Elliott Wave analysis on weekly charts

Elliott wave analysis is the most fascinating method to forecast the waves and the direction of any instrument. Elliott developed the wave principle as a tool to understand the current market position of the price. But Elliott wave analysis also can provide important clues about the immediate future.

USD Index

Wave analysis - USD index ready for breakout

USD Index chart waves are not labelled, but as you can see, a possible ABC flat is complete in the monthly chart. The market may be in the first wave of the next impulse up. However, the market can also create another corrective pattern connected by an X wave. In which case the price is currently in the X wave.

The beauty is though, regardless of the current wave is an X or wave-1 the direction to expect does not change. So Usd index is bullish for the foreseeable future.

If the USD is in a bullish wave, other USD crosses are likely to follow suite. Now, this is not entirely true when the dominant currency is not USD in overall forex market. In other words – when USD index is indecisive, the other currency that is paired to the USD, can be the dominant factor.

USDCAD Wave analysis

Wave analysis - usdcad-w-7-7-16-ew-forecast

The chart speaks for itself. The next impulse to come is the C wave of the Supercycle (green in brackets.) The price is at a crucial point as the B wave (green in brackets) seems to be complete at this point. An impulsive breakout of the B wave structure will give us confirmation of the C wave – possibly in progress right now.

note: The first bullish-red-arrow seems quite small in the image. Given that its a weekly chart, the seemingly narrow range is in fact enormous in the context of intraday trading. In terms of numbers, it’s actually around 400 pips.

Fibonacci analysis

You might need bit of an explanation regarding the fibs on the chart. There are 3 fibs plotted on the chart. Actually 4, but one of them is not clearly visible except for the 0.382 level of the preceding large impulse. Two fib extensions from both the A waves (orange and green,) and the fib retracement of the larger A wave (orange) are plotted on the chart.

Expected turning point marked by the red arrow, is an interesting level. Because there is confluence of the 1.272 extension of the A wave of the lower degree (green) and the 0.382 retracement of the A wave of the higher degree (orange.) Although not shown on the chart, the length of the projected C wave is the exact length of the A wave – pip to pip.

The green zone is the space between 0.382 and 0.618 retracements of the A wave (orange.) In a typical ABC ZigZag B wave usually retraces 38% to 61.8% of the preceding A wave. Its not a hard and fast rule, but certainly a good  guideline. On the other hand it’s also quite a broad range of pips, specially in the weekly chart.

Another very important characteristic of the ABC ZigZags is that the overall correction ends (end of C wave) around the starting point of the 4th wave of the preceding 12345 impulse. This behavior too is considered in this forecast.

Could Oil prices tumble down, once more?

This is not to suggest correlation of OIL and CAD, but Oil prices may tumble as a result or perhaps as the cause for the USDCAD bullish wave. It is likely that Oil prices and CAD index will follow the same direction, but need not necessarily correlate in reverse to the USDCAD. None the less, if wave C (first bullish red arrow) is clear and off, its highly probable that Oil prices too will decline.

USDJPY Wave analysis

Wave analysis - usdjpy-w-elliott-waves-forecast-7-7-2016

USDJPY wave count is a tricky one. Our previous labeling was incorrect at certain points. Although start and end points of waves, the overall counting and the forecasting is all the same; the labeling in this image makes much more sense in terms of expectation. Read the previous wave count of USDJPY.

Count of an even higher degree is not feasible at this moment, simply because there is no clarity if the overall 5-wave impulse is wave – 1 or A of an even higher degree. It does not however make a difference in the overall expectation. So it’s not necessary to label the Grand-supercycle degree for the purpose of this forecast.

Obviously, it’s an ABC ZigZag followed by a 5-wave impulse – the basic wave formation in the Elliott wave principle. Everything starts from here. Now the question is though, is the correction complete? The ABC labeling is obvious on the image. If the correction is to continue, the whole ABC will be marked as wave A (expecting a Flat) or wave W (expecting a double or triple-three combination.) For the moment, assuming the correction is complete; the next wave to come is a bullish impulse.

Again, the wave count on USDJPY too falls inline with USD index as well as the USDCAD.

USDCHF Wave analysis

Wave analysys - usdchf-w-7-7-2016

This is the first time a USDCHF wave count on a weekly chart is published on TradePips. Simply because the weekly structure is a very long WXY sideways correction. It doesn’t mean there is no tradable short term moves. However, there is no sense of direction in a long term perspective.

As mentioned above, the Grand supercycle is a WXY (orange,) with the Y wave in progress. The X wave is apparently another WXY of the Supercycle degree (green,) ending with a triangle.

According to Elliott’s WXY guidelines, triangle pattern is always the last component of the combination. He also mentioned that WXY combining two ZigZags is very rare, but in currencies it seems quite common. So the Y wave here could complete as any corrective pattern – ZigZag, Flat or a triangle.

But the immediate expectation is, once again, a bullish move.

 

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