Saturday, September 15, 2012

Weekly Elliott Wave Update

 Elliott Wave Analysis of Nifty

Above is a weekly chart of Nifty. We can see that since the top of 2008 the market has been moving in corrective waves. Wave (A) bottomed in 2009. Then the market rallied albeit in corrective patterns, to the top in late 2010 completing wave (B). Now the price action post the wave (b) is interesting. We fell in wave {A} of (C) in a TZZ. The last leg being a triangle. This triangle formation has refuted the common belief of being a continuation pattern, but if we study Neely (thanks to persuasive EW analysis by Ranajay Banerjee), this was copy book. Now we should be rising in wave {B}, and the target seems to fall in the range of 5840 - 6100. We broke out of the triangle and also retested the [b]-[d] trend line, and moved back up. This virtually confirms the triangle has ended, and we should now rally towards the target zone, to complete wave {B}. Last week was very dynamic, and if we take out 5630 early next week we should see prices rallying hard till we reach 5840 to start with.

Elliott Wave Analysis of Commodities 


This is a weekly chart of Silver. We can see that Silver was consolidating in a triangle pattern for quite some time, and if you pay close attention to wave (e) of the triangle, you can see that it was a triangle itself. This extreme contraction in prices always lead to stupendous breakouts. And that is what we are witnessing in Silver. The minimum target for this move would be 66900, which it has almost reached, and if the strength persists, which I think it would, then we may even see 75000 on silver. But this is a 5th wave, 3rd wave was extended without doubt, so we can expect 5th wave to be normal. The 75000 target in silver is calculated by the relation "thrust == widest part of the triangle". Keep on your toes when we reach 66900, if we breakout above it, there is a good chance we may see 75000 levels.


This weekly chart of crude shows two possibilities. Concentrate on the 2009 lows, it has two labels marked on it. One label says that we completed wave (A), then the subsequent price action should be corrective, and has been labeled as such. We are counting an {A}-{B}-{C} in wave (B). Wave {C} is turning out to be a terminal pattern. IF this is the case then we should get resisted around 6000 levels and turn back to form wave (C). Another count a bullish one, suggests that we may have completed the correction at wave (C)? and  Then we are forming wave {1}?-{2}?. In wave {2}? we may be forming a very bullish running correction, wave A? was a flat, so wave B? was strong , and wave C? is turning out to be a triangle. This count is very very bullish for crude, but for that we have to take out the 6000 levels first. I suggest keep on our toes if we reach 6000 on crude.

This is a daily chart of gold. Gold also like silver formed a triangle in wave [4]. But there is a difference in the patterns, the triangle in gold is rising one. The whole triangle is skewed upwards, suggesting strength in coming days. The breakout from the triangle looks sharp, and should continue for some time to come. The normal expectation for wave [5] is the widest part of the triangle, and that comes around 33400 levels on gold.
Elliott Wave Analysis of Currencies


This is a weekly chaart of USDINR. We have a very important low at the left bottom corner of the chart marked wave (A). We have completd wave (B) in the top right corner of the chart. The pattern of wave (B) was that of a DZZ. The last leg of this corrective rise, wave Y was a TZZ. The last leg [z] of Y was a triangle, a terminal pattern. But if this count is true we have a potentially very bearish case on our hand.We have two options, 
Option I - We form an {X} wave and then rise again. The {X} wave then should not go below 48.50 levels of wave {Y}. Form the 50-48.50 band we may resume up in wave {Z}.
Option II - If the corrective pattern is complete here, we may see deep retracement of this DZZ in wave (B), even complete retracement. This count will prove very bearish for USDINR, conversely very bullish for INR.
So in both the scenarios above the weakness is expected to continue, at least till the 50-48.50 band.

Dollar Index 

This is a weekly chart of DI. We can see the price action from the significant top from the top left corner of the chart till wave label (W), looks like a triple zigzag (initially wrongly labelled as an impulse). The (X) wave was brief, and then we have see prices converging to form a triangle. the complete corrective pattern is of the form (W)-(X)-(Y), in which wave (Y) is forming a triangle. The target for wave {E} of (Y) comes in the range of 78.40-77.00, marked by two blue lines on the chart, above. Once we break above the {B}-{D} trend line, we can say that the triangle pattern is complete. What will follow if our count is right will be a huge rally in DI, which will be very bearish for other asset classes. There is a possibility that wave {E} may contract eve further in a triangle. This may lead to even stronger breakout.


  1. nice aniruddha,

    no guarantees though that this is a {B}, infact if (big IF) once NS > 6050 (ruffly 80% of prev fall from 6339-4531)

    the possibility of a whole NEW Py Degree impulse opens up!

    6000 -6050 zone wud also be the outer max for the wave channel from 4770 uP... iske upar price gaya, then time to think IMPULSE :-)


    1. Well I sense a triangle (terminal) forming in wave {Y} of (B). For that again prices should not go above 6100, preferably 5840. But yes if this up move persists then we will have to take another look at our count.

  2. Hi aniruddha...i don't think that this triangle has refuted the belief of it being a continuation pattern. There are some striking differences between an Elliott triangle which have certain characteristics and the traditional technical analysis triangle which can be a reversal pattern, as well as a continuation one.

    In fact much of the confusion arises from the fact that both types of analysis use the term 'triangle', unfortunately creating unnecessary confusion. While the pattern in the chart is a classic traditional triangle(with a definitely tradable upside objective), it has no bearing on Elliott's rules whatsoever. i don't know much about neely and how his method treats triangles. Thanks Vimal

  3. In classical EW by Prechter, the triangle is always used as a continuation pattern. But I am aware that in classical TA it is used as both continuation and reversal pattern. But thanks for clarifying the confusion. The readers of this blog and I appreciate it.


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