As you can see, in these calculations only waves of the Intermediate degree took part. Current maximum price value (162.39) is already in the mid of this range, supposing that uptrend will complete soon.
Let's consider the wave structure of the final impulse on smaller time-frames.
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Figure 2. Wave counting on the weekly chart. Alternate variant.
One of possible variants of wave counting allows me to treat impulse (5) as absolutely completed. Though its ending is a bit clumsy.
The estimated range from the previous chart (red-yellow ellipse) is shown on this chart. At the same time the four waves of the Minor degree allow us to use them in the specifying calculations too (given on the chart). As you can see, they almost fit the frames of the previous range, having raised the upper edge only by 1 point. This is an additional confirmation of the earlier calculations.
Let's consider the details of the wave counting of the final impulse (5) in Figures 3 and 4.
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Figure 3. Wave counting on the daily chart. Alternate variant.
In Figure 3 quite possible wave counting is given on the daily chart. Though I still think that impulse (5) ending is a bit clumsy. The thing is that in the classical impulse with extension in the third wave its first and fifth waves tend to be equal both by the length and extension. Here the extension of wedge 1 of (5) is four times more than the extension of supposed impulse 5 of (5). Moreover, there is some irregularity in the wedge.
Let's see the final wave 5 of (5) on a smaller time-frame (Figure 4 below).
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Figure 4. Wave counting on the 240 min chart. Alternate variant.
The structure, shown in the picture, seems to be incomplete. One of possible variants of its wave counting marking supposes that we are only in its third wave of 5. In this case we can hardly expect that the impulse will complete in the projected area or near it as the price is in the mid of the projection already and upward waves (v) of and of 5 have not started yet. Though this variant is possible.
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Figure 5. Wave counting on the 240 min chart. The main variant.
The variant when I mark the forming impulse as wave 3 of (5) seems to be more logic. In this case we are only in its wave (iii) of of 3 and currently some horizontal extended correction iv of (iii) is forming. It is not clear yet what shape it will assume, it may be either a running or skewed triangle or even a triple three.
The only thing is clear — with such a variant of wave counting the area of projected values should be looked for on higher degrees.
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Figure 6. Wave counting on the daily chart. The main variant.
In case of a new wave counting marking the reference points change and the whole impulse (5) logically seems to be incomplete. The first and the fifth waves ( of 3 and of 3) become more proportional. Using the waves of the Minute and Minor degrees as reference points the area of projected values for possible ending of wave 3 of (5) may be specified, this wave will be between 165.12 and 168.25.
It is too early to speak about wave 5 of (5) projection at this wave degree as only the first two reference waves of the Minor degree are completed.
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Figure 7. Wave counting on the weekly chart. The main variant.
With the help of the height of the skewed triangle we get an approximate mark of possible ending of wave (5) on the weekly chart — figure 174 (see article Skewed Triangles in the Forex Market). Taking into account the fact that wave 3 of (5) is incomplete, it does not seem so unreachable.
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Figure 8. Wave counting on the monthly chart. The main variant.
With the help of the monthly time-frame and wave of the Intermediate degree we can find the area of new boundaries for possible ending of wave (5). This is a range between 170.70-177.08 (red-yellow ellipse in Figures 7 and 8). It is at the upper edge of the channel of the global impulse, which indirectly confirms that the calculations are correct.
Thus, scenarios of possible nearest price movement and marks for its further rise (165..168 and 171..177) are specified. Though EURJPY will make the final choice.
Addition (June 14, 2007)The pair is moving in accordance with the forecast, several variants of the adjusted marking are given here.
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Figure 9. Wave counting on 480 min chart.
Supposedly wave iv of (iii) has assumed the shape of the modest zigzag whereas corrective wave structures which were assigned to it (see Figure 5) turned out to be contracting diagonal triangle v of (iii) which completes impulse (iii) of of 3. Having broken slightly the upper forming line of the diagonal triangle the price fell confirming this pattern by implication.
Currently corrective wave (iv) of of 3 is forming. It has already fulfilled the minimum requirements for the fourth waves of the impulse:
[*]it has reached the area of the previous fourth wave of a lower wave degree iv of (iii),[*]it reached the lower edge of the trend channel,[*]the depth of the retracement reached 24.6%,[*]MACD 5-34-5 oscillator is in the negative area.That is why it is possible that it has completed already. Though the wave structure of wave (iv) of of 3 supposes its further development (may be in the shape of zigzag a-b-c), the beginning of the diagonal triangle may be reached. Projected targets for the final wave (v) of of 3 should be adjusted only once the fourth wave (iv) is completed. If we suppose that this four (iv) has completed then new projections are in the already calculated value area.
Supplement (June 16, 2007)
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Figure 10. Wave counting on 480 min chart.
Supposedly, wave (v) of of 3 is almost completed. Yesterday the price reached the area of projected values calculated more then a month and a half ago.
Supplement (June 25, 2007)http://www.alpari-forex.com/files/pic/docs/4/26522_3594.gif
The price has reached the projected area and the upper edge of the channel, the trend downward reverse is highly probable.
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Forming of the supposed fourth wave 4 may last for more than a week.
Note
Given possible trading plans are purely informational purpose only and they should not be considered as trading guides or an invitation to make a transaction.
Reference:
[*]Imaginary Skewer[*]Possible nearest perspectives of the main currency pairs (EWA)[*]Check point. USD fall may continue till May 2007[*]Check point. Normal flight.[*]Possible Perspectives of the European Currencies for 2007[*]Nearest CAD Perspectives (USD/CAD)[*]FOREX forecast, 2007[*]Monthly-0407[*]Wave analysis[*]Elliott’s Code: Wave Analysis of the FOREX Market[*]Wave Counting Marking[*]Methods of Price Movement Projection (EWA)[*]How to Apply EWA Forecasts
Dmitry Voznuy
forDmitry@yahoo.comApril 26, 2007Do not reproduce without explicit permission of Alpari.
Nearest CAD Perspectives (USD/CAD)
In February's article about supposed movement of CAD the area of the trend downward reverse was projected and the first target at ~1.1450 was specified (see Several Words about CAD). Having reversed downwards exactly at the projected point (1.1874), USDCAD reached the projected target on April 11.
Then the price might keep falling in the impulsive mode or start forming of the final waves of the upward extended correction. The price might have chosen the first variant, as it kept falling (Figure 1, below).
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Figure 1. Wave counting on the daily chart. The main variant.
According to the presented main variant the third wave 3 of the supposed impulse (5) is almost completed. If the supposition is correct wave 4 of (5) will start forming in the nearest future. It may assume the shape of the (double) zigzag and complete around ~1.1450. The next minimum target for the downward wave 5 of (5) is 1.09, which will allow it to form a full impulse or a diagonal triangle.
These suppositions are based on the analysis of the wave picture and wave 3 of (5) structure, see pictures 2 and 3 below.
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Figure 2. Wave counting on the 240 min chart.
It is obvious that wave 3 is forming with the extension in the fifth wave of 3. The full set of its inner waves allows us to suppose its nearest completion, MACD suggests the correct numeration of the inner waves and confirms their ending. Expected double retracement of Elliott provides us with the guides for the extremum of wave 4 of (5) at 1.1485. Moreover, extension in the fifth wave is more frequent in the third wave of the impulse, which confirms this scenario indirectly.
If the suppositions are confirmed, the survey wave counting may look as presented in Figure 3.
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Figure 3. Wave counting on the monthly chart.
Supposed impulse will complete with wave (5) ahead of the global correction .
Though this supposition is only a possible variant of wave counting and further price movement. According to the nearest alternate scenario global impulse may have already completed at the last day of May 2006, currently global correction may be forming (see Figure 4 below).
According to the less probable alternate variant wave (4) of may keep forming (see Figure 5 below).
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Figure 4. Wave counting on the daily chart. The alternate variant.
According to the most probable alternate scenario currently the second corrective wave (B) of the global correction is forming. This wave may assume the shape of the downward double zigzag. By the way, this variant does not contradict Elliott's expected double retracement, as opposed to the next variant.
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Figure 5. Wave counting on the daily chart. The second alternate variant.
Less probable but theoretically possible scenario supposes that wave (4) may keep forming in the shape of the upward double (triple) zigzag.
We will learn soon which scenario the price will choose.
Addition (April 26, 2007)One of possible variants of wave counting of the final diagonal triangle (v) of of 3 of USD/CAD is given in Figure 6 below.
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Figure 6. Wave counting on the 60 min chart.
If the supposition is correct by the end of the week the supposed diagonal triangle (v) may complete, remaining within the 12th figure (the area of possible projected points is specified by the yellow-red ellipse). As a rule, in the downward expanding diagonal triangles the ending of the final wave does not reach the lower generating line of the pattern.
Note
Given possible trading plans are purely informational purpose only and they should not be considered as trading guides or an invitation to make a transaction.
Reference:
[*]Imaginary Skewer[*]Possible nearest perspectives of the main currency pairs (EWA)[*]Check point. USD fall may continue till May 2007[*]Some Words about CAD[*]Additional Profit on Swaps (EWA of GBP/CHF)[*]Check point. Normal flight.[*]Possible Perspectives of the European Currencies for 2007[*]FOREX forecast, 2007[*]Monthly -0407[*]Wave analysis[*]Elliott’s Code: Wave Analysis of the FOREX Market[*]Wave Counting Marking[*]Methods of Price Movement Projection (EWA)[*]How to Apply EWA Forecasts
Dmitry Voznuy
forDmitry@yahoo.comApril 24, 2007Do not reproduce without explicit permission of Alpari.
Possible perspectives of the European currencies for 2007
Introduction
The many-month trend of the major European currencies against the dollar has formed a completed wave pattern, which may signal a reversal and a start of a new many-month opposite direction trend. Though this statement requires confirmation. It is based on the reasoned arguments and constant principles under the wave theory and technical analysis (some of them were not released yet).
Any formed or forming Elliott’s wave completion is also a regular bifurcation point, where the price chooses a further appropriate movement.
If to suppose the possible intermediate wave (B) completion, it’s high time to consider the most probable price movement scenarios. Considering the immensity of the pattern wave degree, the bifurcation point influences greatly on the further perspectives of the currency pairs.
EUR/USD
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Pic. 1. Wave counting of the weekly chart. The main scenario.
If the main variant, the project of which was released about one and a half year ago, confirms, the dollar will strengthen till the end of the year (see picture 1).
The approximate price targets, probable wave patterns and check points of this area are quite clear. There is no need to release them till the downtrend starts.
The main waves (B) and (A) of correction are almost equal, which is the optimal proportion for the waves within the horizontal wave structure. The waves balance on the smaller time-frames was considered in the daily wave analysis for April 18, 2007 (see Final Straight).
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Pic. 2. Wave counting of the daily chart. The alternative scenario.
The alternative scenario is shown in picture 2. Within the framework of this variant the final zigzag (a)-(b)-(c) of Y keeps forming and after the short correction (b) the final upward impulse or the diagonal triangle may occur.
This variant may become the main one and complete the expected wave (B) by the regular check point on 02.06.07.
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Pic. 3. Wave counting of the weekly chart. The alternative scenario.
Within the framework of the nearest alternative scenario the survey picture may look so, as it is shown in picture 3. In this case the dollar may strengthen till the end of the year.
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Pic. 4. wave counting of the weekly chart. The alternative scenario 2.
If the upward movement continues at the larger wave degree than it was considered in the previous alternative scenario, at the end of the year we may expect a large triple zigzag (B) as a part of correctional wave , or a diagonal triangle (5) as a finishing pattern of the global upward impulse , which has been forming since the middle of 2001.
According to some signs this scenario has much lesser chances to be true at the current time than the ones, considered above. It is treated to be alternate.
2. GBP/USDhttp://www.alpari-forex.com/files/pic/docs/3/26461_2289.gif
Pic. 5. Wave counting of the weekly chart. The main scenario.
In accordance with the main scenario the dollar may strengthen till the end of the year (see picture 5).
The main waves (B) and (A) of correction are almost equal (0.78-1.27), which is the optimal proportion for the waves within the horizontal wave structure. The waves balance on the smaller time-frames was considered in the daily wave analysis for April 18, 2007 (see Final Straight).
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Pic. 6. Wave counting of the daily chart. The alternative scenario.
The alternative scenario is shown in picture 6. Within the framework of this variant the final zigzag (a)-(b)-(c) of Y keeps forming and after the short correction (b) the final upward impulse or the diagonal triangle may occur.
This variant may become the main one and complete the expected wave (B) by the regular check point on 02.06.07.
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Pic. 7. Wave counting of the weekly chart. The alternative scenario.
Within the framework of the nearest alternative scenario the survey picture may look so, as it is shown in picture 7. In this case the dollar may strengthen till the end of the year.
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Pic. 8. Wave counting of the weekly chart. The alternative scenario 2.
If the upward movement continues at the larger wave degree than it was considered in the previous alternative scenario, at the end of the year we may expect a large triple zigzag (B) as a part of correctional wave , or a diagonal triangle (5) as a finishing pattern of the global upward impulse , which has been forming since the middle of 2001.
According to some signs this scenario has much lesser chances to be true at the current time than the ones, considered above. It is treated to be alternate.
3. USD/CHFhttp://www.alpari-forex.com/files/pic/docs/3/26461_2293.gif
Pic. 9. Wave counting of the weekly chart. The main scenario.
According to the main scenario the franc has formed the truncated double zigzag (B), which may signal about uncompleted pattern or about the forthcoming upward movement. If the main scenario confirms, the dollar may strengthen till the end of the year (see picture 9).
The main waves (B) and (A) of correction didn’t reach equality (0.78-1.27), which is typical of the horizontal wave structure, but are located at the level optimal for the impetuous double or triple zigzags. The waves balance on the smaller time-frames was considered in the daily wave analysis for April 18, 2007 (see Final Straight).
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Pic. 10. Wave counting of the daily chart. The alternative scenario.
The alternative scenario is shown in picture 10. Within the framework of this variant the final zigzag (a)-(b)-(c) of Y keeps forming and after the short correction (b) the final downward impulse or the diagonal triangle may occur.
This variant may become the main one, complete the expected wave (B) by the regular check point on 02.06.07 and form the full double zigzag (B).
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Pic. 11. Wave counting of the weekly chart. The alternative scenario.
Within the framework of the nearest alternative scenario the survey picture may look so, as it is shown in picture 11. In this case the dollar may strengthen till the end of the year.
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Pic. 12. Wave counting of the weekly chart. The alternative scenario 2.
If the downward movement continues at the larger wave degree than it was considered in the previous alternative scenario, at the end of the year we may expect a large double or triple zigzag (B) as a part of wide correctional wave .
According to some signs this scenario has much lesser chances to be true at the current time than the ones, considered above. It is treated to be alternate.
Note
Given possible trading plans are purely informational purpose only and they should not be considered as trading guides or an invitation to make a transaction.
Reference:
[*]Imaginary Skewer[*]Possible nearest perspectives of the main currency pairs (EWA)[*]Check point. USD fall may continue till May 2007[*]Some Words about CAD[*]Additional Profit on Swaps (EWA of GBP/CHF)[*]Check point. Normal flight.[*]FOREX forecast, 2007[*]Monthly-0407[*]Wave analysis[*]Elliott’s Code: Wave Analysis of the FOREX Market[*]Wave Counting Marking[*]Methods of Price Movement Projection (EWA)[*]How to Apply EWA Forecasts
Dmitry Voznuy
forDmitry@yahoo.comApril 24,2007Do not reproduce without explicit permission of Alpari.
Check Point, Normal Flight
Introduction
In Annual-07 the first significant check point of 2007 on March 17 was indicated on the charts. Taking into account the fault of the key pulse points method on the weekly time-frame the price is just above it. That is why we will present the intermediate results and consider possible scenarios of further movement of the main currencies.
1. EUR/USD
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Figure 1. Wave counting on the weekly chart. The main variant.
According to the main variant the final zigzag of Y should form by June 2007 (the next significant check point). Wave of Y ending is the critical level.
At the same time the upward part of the chart from the end of 2005 supposes several variants of wave counting marking inclusive of the shape of the forming impulse (with some restrains). This gives grounds for an absolutely new interpretation of this pair movement within the last several years. Some of them were considered earlier, one variant was even published in my book (see picture 5-2), though it is not necessary to describe them now.
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Figure 2. Wave counting on the weekly chart. The alternate variant.
According to the alternate scenario in the nearest future the reversal high may form, change of the long-term trend in favor of the dollar is also probable. In this case the ending of the corrective wave or 2 may form above the next key point.
2. GBP/USDhttp://www.alpari-forex.com/files/pic/docs/2/24883_1089.gif
Figure 3. Wave counting on the weekly chart. The main variant.
According to the main variant the final zigzag Z should form by June 2007 (the next significant check point). Wave XX of (B) or (X) ending is the critical level.
At the same time the upward part of the chart from the end of 2005 supposes several variants of wave counting marking inclusive of the shape of the forming impulse (with some restrains). This gives grounds for an absolutely new interpretation of this pair movement within the last several years. It is not necessary to describe them now.
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Figure 4. Wave counting on the weekly chart. The alternate variant.
According to the alternate scenario in the nearest future the reversal high may form. In this case the ending of the corrective wave or 2 may form above the next key point.
3. USD/JPYhttp://www.alpari-forex.com/files/pic/docs/2/24883_1091.gif
Figure 5. Wave counting on the weekly chart. The main variant.
According to the main variant supposed wave (B) is forming in the shape of the (extended) flat. Its ending may be expected by the end of June 2007. Wave B of (B) ending is the critical level.
http://www.alpari-forex.com/files/pic/docs/2/24883_1092.gif
Figure 6. Wave counting on the weekly chart. The alternate variant.
According to the alternate scenario the final wave (C) of the upward zigzag is forming in the shape of the diagonal triangle. Wave (B) of ending is the critical level.
4. USD/CHFhttp://www.alpari-forex.com/files/pic/docs/2/24883_1093.gif
Figure 7. Wave counting on the weekly chart. The main variant.
According to the main variant the final zigzag of Y should form by June 2007 (the next significant check point). Wave of Y ending is the critical level.
At the same time the downward part of the chart from the end of 2005 supposes several variants of wave counting marking inclusive of the shape of the forming impulse (with some restrains). This gives grounds for an absolutely new interpretation of this pair movement within the last several years. It is not necessary to describe them now.
http://www.alpari-forex.com/files/pic/docs/2/24883_1094.gif
Figure 8. Wave counting on the weekly chart. The alternate variant.
According to the alternate scenario in the nearest future the reversal high may form, change of the long-term trend in favor of the dollar is also probable. In this case the ending of the corrective wave or 2 may form above the next key point.
Note
Given possible trading plans are purely informational purpose only and they should not be considered as trading guides or an invitation to make a transaction.
Reference:
[*]FOREX forecast, 2007[*]Monthly-0407[*]Wave analysis[*]Elliott’s Code: Wave Analysis of the FOREX Market[*]Wave Counting Marking[*]Methods of Price Movement Projection (EWA)[*]How to Apply EWA Forecasts
Dmitry Voznuy
forDmitry@yahoo.comMarch 22, 2007Do not reproduce without explicit permission of Alpari IDC Corp.
Additional Profit on Swaps (EWA of GBP/CHF)
Introduction
Lately I have received a lot of letters with questions relating to GBP/CHF. Current situation deserves traders' attention, in spite of the fact that I have not released GBP/CHF wave counting before.
http://www.alpari-forex.com/files/0702/070219231558.gif
Figure 1. Wave counting on the weekly chart.
GBP/CHF is supposed to be forming some corrective structure in the shape of upward double (triple) zigzag. If the supposition is correct, finishing of impulse C of (Y) is required for its completion. Let's consider this impulse in details.
http://www.alpari-forex.com/files/0702/070219231649.gif
Figure 2. Wave counting on the daily chart.
The first active waves of impulse C are almost equal in length ( = ~). Chances are great that the fifth wave of C will form in the shape of the extension.
The second leg of impulse C has assumed the shape of a shallow extended flat (35%), having formed a new extremum (wave (b) of ). According to the rules, the fourth wave iv has begun to assume the shape of a sharp and deep double (or triple) zigzag, having reached 50% mark. Its forming is supposed to be uncompleted yet, though the minimum requirements for the fourth impulse waves have been fulfilled:
[*]MACD has broken the zero line,[*]the price is at the lower edge of the channel and[*]the price has almost reached the area of the fourth wave (iv) of of the previous wave level.
Thus, wave of C may complete soon.
Moreover, wave of C has formed with an extension in the fifth wave (v) of , which reminds me of Elliott's double retracement (see pictures 2-8 in my book). The first retracement in the shape of wave is almost completed. Trend reverse upwards and upward second retracement in the shape of the finishing impulse C of wave should be expected.
The lowest target of uptrend may be ~2.48, which is a bit above the high of the third wave – 2.4755 and 127% mark (2.4785) of the first leg A of zigzag (Y) (refer to Figure 1).
The high of the first wave of C – 2.3771 is the critical level for the accepted scenario. This level may be broken in the short run on marginality of the FX market.
Judging by the information given above it is time to open long positions. Moreover, this cross rate has positive swaps in this direction (Figure 3 below), which produces rather significant additional profit in case of mid- and short-term long positions.
http://www.alpari-forex.com/files/0702/070219231947.gif
Figure 3. Estimated data on GBP/CHF.
Aggressive traders may open long positions now. Even in case of 3-4 figure drawdown, they will get an additional bonus (positive swaps).
Conservative traders should better wait for confirmation of the trend reverse upwards.
In any case this report reveals the analyst opinion of the situation at the moment of its release. That is why it should not be considered as a trading guide.
Addition (February 21, 2007)
http://www.alpari-forex.com/files/0702/070221083935.gif
Figure 4. Wave counting on 120 min chart.
Possible scenario of supposed wave of C forming in the shape of the triple zigzag is given in Figure 4.
Addition (February 28, 2007)
http://www.alpari-forex.com/files/0702/070228080036.gif
Figure 5. Wave counting on 120 min chart.
Possible scenario of supposed wave of C completion in the shape of the triple zigzag is given in Figure 5.
Addition (March 02, 2007)
http://www.alpari-forex.com/files/0703/070302090513.gif
Figure 6. Wave counting on 120 min chart.
Possible scenario of supposed wave of C completion in the shape of the triple zigzag is given in Figure 6. 2.3831 is the critical level for this scenario.
Addition from 22.03.07
http://www.alpari-forex.com/files/pic/docs/3/25784_2382.gif
Figure 7. Wave counting of weekly chart.
Unfortunately the supposed scenario wasn’t confirmed, as the critical levels were broken. The final wave of zigzag (Y) will take the form of the diagonal triangle or this zigzag is already completed.
If to refer to the daily chart…
http://www.alpari-forex.com/files/pic/docs/3/25784_2383.gif
Figure 8. Wave counting of daily chart.
…we see that the downward zigzag (a)-(b)-(c) of ? is supposed to develop. Its correction (b) of is completed. If the long positions were opened, it’s better to close them right mow (refer to figure 9 below).
Short positions open on this pair is justified, but the decision remains after traders.
http://www.alpari-forex.com/files/pic/docs/3/25784_2384.gif
Figure 9. Copies of trading transactions with the chart.
Final trading GBP/CHF transactions on the demo account are represented in figure 9. The first buy was done at the moment of the article writing. The next 3 buys were done quite after 2 figures within the month.
The resulting drawdown proved to be ~6 figures, but not 3-4 as it was expected, as the supposed scenario was false. However, only the first transaction was unprofitable. Additional profit on swaps on all the transactions made ~25% of the whole profit and made ~$800.
Copies of trading transactions with the chart may be downloaded below.
[*]http://www.alpari-forex.com/i/i-zip-big.gifCopies of trading transactions with the chart. 18.91 Kb
Reference
[*]Imaginary Skewer[*]Possible nearest perspectives of the main currency pairs (EWA)[*]Check point. USD fall may continue till May 2007[*]Some Words about CAD
[*]FOREX forecast, 2007[*]Monthly-0207[*]Wave analysis[*]Wave Counting Marking[*]Methods of Price Movement Projection (EWA)[*]How to Apply EWA ForecastsDmitry Voznuy
forDmitry@yahoo.comFebruary 19, 2007The ideas given above are purely informational purpose only. This report was translated by Natalya.
Do not reproduce without explicit permission of Alpari.
How to Apply EWA Forecasts
Introduction
From time to time, especially when new visitors come to the web-site of Alpari Ltd., I receive letters concerning forecasts on the basis of the wave analysis (EWA — Elliott Wave Analysis). Some beginners try to understand the situation on the market and the main principles of the wave theory and apply it. Others begin with critics, claims and advice. After a brief correspondence misunderstanding or superficial knowledge of the principles of the wave analysis becomes apparent, as well as desire to get a real profit from someone else’s forecasts, even without reading the materials on the topic.
I will try to answer some of the frequently asked questions here in order to save your and my time in the future. Where necessary, I will reference to the more complete information.
So,
What is Wave Analysis?
From my point of view this is one of the most powerful and flexible instruments of the graphical analysis and financial markets projection. Wave Principle, originated from Charles Dow’s theory, was developed by Ralf Nelson Elliott. Moreover, some elements of wave patterns structure are given in book «Profits in the Stock Market», by Harold M. Gartley, 1935, published three years before the first book on the Wave Principle of Ralf Elliott. Fibo coefficients were not mentioned in that book, they have appeared later, when those materials were retold by our contemporaries (e.g., Fibonacci Ratios with Pattern Recognition by Larry Pesavento, 1997).
In the context of modern wave theory any financial chart is a reflection of sentiments of the market participants. Indeed, looking at the formed chart it is not difficult to specify when bulls or bears won in the market and when they were almost equal in strength. But Elliott was the only one who managed to specify separate patterns of price movement in each phase of the market, then he compiled the list of wave patterns, which described any possible market movement, and specified their mutual influence and the main regularities of their recurrence. On the back of this information further market movement can be forecast in the shape of this or that wave pattern projection, supposing, what the chart will look like in the future.
I think I should not retell the basis of the Wave Principle here, as it is given in Wave analysisand my book Elliott’s Code: Wave Analysis of the FOREX Market. Note that this information should be studied carefully rather than just looked through.
At the same time, I would like to draw your attention to the fact that the Wave Principle is not a finished trading system, which yields profit, but a complicated prognostic instrument, with the help of which such a system can be created.
What Information EWA Forecast Provides
Any EWA forecast is based on the survey wave counting, that is on the supposed set of interrelated wave patterns, which in the author’s opinion has been formed by the market. With the help of it we can understand what phase of the market it is now, whether we should open a position immediately or it’s better to wait till the current wave pattern completes.
The type and peculiarities of the forming pattern are assumed on survey wave picture analysis. If its forming is confirmed and it is doubtless, on this time-frame it gives us in addition supposed direction and the shape of further price movement as well as possible projection of the point of this pattern completion, that is projection of supposed point of the trend reverse.
It should be noted that EWA is not formalized enough, that is why any wave scenario is quite subjective. Unfortunately, «the true» counting is impossible because of such nonmathimatic nature of this forecast instrument, and disputes over the correct view on this or that wave construction become useless, any waver just has his own perception of waves. Moreover, one and the same part of the chart can be marked differently with the set of different wave pictures because of the lack of unique methods of wave patterns specification and presentation of the general wave picture, that is why a variety of alternate variants of wave counting arises. In this case, as a rule, most probable scenario from the point of view of an analyst (P >> 50%) is taken as the main scenario, other variants are considered to be alternate ones.
For each scenario clear-cut boundary conditions of its existence are specified. As a rule, these are critical and confirmatory levels, which breakout finally confirms or annuls the chosen variant. It is quite usual when a critical level of the main variant is a confirmatory level for the alternate scenario and vice versa. Sometimes price can be fluctuating between such levels, giving rise to a variety of new intermediate variants of wave counting and turning the scale in favor of one variant and then in favor of another one. At such moments the main and alternate scenarios may be almost equally probable (P = ~ 50%) before the price breaks the boundary levels, specified before, or before the wave picture changes principally.
As a rule, the state of dynamic equilibrium is observed when a corrective phase of the market is forming or when a trend breaks out. From the practical point of view there are several ways to avoid such a situation. The easiest one is to be out of the market, waiting for the wave picture to clear up. The most aggressive way is to go to a smaller time-frame and make short-term trading plans there. The most conservative way is to go to a larger time-frame without closing positions and wait until the correction ends or the accepted scenario is annulled or confirmed (for the H4 time-frame and larger ones it is reasonable when swaps are positive, leverage is small and positions are long-term).
The Choice of the Optimal Time-frame
From my point of view, an optimal time-frame is a time-frame, which allows to see the full current picture on the chosen wave degree, as well as every necessary detail and further perspective (projection) of the price movement according to the accepted scenario. Though a time-frame is not enough to have an idea about the full wave picture, wave specification is better to be considered successively from the Grand Supercycle to the Micro-6.
As there is no unique link between wave degrees and time-frames and no more than 3-4 wave degrees can be clearly seen in a chart of a usual size, it has been found out in practice that shift from a larger degree to the smaller one can be done discretely, when time-frames of the charts are approximately 3..6 times different. In this case succession of the general wave picture is preserved between the charts.
That is why in my EWA forecasts, as a rule, monthly, weekly, daily, 480-min and 120-min charts are used. In case it is necessary, I can use 720-min and 360-min charts, in some cases any appropriate chart from 90-min to 1-min can be used to specify waves (e.g. refer to Basement-0604).
In annual forecasts monthly and weekly charts are mainly used, in monthly forecasts — weekly, daily and 480-min charts whereas in daily forecasts 480-min, 120-min and other charts are used (if necessary). In this case succession of the wave picture is preserved from the larger degree to the smallest one.
Why are 120-min charts a usual minimum specification of the current market? The reason is quite simple, the smaller the time-frame, the more possible scenarios of the current wave counting arise thus losing the general wave picture and the trend of the market. That is why it was specified in practice that price noise of the Forex market giving rise to a variety of «false» scenarios is not as obvious on 120..60 min charts as on the smaller charts. At the same time on the 120-min chart general wave picture can be more clearly seen than on the 60-min chart and succession with 480-min chart is preserved.
At the same time taking a detailed wave counting on the 120-min chart as a basis, any waver can mark all necessary areas with required precision if necessary. Though such additional specification of the earlier marked chart is not so necessary for real trade. It is required only as an «intellectual exercise» or checking of some separate nodal constructions. That is why 120-min chart has been chosen as a usual minimum time-frame.
Conventional Signs, Used in EWA
I am not going to describe Wave Counting Marking in details, its detailed description is given in my book. If you want to understand it you should know it. With the course of time any beginner realizes that understanding of «letters and numbers» combination can help to dip into the future.
I will briefly explain some subjective labeling in EWA forecasts charts (e.g. see Daily-150207).
http://www.alpari-forex.com/files/0702/070216145307.gif
Figure1. Legend for EWA forecasts.
How to Apply EWA Forecasts
Knowing the basis of the wave analysis, a trader can use EWA forecasts as basic data to make his trading plan, as EWA forecasts have:
[*]general concept (reason to open a position),[*]supposed direction of the price movement (direction of a position),[*]the main critical level (original stop-loss) and[*]rough target projection (possible take-profit).More detailed information to make your own trading plan you can find here(in Russian). When the situation in the market clears up, I give graphical recommendations on orientation points of entry and possible targets (e.g. see Daily-150207).
Well, that is not all. That is why beginners who do not know the wave analysis well enough and those who do not know anything about the technique of positions opening and management should not use such EWA forecasts to enter the market as any forecast is just a supposition, which reveals its author’s opinion at the moment of its release. In any case any figure of the trading plan should be understood before a position is opened.
The traders who place orders proactively to catch a new trend at the very beginning, must remember that such strategy is agressive, with high risks. In such a case it is simply necessary to place protective stop orders behind that ending of the wave that you supposedly consider to be the turning point of the local or global trend.
If necessary, this article may be complemented.
Reference
[*]Wave analysis[*]Wave Counting Marking[*]Methods of Price Movement Projection (EWA)Dmitry Voznuy
forDmitry@yahoo.comFebruary 15, 2007Do not reproduce without explicit permission of Alpari.
Some Words about CAD (EWA of USD/CAD)
One of possible variants of wave counting of CAD monthly chart is given in Figure1.
http://www.alpari-forex.com/files/0702/070207165754.gif
Figure 1. Wave counting on the monthly chart.
The fact that supposed wave (3) of has already completed was discussed in the previous articles. Though CAD further movement did not always form in accordance with the forecasts.
At the moment CAD has reached strong resistance at 1.18, having bounced from strong support level at 1.10, thus we can suppose that the trend will reverse against the dollar in the nearest future. Let's consider this part of the chart on the weekly time-frame (Figure 2, below).
http://www.alpari-forex.com/files/0702/070207165843.gif
Figure 2. Wave counting on the weekly chart.
It can be clearly seen in this picture that supposed wave A or (4) has fulfilled the minimum requirements for the fourth impulse waves: the price has reached the upper edge of the channel, MACD has broken the zero line. By the way, note the divergence between the price and this oscillator for waves and of 1 of (3) and for waves 3 and 5 of (3), which is an additional argument in favor of the current variant of wave counting.
At the same time the fact that the current depth of wave A or (4) (~19%) is not very deep can signal that correction is not completed yet. The depth of about 24% and less is more likely characteristic of the horizontal triangles or other extended corrections, which shape is often taken by the fourth waves of an impulse. Consequently, if uptrend assumes the shape of some zigzag construction, we may assume that only the first main wave A of (4) of correction is forming now, rather than the whole correction (4) completes.
Let's consider this part of the chart on smaller time-frames (Figures 3..6, below).
http://www.alpari-forex.com/files/0702/070207165936.gif
Figure3. Wave counting on the daily chart.
Uptrend, which has been forming from last summer, can be shown in the shape of uncompleted double zigzag. Several possible variants of the price further movement arise from incompleteness of the second supposed zigzag .
According to one of them final impulse (c) of the second zigzag completes with diagonal triangle v of (c), forming now (Figures 3 and 4).
http://www.alpari-forex.com/files/0702/070207170040.gif
Figure 4. Wave counting on 720 min chart.
According to this variant ending of wave v of (c) of and the whole double zigzag A? may be expected around 1.1825.. 1.1904.
Then price may fall to the lower edge of the trend channel, at 1.1450 (with further forming of upward triple zigzag A or (4)), or even below, to wave (3) ending (in the shape of wave B of (4)), refer to Figure 3.
Though according to one of the alternate variants current diagonal structure can be only wave iv of (с) of , which is assuming the shape of the skewed triangle (refer to Figures 5 and 6 below and article Skewed Triangles in the Forex market).
http://www.alpari-forex.com/files/0702/070207170135.gif
Figure 5. Wave counting on the daily chart.
In this case ending of wave v of (c) of and the whole double zigzag A? may be expected at the following Fibo lines, e.g. around 1.2035..1.2159 (refer to Figure 6, below) or even above (not considered in the article).
Then parameters of the trend channel will be different (Figure 5).
http://www.alpari-forex.com/files/0702/070207170226.gif
Figure 6. Wave counting on 720 min chart.
I'd like to mention that the given analysis is guidelines only and is subject to change until supposed zigzag completion is confirmed.
Addition on February 12, 2007
http://www.alpari-forex.com/files/0702/070212084959.gif
Figure 7. Wave counting on 720 min chart.
In several days ending of supposed second zigzag formed at one of the calculated values at 1.1874.
Reference
[*]Imaginary Skewer[*]Possible nearest perspectives of the main currency pairs (EWA)[*]Check point. USD fall may continue till May 2007[*]FOREX forecast, 2007[*]Monthly-0207[*]Wave Counting Marking[*]Methods of Price Movement Projection (EWA)[*]Wave analysisDmitry Voznuy
forDmitry@yahoo.comFebruary 7, 2007The ideas given above are purely informational purpose only. This report was translated by Natalya.
Do not reproduce without explicit permission of Alpari
New mid-term fall of USD is possible (EWA of USD/CAD)
In the forecast for 2006 (refer to Annual-06) it was supposed that USD fall ending was possible in autumn 2006 in case complete corrective three pattern had formed by that time. If it did not happen, the dollar fall could continue till May 2007. Once the check point had been reached, the forecast for the main USD pairs was adjusted correspondingly at the end of October (refer to Check point. USD fall may continue till May 2007).
Though USD/CAD has not been adjusted. This pair, though considered optionally, also responds to USD strengthening/weakening.
Possible extension in CAD downward movement, supposed at the beginning of September, has not realized (refer to USD/CAD fall may complete with an extension). But from the mid of 2005 an interesting downward structure formed, which has been treated, with reason, as a diagonal triangle recently (wave 5 of (3) in Figures 1, 2, 3). One of the scenarios of CAD possible movement, which is gaining momentum currently, admits that this diagonal triangle has been completed already (Figures 1, 2, 3).
http://www.alpari-forex.com/files/0612/061213082137.gif
Figure1. Survey wave counting of the monthly chart.
If the assumption about the current counting is correct, wave (3) = ~ (1) x 4.237. Moreover, waves intercrossings inside wave 5 of (3) fit in the pattern of the final diagonal triangle (refer to Figure 2).
http://www.alpari-forex.com/files/0612/061213082222.gif
Figure 2. Wave counting on the daily chart.
In this Figure it can be clearly seen that wave counting of the inner waves of the previous variant of the diagonal triangle has been modified slightly, as price has broken significantly the upper generating line. In case my suppositions are correct, wave counting of the global impulse may look like this (Figure 3).
http://www.alpari-forex.com/files/0612/061213082306.gif
Figure 3. Wave counting on the weekly chart.
According to this variant of wave counting wave 5 of (3) completion is confirmed by the divergence between the endings of waves 3 of (3) and 5 of (3), and between of 5 and of 5.
Moreover, the fourth wave (4) of impulse may also complete soon as price has almost reached the upper edge of the channel of the global impulse. The depth of the retracement of supposed wave (4) currently makes about 12.5% (fibo), which corresponds to the guidelines for alternation of the corrective waves of the impulse. Moreover, MACD 5-34-5 oscillator has crossed the zero line. All that signals that supposed wave (4) has fulfilled the minimum requirements for the fourth waves of the impulse, that is its earliest completion is possible.
Though completion of its wave structure is still the main criterion of the wave possible ending. That is why let's consider its enlarged wave (4) (Figure 4).
http://www.alpari-forex.com/files/0612/061213082350.gif
Figure 4. Wave counting on 720 min chart.
Wave formula of supposed wave (4) is equal to 3-3-5, that is it may be a flat with completing diagonal triangle as wave C of (4). Projection method “trend-to-trend” gives us projection of wave C ending around 1.1555, method “correction-trend” - projection 1.1571 (refer to Methods of price movement projection).
Moreover, supposed diagonal triangle has formed with the longest first wave of C, which places some restrictions on the length of its wave of C, it should not exceed 1.1601 edge. For possible specification of the projections let's refer to the smaller time-frame.
http://www.alpari-forex.com/files/0612/061213082428.gif
Figure 5. Wave counting on 120 min chart.
Final wave of the diagonal triangle is supposed to be assuming the shape of the ordinary zigzag (a)-(b)-(c) of . In case the legs of this zigzag are equal, we get another projection of the pattern completion around 1.1558 (Figure 5).
Thus, in case my suppositions are correct, in the nearest future CAD may reverse its mid-term trend against the dollar. Of course, it should be remembered that we may observe forming of high A of (4) only, that is the first wave of a new correction, rather than of the whole corrective wave (4).
If the wave picture changes or the critical levels are broken, this scenario may be modified or annulled.
Addition (December 15, 2006)
http://www.alpari-forex.com/files/0612/061215091349.gif
Figure 6. Wave counting on 60 min chart.
CAD has reached the projected levels and approached the critical level at 1.1601. Price lacks a small upward thrust to complete impulse (c). According to R. Balan's Fifth Measurement Method (refer to Methods of Price Movement Projection (EWA)) wave v may be equal to the distance between the beginning of the impulse and the high of the third wave iii.
Addition (December 18, 2006)
Several new arguments in favor of USD expected fall are given below.
http://www.alpari-forex.com/files/0612/061218072754.gif
Figure 7. Wave counting on the weekly chart.
RSI has tested its resistance level while price is at the upper edge of the channel, which increases chances of the trend downward reversal.
http://www.alpari-forex.com/files/0612/061218072834.gif
Figure 8. Wave counting on 480 chart.
Price has broken the upper edge of the supposed contracting diagonal triangle C. As a rule, it occurs before the very completion of the diagonal triangle. Moreover,divergence formed between the endings of the third and fifth waves and corresponding endings of oscillators MACD and RSI, which may also signal this pattern completion.
By the way, note that RSI and MACD oscillators are forming the resistance line while price reverses at the lower edge of the trend channel (refer to parts 4.5 and 4.6 in book Elliott's Code: Wave Analysis of the FOREX Market).
http://www.alpari-forex.com/files/0612/061218072917.gif
Figure 9. Wave counting on 60 min chart.
CAD has reached the projected levels, almost approached the critical level at 1.1601 and almost completed forming of the diagonal triangle v of (c). According to R. Balan's Fifth Measurement Method (refer to Methods of Price Movement Projection (EWA) and part 4.4 in book Elliott's Code: Wave Analysis of the FOREX Market) the length of wave v, which has assumed the shape of the diagonal triangle, may be equal to the distance between the beginning of the impulse and the ending of the third wave iii (calculated value is equal to 1.1590).
Though in case price fixes behind the critical level, current wave counting should be adjusted.
Addition (December 19, 2006)
http://www.alpari-forex.com/files/0612/061219082056.gif
Figure 10. Wave counting on 60 min chart.
Some horizontal construction, which may be the fourth wave of the diagonal triangle, e.g. in the shape of the horizontal triangle, is forming now. Though in case price fixes above the critical level, current wave counting should be adjusted.
Summary (December 21, 2006)
http://www.alpari-forex.com/files/0612/061221075348.gif
Figure 11. USD/CAD reversal point projection summary.
The most near-real projective value was reached in the smallest time-frame from those under consideration (projection – 1.1590, real value – 1.1587).
Reference
[*]Imaginary Skewer[*]Project Targets for 2006-2007, USDJPY (Wave Analysis)[*]CAD possible perspectives till 2008 and further (EWA of USD/CAD)[*]Japanese Triangles (EWA of EUR/JPY & GBP/JPY[*]Possible nearest perspectives of the main currency pairs (EWA)[*]Two possible fourth waves till the mid of June (EWA)[*]USD/CAD fall may complete with an extension[*]Possible scenarios of USD strengthening (EWA of CHF, EUR, GBP, JPY, CAD)[*]Check point. USD fall may continue till May 2007[*]FOREX forecast, 2006[*]Monthly Wave Analysis, December 2006[*]Wave Counting Marking[*]Methods of Price Movement Projection (EWA)[*]Wave analysisDmitry Voznuy
forDmitry@yahoo.comDecember 13, 2006The ideas given above are purely informational purpose only. This report was translated by Natalya.
Do not reproduce without explicit permission of Alpari.
Methods of Price Movement Projection (EWA)
This material was released at the book presentation
“Elliott's Code: Wave Analysis of the FOREX Market”
…
A considerable section of the book is devoted to the detailed consideration of the main methods of price movement projection. They are based on statistics of waves correlation inside a pattern, which is given in the book. With the help of these methods the following items can be specified:
[*]Depth of a correction on basis of the previous trend (trend -> correction).[*]Length of a trend on basis of the previous correction (correction -> trend).[*]Size of a price movement on basis of one-type waves correlation:[*]- length of a trend on basis of the previous trend (trend-to-trend),[*]- depth of a correction on basis of the previous correction (correction-to-correction).In the course of the projection in each specific case this or that method can be preferred. Though the results will be more precise, or objective, if as many methods as possible are applied simultaneously on different wave degrees.
http://www.alpari-forex.com/files/0611/061128153303.gif
Figure 1. Robert R.Prechter's Utility Manual for the precision ratio compass.
I would like to note that the foundation of these approaches was laid by the worldwide known waver, Robert R.Prechter, in his brochure of 1985 entitled “Utility Manual for the Precision Ratio Compass”. This is workbook # 7 in his classes. At that time personal computers were not so widely spread and waves were compassed on graph paper, that is why this title survived up to this date, though the brochure was reissued three times. About 10 years ago Robert Miner used this material in his book, having systematized it, which is his contribution, for sure.
Now let's consider the methods, mentioned above, in details in practical examples. They are worth it!
http://www.alpari-forex.com/files/0611/061128153413.gif
Figure 2. Method trend-correction.
Let's begin with the most famous projection method – specification of the depth of a correction on basis of the previous trend. Here actionary wave of the pattern is taken as a fixed reference (blue lines in Figure 2). The depth of the expected correction is calculated by multiplication of the fixed reference by the Fibonacci coefficient, individual for each wave pattern (red lines).
With the help of this method projected depth of the second wave of the impulse can be specified on basis of its first wave length, or the depth of its fourth wave can be specified on basis of its third wave. It is natural, that some statistical figures of expected retracement are characteristic of each wave pattern.
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Figure 3. Method trend-correction to specify wave projection.
As an example let's specify possible depth of correction of supposed zigzag on basis of its first leg length. The very supposition that a zigzag is forming was made as the result of wave picture analysis of the daily and weekly charts, which are not described here.
Refer to Figure 3 for upward impulse , which, supposedly, is the beginning of expected zigzag. The fact that it is an actionary wave, that is the motive phase of the market or trend, is doubtless, as five-wave impulsive movement may be only an actionary wave. Such movement, at first, always points at the direction of the dominating trend of a superior wave degree. In this case upwards, and soon you will make sure that it is really so. Secondly, once it is completed, either correction (at least) or a new trend in the opposite direction forms. Thus, once any actionary wave ends, the nearest movement is expected to be in the opposite direction.
Thus, actionary wave , foregoing expected downward correction, is taken as a reference wave for 100% of the length.
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Figure 4. Method trend-correction to specify wave projection.
Then let's mark Fibonacci's line with supposed retracement figures in the chart. This is a well-known row for a zigzag, 38%, 50% and 62% (Figure 4). It is considered that a classical zigzag forms correction with 62% depth. But, at first, ideal zigzags are quite rear in the market. Secondly, math expectation (that is average value) for the depth of a zigzag correction, according Rich Swannell statistics, is equal to 39%. That is why having marked projected edges watch carefully the structure of the forming waves, as the main criteria of the correction ending will be complicated wave structure of the pattern.
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Figure 5. Method trend-correction to specify wave projection.
Some time later at depth of 38% downward three-wave zigzag a-b-c formed (Figure 5). With some reserve we may suppose that this is the ending of the expected correction, as we have a corrective three pattern, which has reached the first estimated edge. The wrench is that its duration is rather short in comparison with wave duration. That is why it is possible that this three is just the first part of the whole correction. Consequently, expecting nearest upward price movement, keep watching the forming wave structure.
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Figure 6. Method trend-correction to specify wave projection.
Indeed, subsequent upward movement was forming in the corrective, rather than in the motive mode, having formed another three pattern, equal to 117% of the first wave length (Figure 6). Due to the corrective wave structure of this knot we may assume that forming of wave of the zigzag is not completed yet.
As it was the second corrective three after wave , it is logical to suppose that the whole correction is assuming the shape of either a double three or extended flat, or running triangle.
According to the known statistics of Rich Swannel, a flat appears at the place of wave of a zigzag twice as often as a double three. Moreover, in case we consider waves correlation inside the flat, the most probable value for its wave is between 95-130% of its first actionary wave with a math expectation of 114%. Our second three corresponds to 117% of the length of the first one, that is, it's close to the math expectation. Thus, it is logical to assume that the flat will form as a corrective wave of a zigzag, that is, to expect nearest completing price fall in the shape of the impulse or diagonal triangle.
Certainly, once the first two waves of correction formed and conclusion about the supposed shape of the corrective pattern was drawn, these waves should be used as fixed references to specify projection of the finishing ending. I will not do it now not to disturb the order of projection methods consideration.
That is why let's watch downward impulsive structure forming.
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Figure 7. Method trend-correction to specify wave projection.
In Figure 7 you see that in the long run correction in the shape of the extended flat finished with a completed five-wave impulse with extension in the third wave and correct fibo proportions, having reached 61% depth, close to the projected value.
Thus, on basis of the length of the first wave of supposed zigzag we projected its correction ending, wave ending. Then we made sure that it completed at the estimated values. As the zigzag does not finish here, let's continue its projection.
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Figure 8. Survey picture of the corrective pattern on a larger wave degree.
In Figure 8 we see the same two waves of supposed zigzag, but on a larger time frame. In this case we are interested in the area where the final point of our zigzag may be, wave ending. Moreover, it is clearly seen that forming zigzag Y is a component of a larger correction – double or triple zigzag.
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Figure 9. Method trend-to-trend.
That is why the next method, trend-to-trend, is more appropriate to specify completion point of either the ordinary or the double zigzag, actionary wave of a pattern is taken as a fixed reference (blue lines in Figure 9). The length of the projected trend is calculated by multiplication of the fixed reference by the Fibonacci coefficient, individual for every wave pattern (red lines).
With the help of this method projected length of the third wave of the impulse may be specified on basis of its first wave length; or the length of the fifth wave of the impulse on basis of its third and/or first wave; or wave C length of the flat on basis of its wave A. It is natural that some statistical values of the expected trend are typical for each wave pattern.
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Figure 10. Method trend-to-trend to specify wave projection.
In Figure 10 possible schematic projection of the final wave of ordinary zigzag is marked in red. Impulse is taken as a fixed reference again. In contrast to the previous method, coefficients' values will be different.
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Figure 11. Method trend-to-trend to specify wave Y projection.
Moreover, in our case application of this projection method is possible on a larger wave degree, the first zigzag W is taken as a fixed reference instead of impulse (as it is the first actionary wave of the corrective pattern, refer to Figure 11). First of all, it specifies possible points of the pattern completion and then the total of the surrounding project points will form possible values area.
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Figure 12. Method trend-to-trend to specify waves and Y projections.
This is how the area of projected values for our example looks like (red dotted lines in Figure 12). Reference waves are marked in blue, projected lines are marked in red. Moreover the edges of the channels are marked for both the ordinary and the double zigzags. The point of overlapping of the upper edges of the channel is the first project point, which should be paid attention to. That is why the most probable row of values is marked on the projected lines, which is either near this point or exceeds it, in case uptrend will be powerful enough (127%, 162% and 200%).
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Figure 13. Method trend-to-trend to specify waves and Y projections.
Indeed, some time later price reaches the first estimated point, practically with no pauses (Figure 13). Is it the final point of movement of the whole zigzag? It is not confirmed yet. In this case it is highly recommended to check thoroughly completeness of waves of our supposed impulse , and we'll do it. The last upward part is given in the next chart (enlarged view).
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Figure 14. Wave counting draft of supposed wave of Y with a wedge.
It can be clearly seen in Figure 14 that upward nine-wave construction, which may be considered to be a completed impulse , has formed by 1.26. Moreover, upper edges of the channels have been reached already and the length of the impulse corresponds to projected 127% of the length of the first leg of the zigzag.
The only proportional way of this part marking as a completed impulse is the variant with the wedge as its first wave (i). Unfortunately, in this case the third wave iii of (i) of the wedge turns out to be the shortest one among the actionary waves of the wedge, which is a crude violation of the rules. That is why we have to look for a more suitable variant of wave counting. As the first waves of the upward movement overlap significantly, there are two possible variants: either a wedge, which does not suit us, or a sequence of the initial waves 1-2, 1-2 of descending wave degrees.
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Figure 15. Wave counting draft of supposed wave of Y with sequence 1-2, 1-2.
In Figure 15 this variant is given. If our supposition is correct, we may state that the mid of the upward impulse has formed at 1.26, a series of waves 4-5, 4-5, completing impulse , of ascending wave degrees, should be expected. In this case we need some other milestones, other projections.
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Figure 16. Method trend-to-trend to specify waves and Y projections.
The next nearest fibo coefficients for the previous reference waves are taken as new projected values (Figure 16). These are 162% in case of the double zigzag and 200% in case of the ordinary zigzag (green rectangle). As you see, taken one with another they provide us with a quite narrow area of projected values (red dot line).
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Figure 17. Method trend-to-trend to specify waves and Y projections.
As the result, supposed impulse met our expectations and kept rising (Figure 17). In the long run, it finished the full completing of its waves at the area of the projected values, confirming our calculations.
Let's continue our projection. As you know, once any actionary wave is completed, either correction or a new trend in the opposite direction occurs. Our wave Y is such an actionary wave, analysis of the survey picture on the weekly time-frame showed that, supposedly, a triple zigzag, rather than a double one, is forming. Consequently, it is time to project the depth of the second corrective wave X of this zigzag.
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Figure 18. Method trend-correction to specify wave XX projection.
As the more reference waves we have, the more possible projection methods we may apply simultaneously, this projection may be calculated with the help of several methods, as 3 waves of the triple zigzag have formed already (Figure 18). First of all, let's rechannel the trend, as its lower edge is the orientation area, where completion of the second wave X should be expected.
One of possible ways of projection is already known, it is specification of the depth of a correction on basis of the previous trend. It was the first one to consider. In this case zigzag Y acts as a fixed reference. Math expectation of the depth of the retracement in the triple zigzag is equal to 57%, the most probable retracement values are 38%, 50% and 62% of the length of its actionary wave Y.
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Figure 19. Method correction-to-correction.
Moreover, we may use a new projection method, correction-to-correction, when corrective wave of a pattern is taken as a fixed reference (blue lines in Figure 19). The depth of the correction, projected next, is calculated by multiplication of the fixed reference by the fibo coefficient, individual for every wave pattern (red lines).
With the help of this method we may calculate the projected depth of the fourth wave of the impulse on basis of its second wave, or the length of wave D of a triangle on basis of its wave B. Unfortunately, this method is limited in application only in the patterns with five main waves, as only they form the two main corrective waves.
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Figure 20. Method correction-to-correction to specify wave XX projection.
In our case we specify the depth of the second correction X on basis of the depth of the first wave-link of the triple zigzag (Figure 20). Even geometrically it can be seen that corrections in triple zigzags tend to be of an equal size, may be through Fibonacci coefficients. That is why mark in the chart the fibo line with values 78%, 100% and 127% (that is 100% and two nearest values). Math expectation for the second wave-link, according to Swannell's statistics, is equal to 112%.
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Figure 21. Two methods of wave XX projection simultaneously.
This is how our projected lines look like, according to two methods applied simultaneously (Figure 21). Please note that a narrow area of the most probable projected values is at the lower edge of the channel.
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Figure 22. Two methods of wave XX projection simultaneously.
Later on we see that downward correction keeps forming in the shape of the supposed zigzag (Figure 22). Having reached the first projected values around 38% and 78% on the different fibo lines, the price has formed only a part of a correction – the third wave (iii) of the final impulse . The same thing is signaled by the wave structure and the fact that the lower edge of the channel has not been reached yet. Consequently, it is necessary to wait for zigzag XX completion somewhere at the subsequent boundaries.
By this moment in accordance with correction XX several waves have formed already, which may be used for specifying projection on smaller wave degrees. That is why it is high time to shift to a smaller time-frame to specify our projection point.
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Figure 23. Several possible reference waves for specification wave (v) of XX projection.
In Figure 23 wave counting draft of forming correction XX is given. It can be clearly seen, that final impulse of downward zigzag is forming. Its fourth wave has formed in the shape of the truncated zigzag, which foreshadows a powerful fall. Having four completed waves of the impulse we may take any of them, except the second one, as a fixed reference to project the final actionary wave. The first and the third waves of the impulse are appropriate for projection of the fifth wave by trend-to-trend method. To show the new method let's take only the fourth wave of the impulse to specify the length of the trend on basis of the previous correction.
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Figure 24. Method correction-trend.
According to this method corrective wave of the pattern is taken as a fixed reference (blue lines in Figure 24). The length of the projected trend is calculated by multiplication of the fixed reference by the Fibonacci coefficient, individual for every wave pattern (red lines).
With the help of this method projected length of the third wave of the impulse may be specified on basis of its second wave, or the length of wave C of the zigzag on basis of its correction B. It should be mentioned, that this method gives more precise results if projected trend is not forming an extension.
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Figure 25. Method correction-trend to specify wave (v) of XX projection.
In our case to specify the length of the fifth wave of the impulse we take its corrective fourth wave as a fixed reference (Figure 25).
Two additional features of the formed wave construction may provide us with possible projected targets. On the one hand, in our case extension in the fifth wave of the impulse is hardly probable, as it has already formed in the third wave. Consequently, it should not be expected, that the fifth wave will exceed the forth one more, than 1.62 times. On the other hand, the fourth wave formed in the shape of the truncated zigzag - an evident signal of the forthcoming powerful price fall. In this case, vice versa, price may be expected to reach, at least, 162%. Moreover, there is a lower edge of the impulse channel there. That is why let's mark the most probable values 127% and 162% on the Fibonacci line.
As in this case we project the fifth wave of the impulse, we should use the so called "R.Balan's Fifth Measurement Method".
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Figure 26. R.Balan's Fifth Measurement Method to specify wave (v) of XX projection.
Actually, this is a slightly modified method “trend-to-trend”, described earlier, except one thing – the distance between the beginning of the impulse and the ending of the third wave, rather than one actionary wave, is taken as a fixed reference (blue line in Figure 2b). All the rest is the same as in method trend-to-trend. For our case, expecting a deep price fall, foreshadowed by a truncated zigzag, mark on the line 62% and 78%.
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Figure 27. Two methods to specify wave (v) of XX projection simultaneously.
As the result we see that both projection methods provide us with a narrow area of projected values at the lower edge of the channel, close to which the final fifth wave of the impulse ends, crowning correction XX (Figure 27). Price has reached the lower edge of the impulse channel and confirmed our calculations and estimations.
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Figure 28. Four methods to specify wave XX projection simultaneously.
If we pass to a larger time frame now, it can be clearly seen there that all the four projection methods provide us with a narrow area of projected values near the lower edge of the channel (Figure 28). Whereas the second corrective wave X ends close to this area.
As you can see, applying only one-two methods to project the market movement together with the analysis of the current wave structure and trend channeling, one can get good results. Whereas application of every possible method of projection on different wave degrees simultaneously will make it possible to confirm and specify the areas of projected values additionally.
Reference
[*]Imaginary Skewer[*]Project Targets for 2006-2007, USDJPY (Wave Analysis)[*]CAD possible perspectives till 2008 and further (EWA of USD/CAD)[*]Japanese Triangles (EWA of EUR/JPY & GBP/JPY[*]Possible nearest perspectives of the main currency pairs (EWA)[*]Two possible fourth waves till the mid of June (EWA)[*]USD/CAD fall may complete with an extension[*]Possible scenarios of USD strengthening (EWA of CHF, EUR, GBP, JPY, CAD)[*]Check point. USD fall may continue till May 2007[*]FOREX forecast, 2006[*]Monthly Wave Analysis, November 2006[*]Wave Counting Marking[*]Wave analysisDmitry Voznuy
forDmitry@yahoo.comNovember 28, 2006The ideas given above are purely informational purpose only. This report was translated by Natalya.
Do not reproduce without explicit permission of Alpari.
Check Point. USD Fall May Continue till May 2007.
At the beginning of January the forecast for 2006 was released (refer to Annual-06). It is too early to cast the total, it will be done at the end of the year, but it is high time to adjust possible scenarios of movement in the nearest months of the currencies under consideration, as they have reached projected check point. Let me cite quite a small extract from the January annual articles.
“... Further price movement will depend on different data, if, once the trend is reversed (against the dollar*), completed three-wave pattern forms by November, 2006, its high/low may be the second high/low of many-month extended correction. In this case further prices movement will be defined with the help of the wave picture and mutual waves correlation. Otherwise the US Dollar decline may last at least till May, 2007.”
Thus, with the help of the key pulse points method, two possible dates of the second wave of global correction (B) of (for the yen – wave (B) of ) ending were specified in January. In the long run the global correction may be the elementary corrective pattern (zigzag, flat), more complicated correction (double zigzag, double combination) or assume more complicated shape of the extended correction, that is consist of five main waves (horizontal or skewed triangle, triple zigzag, triple three).
For illustrative purpose survey wave counting of monthly charts from the annual analysis is given.
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Figure 1. USD/CHF survey wave counting.
(Refer to Figure C2)
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Figure 2. EUR/USD survey wave counting.
(Refer to Figure E2)
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Figure 3. GBP/USD survey wave counting.
(Refer to Figure G2)
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Figure 4. USD/JPY survey wave counting.
(Refer to Figure Y2)
It should be noted that the method of the key pulse points helps to project possible trend reversal points or their limit values, that is check points, in which supposed scenario is either confirmed or annulled. It happened with the limit date of the trend reversal point against the dollar in spring this year (refer to Possible nearest perspectives of the main currency pairs (EWA)
Again we have come to another check point, specified at the beginning of the year. What do we see? Unfortunately, there is no simple completed movement against the dollar in the chart (refer to Figures 5..8 below).
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Figure 5. USD/CHF wave counting of supposed wave .
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Figure 6. EUR/USD wave counting of supposed wave .
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Figure 7. GBP/USD wave counting of supposed wave .
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Figure 8. USD/JPY wave counting of supposed wave .
The reversal point, which theoretically may be considered to be wave (B) ending, is marked with a black arrow in the last charts. Though further price movement is rather of a corrective, then of an impulsive character. That is why such scenarios, though still taken into account, are not on the front burner.
Thus, in accordance with the annual forecast (refer to Annual-06) and current wave picture it is logical to assume that the trickiest corrective wave (B) is still forming and “... USD fall may continue at least till May 2007.”
Possible scenarios of expected spring-autumn price reversal in favor of the dollar are given in Figures 9.. 12 below. New check points for this or that variant are also given there (date limit values for projected reversal points).
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Figure 9. Possible scenarios of USD/CHF further movement.
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Figure 10. Possible scenarios of EUR/USD further movement.
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Figure 11. Possible scenarios of GBP/USD further movement.
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Figure 12. Possible scenarios of USD/JPY further movement.
I would like to note that any forecast is just a supposition until it is confirmed by real prices movement.
For detailed wave counting on smaller time frames, support/resistance levels and parameters of possible trading plans refer to monthly and daily reports.
Reference
[*]Imaginary Skewer[*]Project Targets for 2006-2007, USDJPY (Wave Analysis)[*]CAD possible perspectives till 2008 and further (EWA of USD/CAD)[*]Japanese Triangles (EWA of EUR/JPY & GBP/JPY[*]Possible nearest perspectives of the main currency pairs (EWA)[*]Two possible fourth waves till the mid of June (EWA)[*]USD/CAD fall may complete with an extension[*]Possible scenarios of USD strengthening (EWA of CHF, EUR, GBP, JPY, CAD)[*]FOREX forecast, 2006[*]Wave Counting Marking[*]Wave analysisDmitry Voznuy
forDmitry@yahoo.comOctober 28, 2006The ideas given above are purely informational purpose only. This report was translated by Natalya.
Do not reproduce without explicit permission of Alpari
Possible scenarios of USD strengthening (EWA of CHF, EUR, GBP, JPY, CAD)
Introduction
In Annual-06 the reference point for the current wave picture adjustment and possible correction of further forecast (the second half of October 2006) was specified with the help of the key pulse points method. By that time supposed wave (B) or (X) in the shape of some “three” pattern completion was expected with subsequent change of the direction of the global price movement in favor of the dollar.
Approximately five weeks left before the projected reference point, the closer we are the more nervous and unpredictable short-term price movement of the majors becomes. Unfortunately, at such periods of the global trend break wave counting becomes multi-variant that makes it difficult to analyze current situation and to forecast further movement of the currencies.
The most urgent question now is when the global trend in favor of the dollar reverses or it has already happened. Survey wave counting of the described dollar pairs signals that for three main pairs (EUR, GBP, CAD) global trend has not reversed yet, though, probably, it will do it soon. According to wave pictures of CHF and JPY currency pairs trend may have reversed in favor of the dollar already at the mid of May this year. Most probable wave counting of the majors (from my point of view) is given below. Let's consider it in more detail.
USD/JPY
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Figure 1. Wave counting of USD/JPY on the weekly chart.
This scenario (Figure 1) was given in Monthly-0906. According to this variant final upward impulse (C) of zigzag is forming. Now corrective wave 2 of (C) is supposed to be forming, it may assume the shape of the flat and complete above the key pulse point about the twentieth of October (Figure 2).
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Figure 2. Wave counting of USD/JPY on the daily chart.
Supposed zigzag of 2 completion is not confirmed yet (though judging by the wave pattern we may suppose it). That is why possible projection of wave 2 completion was specified by support/resistance levels and classical proportions of the flat pattern. 113.0-114.0 around 50% of fibo retracement are the preferable values for wave 2 completion.
Thus according to the main scenario the nearest USD/JPY fall is expected in the shape of the impulse or diagonal triangle approximately by 500 points within 5 weeks and only then USD strengthening is expected to continue.
At the same time according to the alternate variant wave 2 may be already completed (it is given in grey color). In this case uptrend will continue after a slight downward retracement, confirming level will not be tested.
EUR/USD
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Figure 3. Wave counting of EUR/USD on the daily chart.
From the mid of May the euro is moving in the shape of the horizontal pattern, several variants of wave counting are probable. For example, according to one of them the second wave X is still forming in the shape of the horizontal triangle or another extended correction.
In Figure 3 the main scenario is given, in accordance with it wave of the final zigzag Z is almost completed. As it is not confirmed yet (though it it probable judging by the wave structure) projected figures of wave Z completion are given on the basis of triple zigzag W-X-Y-X-Z waves rather than final zigzag -- of Z waves. Though in Figure 3 it is clearly seen that with classical legs correlation of zigzag ( = ) projected value of zigzag Z completion coincides with the projected area of triple zigzag (B) or (X) completion (it is given in the chart in the shape of the red-yellow ellipse). The triple zigzag may complete above successive key pulse point around the twentieth of October.
Thus according to the main scenario the nearest EUR/USD rise is expected in the shape of the impulse or diagonal triangle approximately by 500 points within 5 weeks and only then USD strengthening is expected.
At the same time according to the alternate variant wave Z may be already completed (it is given in grey color). In this case downtrend will continue after a slight upward retracement, confirming level won't be broken.
GBP/USD
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Figure 4. Wave counting of GBP/USD on the daily chart.
This article was given in Daily-070906. According to this variant the second leg of zigzag Y may be almost completed (Figure 4). Currently final wave (v) of impulse is forming, it may complete above the key pulse point around the twentieth of October. Projected area of possible ending of the double zigzag is given in the chart in the shape of the red-yellow ellipse.
Thus according to the main scenario the nearest GBP/USD rise is expected in the shape of the impulse or diagonal triangle approximately by 500 points within 5 weeks and only then USD strengthening is expected.
At the same time according to the alternate variant uptrend may be already completed. In this case downtrend will continue after a slight upward retracement, confirming level won't be broken.
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Figure 5. Wave counting on the daily chart of GBP/USD. Alternate variant.
One of possible alternate variants is given in Figure 5. In this case uptrend is within the bounds of the triple zigzag and it is completed already.
USD/CAD
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Figure 6. Wave counting on the daily chart of USD/CAD.
This scenario was given in article USD/CAD fall may complete with an extension. Downward wave 5 is forming in the shape of the diagonal triangle which completion is expected at the second half of October, in synchrony with the majors. As waves iii and i are almost equal (iii > i) it was supposed that the final wave may assume the shape of the extension. Projected area of possible ending of the diagonal triangle is given in the chart in the shape of the red-yellow ellipse.
Thus according to the main scenario the nearest USD/CAD fall is expected in the shape of the extension approximately by 500-600 points within 5 weeks and only then USD strengthening is expected to begin.
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Figure 7. Wave counting of 720 min chart of USD/CAD.
It is clearly seen in Figure 7 that wave iv of (c) has moved behind wave i of (c) high. Such an exception is possible in marginal markets though it still remains an exception to the rules. If price breaks the critical level (wave ii ending) wave (c) forming in the shape of the downward diagonal triangle is possible or this scenario may be changed completely.
USD/CHF
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Figure 8. Wave counting of daily chart of USD/CHF. Alternate variant.
On Friday price exceeded the critical level of CHF having called the previous calculations into question. In fact, in Figure 8 it is clearly seen that the previous critical level has been broken as well as the upper edge of downtrend channel. That is why wave counting draft given in Figure 8 may be treated only as an alternate variant.
Moreover price fall to, at least, 1.18 point is necessary to confirm this scenario, that is price should pass no less than 800 points. Taking into account expected movement by 500-600 points of the currency pairs described in the nearest five weeks, such a movement is hardly probable.
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Figure 9. Wave counting of daily chart of USD/CHF.
CHF scenario with already started strengthening of the dollar seems to be more attractive now. According to this variant upward wave A or 1 has formed already in the shape of the wedge. Currently corrective wave B or 2 is forming, supposedly, in the shape of the flat which may complete at the end of October.
Unfortunately, it is not confirmed yet that supposed zigzag of B or 2 is completed (though we may assume it by the wave structure), that is why possible projection of wave B or 2 completion was specified by support/resistance levels and classical proportions of the flat pattern. 1.21-1.22, around 62% of fibo retracement, are preferable values for wave B or 2 completion.
Thus according to the main scenario the nearest USD/CHF fall is expected in the shape of the impulse or diagonal triangle approximately by 500 points within 5 weeks and only then USD strengthening is expected to continue.
At the same time according to the alternate variant wave B or 2 may be already completed (it is given in the chart in grey color). In this case uptrend will continue after a slight downward rebound, the confirming level won't be broken.
I would like to note that described variants of USD strengthening are not the only possible ones.
Reference
[*]Imaginary Skewer[*]Project Targets for 2006-2007, USDJPY (Wave Analysis)[*]CAD possible perspectives till 2008 and further (EWA of USD/CAD)[*]Japanese Triangles (EWA of EUR/JPY & GBP/JPY[*]Possible nearest perspectives of the main currency pairs (EWA)[*]Two possible fourth waves till the mid of June (EWA)[*]USD/CAD fall may complete with an extension
[*]FOREX forecast, 2006[*]Monthly Wave Analysis, September, 2006[*]Wave Counting Marking[*]Wave analysisDmitry Voznuy
forDmitry@yahoo.comSeptember 17, 2006The ideas given above are purely informational purpose only. This report was translated by Natalya.
Do not reproduce without explicit permission of Alpari.
USD/CAD fall may complete with an extension
In article CAD possible perspectives till 2008 and further (EWA of USD/CAD) on March 23, 2006 perspectives of CAD movement were described:
[*]Expected downward trend reverse around 1.1750.[*]Forming of supposed downtrend up to 1.0610 with several intermediate targets (1.1040, 1.0850).[*]Once 1.1079 is tested wave correlation of the alternate scenario applies a classical value.I would like to note that trend reversed downwards at 1.1770. Moreover the first intermediate target has been already reached (the minimum value is 1.1029), currently the price has stopped at 1.1047.
As during almost a half of the year once the article was released new data appeared and new wave patterns were formed, it would be logical to check and adjust current project targets. The main variant remained unchanged and it was described in details in March. That is why let us refer to the alternate scenario, mentioned in the March article in passing. Moreover, price has reached 1.1079 when supposed wave (3) of the alternate variant becomes 4.237 times (Fibo) longer than wave (1).
From the point of view of the nearest price movement and specification of the point of upward trend reverse, the main and the alternate scenarios do not contradict each other, they differ in the shape and depth of the price movement following upward reverse.
http://www.alpari-forex.com/files/0609/060903203525.gif
Figure 1. Wave counting draft on the weekly chart.
In Figure 1 alternate scenario is given. In accordance with this variant supposed wave (3) of the global downward impulse is almost completed. It represents an impulse with extension in the first wave 1. Thus in case the supposition about the wave picture is correct, the fifth wave 5 should be the shortest wave among the valid waves of impulse (3). The limit value for the fifth wave is given in the chart in the shape of the red dashed line (1.0447).
Wave 5 of (3) is interesting, it represents quite a rare example of expanding diagonal triangle (Figure 2) as its waves and do not overlap. Such an example was published in the famous book of Alfred J. Frost and Robert R. Prechter (Lesson 5, figures 1-18).
http://www.alpari-forex.com/files/0609/060903203619.gif
Figure 2. Wave counting draft on the daily chart.
Skewed triangle acts as the fourth wave of 5 of the supposed diagonal triangle (wave 5), emphasizing that the pattern will complete soon. Moreover, zigzag or its derivatives are the most widely spread patterns in the triangle, whereas the fifth wave of 5 is supposed to be assuming the shape of the zigzag (a)-(b)-(c), currently its final leg (c) of of 5 is forming.
Possible projected targets are given in the chart in the shape of the red-yellow ellipse. These projections were calculated with the help of the main waves of the diagonal triangle and first waves (a) and (b) of zigzag of 5.
At the same time two active waves of the final impulse (c) of may be already formed (waves i and iii), with their help kind and targets of CAD final movement may be specified (Figure 3).
http://www.alpari-forex.com/files/0609/060903212532.gif
Figure 3. Wave counting draft on the 720min chart.
In Figure 3 CAD price movement after March forecast is given. In case zigzag assumes the shape with the classical waves correlation (that is, (c) = (a)), completion of its second leg may be expected around 1.0616.
Moreover, judging by current wave structure of impulse (c) of we may assume that its waves i, ii and iii have been already formed. In case the supposition is correct approximate equality of waves i and iii is obvious. In this case it is logical to expect the final impulse v of (c) to form in the shape of the extension that makes this area attractive for short positions opening once corrective wave iv is completed.
http://www.alpari-forex.com/files/0609/060903212619.gif
Figure 4. Wave counting draft on the 240 min chart.
Taking into account the fact that the depth of wave ii of (c) made 51% (Figure 4), in virtue of the alternation guideline we may assume that correction iv of (c) will not be deep and will complete between 1.1090..1.1140 (24%..38%). Moreover, wave i of (c) (1.1172) completion is the critical level for this wave counting. It is most probable that expected wave iv of (c) will assume the shape of a shallow horizontal extended correction.
In case suppositions are confirmed (and these are just suppositions), USD/CAD downward movement may complete around ~1.0650 practically in synchrony with the European currencies (refer to Monthly-0906).
Addition (September 29, 2006)
http://www.alpari-forex.com/files/0609/060929081222.gif
Figure 5. Wave counting on the daily chart.
According to the variant in Figure 5 wave (b) of of the final zigzag of diagonal triangle 5 is assuming the shape of the horizontal triangle.
Targets adjustment with the help of the main waves of zigzag is reasonable only after wave (b) completion. Preliminary, wave (c) of ending may get into the projected area if its length makes about 62%... 78% of wave (a) of length.
Reference
[*]Imaginary Skewer[*]Project Targets for 2006-2007, USDJPY (Wave Analysis)[*]CAD possible perspectives till 2008 and further (EWA of USD/CAD)[*]Japanese Triangles (EWA of EUR/JPY & GBP/JPY[*]Possible nearest perspectives of the main currency pairs (EWA)[*]Two possible fourth waves till the mid of June (EWA)[*]FOREX forecast, 2006[*]Monthly Wave Analysis, September, 2006[*]Wave Counting Marking[*]Wave analysisDmitry Voznuy
forDmitry@yahoo.comSeptember 3, 2006The ideas given above are purely informational purpose only. This report was translated by Natalya.
Do not reproduce without explicit permission of Alpari.