Revision of last post

The aforementioned confirmation point is not correct. I believe the GBP will move long into the 1.6000 to 1.6020 zone and then move short to 1.5888 to complete wave c (circle) of the triangle. From there it has the potential to resume the next long leg that will be labled d (circle).   Again, if it breaks 1.5706 before moving long the triangle formation is invalid and the short has begun in earnest.

Confirmation point

When the GBP breaks 1.6007 in he long direction, this should be solid confirmation that wave c (circle) of the triangle is over and long is the trend for the next 2-3 weeks that will probably terminate near 1.6700. and then move short again.

Revision of long term triangle analysis

In earlier analysis I had claimed that the triangle pattern that I believe has been developing since Aug 5th was complete. This was highly premature. Considering the movement to this point, if this is indeed a developing triangle, it has much further to go. As you can see in the chart below, I now think that leg c (circle) wave is not quite complete yet. It may complete at or below the trend line. The trend line crosses 1.5877 today. As you can see the c (circle) wave is more complex than a (circle) and b (circle) waves. If price goes below 1.57063 this would negate the triangle scenario and signal that the long term short trend is firmly in place. If not then I have drawn a likely completion of the triangle that will led to new recovery highs to approximately 1.7400 over the next several months. From that point the short trend should once again take strong hold.

Long should prevail tonight

I will post some more detailed chart anaylsis tomorrow. I am looking for the long trend to continue, likely to 1.6350. A break of 1.62081 should confirm this analysis

Should trend Predominatly long for days. Final Move!

Okay, This morning I am posting two charts. The first shows what I believe to be an (x) wave triangle that began on Aug 5th 2009 and completed Jan 22nd 2010. Triangles preceed the final actionary wave. The second chart shows the first and second waves after the triangle completion. I have labled them A and B (they may have to be changed to 1 and 2 later, only time will tell). If this is correct, over the next several days or even a couple of weeks, the Sterling should move long in 5 waves. This movement should take it close to 1.6700. Please keep in mind, because this is a post triangle movement, once it is complete, the long trend that began in Jan 2009 will end. Over the next year or more then trend in the GBP will become short.

Short then long

I think It is quite likely we will see a pull back to 1.6140 before it breaks long again to a new high.

Trend is now long

The trend for the next couple of weeks at least should be long. When it is over I expect it will end somewhere near 1.6700. I will post a chart later today to make my case.

Expandig Diagonal. Last wave long

Last night worked out well. Triangles are so easy to trade. I love them. I have relabeled the chart i have posted before. I believe the structure that is developing since 12/30/09 is an expanding diagonal. If this interpretation is correct, this is the fifth leg and should be very easy to trade because expanding digonals ALWAYS end beyond the third wave. In this case the one marked wave .iii . This means the new long move should end beyond 1.64573 with and ending target of at least 1.6638 and probably stay within the upper trend line. The last part is not required, just the 1.6638 target.

Triangle?

The GBP appears to be making a triangle on the 21 min chart. If this is correct it is going to pop long. Probably not very far, 20-40 pips, and then turn and run short to probably 1.6120 or there about. Once there I would expect it to turn hard in the long direction.

Short then long or just long?

Per the chart below, we have completed a double zigzag or are still in the process of a triple zigzag. A break above 1.62352 would likely confirm the short move was over. A break below 1.61335 would confirm the triple zigzag scenario. If the bottom resistance number is broken a likely stopping point would be 1.6020.  Once one of these scenarios plays out I will project an upside stopping point.

GBP ???

Even though it did what I said it would last night, I am not convienced the short is over. It may still make one lower low before moving long. At this point in the movement, I can't really tell. I am going to take a wait and see attitude and when the picture clears up I will comment.

Still correcting short

Current move will retrace long to 1.6320 to 1.6340 zone and then resume short to approximately 1.6100. From there it will move long angain to new highs above 1.6457

In Wide corrective (iv) wave

We are in a corrective fourth wave that began at last nights high of 1.6407. Going forward the movement should pop above 1.6442 and then move short to about 1.6200. Once that happens we should see new highs in the GBP.

Trend still long

Here is a 240 min chart that shows a slight revision to some of the lableing of the last chart. I think we will see a pull back to about 1.6200 and then the GBP will continue on to make a new high. It is really not possible to know if this is the last push long or if it willl become more complex and go further long. I'll do my best to keep the count. My Alt count has a wave as i and b as ii with this current wave as iii.

Big Picture

Okay, I thought I would give a bigger picture outlook for this chart. The Sterling made it to my retrace zone now it should move short. I think the short move will end in the 1.6210 to 1.6140 zone. It could run shorter than that (perhaps as far as 1.6080) but only time will tell. Once that move is over I think the trend long will resume per the chart below. From Aug 5th, 2009 till Dec 30, 2009 the Pound has traced out a three wave movement. That is corrective. I am going to lable it (X). Then it moved up in 3 waves that will be labled a wave and should befinishing b wave by tonight or tomorrow. From there it should move long in 5 waves to, most likely, above 1.6877 to finish to long movement that began Jan 23, 2009. The ensuing short move should then take the GBP to below 1.3500 and likely much lower.

Trend is Short

The current long move will end in the 1.6290 - 1.6308 zone. I favor the longer side at 1.6308 from there the short trend will reume. A likely stopping point for wave (iii) will be somewhere near 1.6100. I'll try and post a chart later today after the Chargers game is over. :)

Just a bt further long

Check out the attached chart. The push long should go just a bit longer i think 1.6350 to 1.6400 is a likely stopping zone. I favor closer to 1.6400. Then the multi day short should resume.

New Short Confirmation Point

I have moved my strong confirmation point up to 1.6286. A break of this point short will signal a multi day new short trend.

Tringle Information

Please be aware that triangles always preceed the final actionary movement. So, if my triangle count is correct, there can not be a triple zigzag as noted in my last post. I just remembered that. So this should be the last push long

Wave .iv Extension

From a trading statndpont last night was frustrating. I didn't trade because I couldn't figure out the movement. From a technical sandpoint it was exciting. That was the first expanding triangle  have called in real time and I was able to notice it quickly. I thought I would have a hard time with it and it was actually the first thought I had, as it was forming. That was satisfying. Anyway from the chart below you can see it is completing the Y leg of wave .iv. Now this could extend and become more complicated to make a Z leg tripple zigzag but there is no way to know. But a break of 1.6250 should eliminate this possibility. So when it breaks 1.6250 the short has resumed for perhaps as much as 600 pips.

Short Confirmation point change

Based on the last push long the GBP must now break 1.62453 to confirm the short movement.

Long Over?

I know it is still early in the evening but the movement looks quite weak and I think I have a count that shows it is over. A break of 1.62633 should be strong confirmation of the short movement resumption

A Bit Longer

We'll I have been looking at the movement long and hard. I believe the long move will end in the 1.6400 area and then begin trending short again.

Still Moving long

Well here is my current labeling. If this is correct there is definetly more upward potential. if wave .5 meets equality with wave .1 then we can expect it to move to 1.6480. This would give us approximatly a ratio of 1.38% of wave (c) relative to (a) which is quite within the normal range. Please be aware that I have an alternate count that has much more long potential. There is no way to know until it plays out. This is the labeling for now.

Latest and greatest

I keep counting the move but I'm also keeping in mind technicals even though it broke 1.6180 that does not signal a new strong long movement. I believe we are in the 5th of a 5th wave. The long correction is SOOOO close to being over. a break short of 1.61356 should be sufficient conformation of this outlook.

More upward potential?

After analyzing the corrective movement from 8 am PST this morning. I believe there is much more upward potential. Anywhere from 1.6300 to 1.6400. A break above 1.6180 would be solid confirmation of this outlook. If this happens I will post another chart with the labeling. If it doesn't happen then I wll stick with my original labeling on the last chart. If it does I will post a new chart

Off Track. Revised Count

Okay. the beauty of wave analysis is you can be right and be wrong all at the same time and still make money. I have been saying for some time that the trend is still basicly short. I thought it was making a triangle but the break of 1.6192 tells us it is not. So what happened. Easy (a) was actually 5 waves rather than 3. You can see this from the below chart. wave i was extended (something I have not seen before at that degree). If you measure it, it all works. wave iii is not the shortest. So i think the current labeling is correct and the long correction is very close to being finished.  One more rise above 1.61936 and it should be finished. (how far is hard to say but I think it will stay under 1.6220 but we will just have to see) That will end wave {iv}. After that I am looking for equality with wave {i} which should take us close to 1.5600

Still On Track

Nothing has happenend to change my triangle scenario. I will update if something does.

Why You Should Care About DJIA Priced in Gold

 January 11, 2010

By Vadim Pokhlebkin

The following article is provided courtesy of Elliott Wave International (EWI). For more insights that challenge conventional financial wisdom, download EWI’s free 118-page Independent Investor eBook.

-------------

Of the many forward looking market indicators we at EWI employ, one of the most interesting tools (and least discussed in the financial media) is the DJIA priced in gold -- "the real money," as EWI's president Robert Prechter calls it.

We've been tracking the Dow/Gold ratio for many years and it has serves our subscribers well. It's not a short-term timing tool, yet in the longer term, as our January 6 Short Term Update put it, "the nominal Dow eventually plays catch up to what is transpiring in the Dow/Gold ratio."

Here's a good example. Remember when the nominal DJIA hit its all-time high? October 2007, just above 14,000. At that time, most investors expected new highs still to come. But our Elliott Wave Financial Forecast warned five months prior, in May 2007:

One key reason [for a coming top in the DJIA] is the undeniable bear market status of the Dow Jones Industrial Average in terms of gold, the Real Dow...

Notice, by contrast, the relative strength of the Real Dow versus the nominal Dow, the index in terms of dollars, from 1980 to 1982. By August 1982 when the Dow denominated in dollars bottomed, the Real Dow was rising strongly from its 1980 low... The nominal Dow soon played catch-up, and they both rallied more or less in sync until 1999.

Now, instead of soaring the Real Dow is crashing relative to the nominal Dow. In fact, it’s barely off its low of May 2006. This dichotomy reveals the weakness that underlies the financial markets’ push higher. When mood turns and credit inflation reverses, the ensuing drop in the nominal value of the market should be dramatic.

"Dramatic drop" did indeed follow: Between October 2007 and March 2009, the DJIA lost 53%, high to low.

For more information, download Robert Prechter’s free Independent Investor eBook. The 118-page resource teaches investors to think independently by challenging conventional financial market assumptions.

--------------------------------------------------------------------------------


Vadim Pokhlebkin joined Robert Prechter's Elliott Wave International in 1998. A Moscow, Russia, native, Vadim has a Bachelor's in Business from Bryan College, where he got his first introduction to the ideas of free market and investors' irrational collective behavior. Vadim's articles focus on the application of the Wave Principle in real-time market trading, as well as on dispersing investment myths through understanding of what really drives people's collective investment decisions.

Triangle?

I think I figured out why this correction is not meeting my expectations. It is making a traingle. If you look at a 4 hour chart begining on 12/30/09 at 04:00 you should be able to see this clearly. Although it has been frustrating to this point figuring it out, Im pretty sure that is what it is doing. The good new is that triangles are 100% accurate in their predictive capabilities. Once this thing finishes 5 waves ending in an E wave in the long direction it should make a final move short for perhaps as much as 600 pips before making a significant retrace long. If my triangle scenario is correct the current short move should stay above 1.5895 before moving long again and that long move should stay below 1.6192 to keep this scenario intact.

New Info

So based on the move from the open. I believe it is going to move short to at least 1.5872 before then moving long to the target zone described in my last post.

Still correcting.

I thought the correction was over but clearly it wasn't based on the long move Thur night. Here is the most likely movement for Sunday. I expect it to move short to somewhere near 1.5956. Once in this area you should look for a place to go long. The min target ending zone for the long is likely to be between 1.6240 and 1.6300. It is quite possible it could go further than that but that is my min target. Once the long is over I expect it to resume the short move to eventually make a new low below 1.5706 over the next few days. That is my primary scenario. We will see how it plays out and adjust from there.

Retrace Over?

If it breaks 1.5920 I recommend getting in short and holding till 1.5615. I'll try and post a chart later tonight. Gotta go eat dinner.

Quick note 2

After doing some measurements. I think a likely retrace point will be 1.5990 before the short resumes. I will try and message this number as more information developes. Once in that general area I would expect the short to resume.

Quick Note

If you are in short I would go ahead and take profit now or perhaps as it hits 1.5909. It is still going to make a new low but it will trace long to about 1.6060 before it does. I will give a more detailed analysis and chart after the US session closes

The perfect Trade

The GBP has been making a trianlge for the last 24 hours on a 30 min chart. When it comes back above 1.6020 jump in short and ride it to 1.5872 and you will take 145 pips in 1 trade. Book it!

But just in case :) if it breaks 1.60584 to the long side that scenario is incorrect and end your trade.

Alt Count

Here is a different interpretation of the current  move. Even with the below chart, I still expect to see 1.5872 it will just get there a different way. The technicals other than the count are starting to make this count look more like what is happening. The failure points for this count has a wider lattitude which I won't mark at this time. My philosophy is "I don't trade when the count is vague." It will clear itself soon enough to give a great opportunity.

No Change

Nothing has transpired that would cause me to change my current analysis of a triangle forming on the dialy chart. I am still looking for a move short to 1.5872 at a min before turning long. Here is what would cause me to have to reassess. A break of 1.57063 or a break of 1.60624 to the long side BEFORE breaking 1.5872.

Still on track

I still favor a move to 1.5872 before a strong reversal to the long direction resumes. I think a good target for the long move is 1.6480 at a minimum. I won't make another post until the prediction plays out or I see a reason to reasses my primary count.

Possible stopping point for current short move

I think it is quite possible that the GBP will make it to at least 1.5872 and perhaps as far as 1.5840 before it can turn and run long. The failure point for my triangle scenario on the daily chart is 1.57063. If it breaks this point I will have to reasses the structure.

Retrace zone achieved but is it over?

The pair reached nicely into the retracement zone I defined in yesterdays post at 10am. From the looks of it I think this particular short move may not be over yet. It is dificult to tell right now. I am going to take a wait and seee approach for right now. If the short is over or very nearly over and the long resumes, I think a good first target on the long side would be 1.6400. No chart right now

Short Correction Over?

It is starting to look like a possibility. It looks like my min retracement line may not be meet. It looks like it is starting to trace a small first and second wave long and it is breaking out of the retracement channel. When the Asian markets open this thing may just start going long early in the session. Be on gaurd.  Min long expectation is 1.6235 but 1.6330 might be a real possibility. No chart.

Still correcting

Okay the movement is still correcting the long move that began on 12/30/09 at 04:00 PST. I expect the short to take the Sterling into the zone of 1.6057 to 1.5976. Once we achive this zone I would expect the long to resume above 1.6250 as a first target, to be updated later as the movement dictates.

The longer term outlook is as follows. Ultimately this current long trend should take us near 1.6600 before the short is once again favored. Because I believe the GBP is tracing out a triangle on the daily chart we should receive diminshing returns in both long and short directions until (E) wave is finished. Then we should get a long push to at least 1.8000 I would estimate. So over the next several weeks or months I think the long is ultimately the safe play. Once we reach that 1.80 to 1.93 zone, I will expect the GBP to crash pretty hard to at least 1.1800 if not further. We will of course discuss this further we the time is right.

Current chart Below:

On Track

Well the retrace went 2 1/2 pips past the point I called. Of Course. I missed the target by about 60 pips. Even though it is moving long as I type, this is still likley part of the long correction and I expect it to make a new low below 1.6137. Im not going to try and call a retrace point, as all my measuring points are not in place yet. I will try and make a post when it looks to be over and the long is ready to resume. By the way it can make a new high and it is still part of the corrective move that will turn and go lower. If I think anything changes I will try and let you know. No chart right now.

Slight revision

When this current short movement finds its bottom near 1.6060 I am NOT looking for a sideways movement as I had previously stated. I am looking for 5 waves in the long direction. I think a good first target when the long begins will be 1.6300

Short Term Trade

The below 30 min chart shows what I believe the short term movemnt will be over the next few hours to a day or so. If it didn't do it during the off hours the GBP will move long to break 1.6235 once it has completed that long movement it will move short to the 1.6080 to 1.6020 zone. That should be the first leg of a flat or triangle that will likely take a while to play out. The movement will be essentiall sideways within a 100 or so pip channel. Once complete the long trend should resume. If this scenario plays out or changes I will make a post as soon as identify material changes

There is an alternate possibilty to this scenario. The point I have labled as 3 may actually be 5 and then only the second half of the above analysis will play out, i.e the retrace short that turns into a sideways movement before heading long again.

Total Reassesment for longer term movement

I spent a lot of time this Saturday reviewing the movement of the cable on a monthly chart. I have made a bit of an adjustment in my thinking as to the shorter term trend (several weeks if not months). I believe the sterling is in a contracting triangle that can be observed on the daily chart. Once this triangle is complete, still many weeks away, the GBP will push longer. Probably to at least the 1.8000 point and quite possibly as far as 1.9340.   Below is a chart that shows the developing triangle in trend lines, as well as a hypothetical finishing movement before it breaks long. I will make another post in a few minutes to show a likely movement for the next few days.