The Pound has been steadily gaining ground and is poised to reach the 61.8% retracement of its last swing lower. This comes at 1.5664, and is worth looking at closely. Besides, if we consider that the recovery is a double zigzag, the second wave ‘c’ has a 123.6% measure of wave ‘a’ at 1.5666. If we look at the internal waves of wave ‘c’ we see that the 5th minor wave will have its 61.8% measure of the distance from 0 to 3 at 1.5680. We also see that an Elliott wave channel top comes around that level. Considering all this, one might consider a SMALL short position at 1.5663 with a stop at 1.5683. If stopped, one should wait for 1.5778 and sell a bit more aggressively there with a stop at 1.5798. These are really counter-trend trades and I present them here so you could learn how I think about waves. It is not a recommendation!
Category Archives: Elliott Wave
Elliott Wave Analysis is a powerful tool if used properly. For instance, the following Elliott Wave Analysis of Dr. Reddy’s laboratories Ltd as shown in the chart suggests that a major extended third wave has likely finished at the Rs 1968 levels. If you had this stock in your portfolio, and noticed that the 5th wave has a target at 1976, would you have waited for the last 25 or 30 rupees before getting out? Of course not!
I am positive that there are countless traders who went long this stock above 1900, and are now hoping it will come back to break even. Whether you are a trader or an investor, you are better off learning some technical analysis.
Now what does the chart of Dr Reddy’s Lab tell us? Elliott Wave analysis tells us that a three-wave correction is due, because an extended third wave has been completed. We should look for a minimum correction of 23.6% of the 3rd wave, and that should bring the stock down to around Rs. 1600. That is the minimum target. It could go down a lot more! Suppose you own some of this stock, what should you do? You should consider selling on a recovery to around 1790 and not worry about it till it eventually comes down to around 1610.
What of the 4 year rally inside stocks plus different assets? Again, the position maintained by this website is the fact that it is actually a counter-trend move to a heavier downtrend. Indeed the wave structure because the 2009 low supports this idea. The wave structure counts ideal because a corrective structure because the 2009 low plus not a big impulse. We just have to wait for the corrective structure to “finish”.
Well, it is about 3 weeks since my last post here, and many of you must be wondering if I have forgotten you! Of course not. WaveTimes will always be around as long as I am. The paid service has been keeping me busy as well. And during January, I made a quick trip to India to attend the wedding of my friend’s son…..
Anyway, here I am, boldly sharing with you a trade that went wrong in the paid service. First, read the trade idea carefully, and then let us figure out what went wrong.
The trade was first posted on 6 Jan 2013 as follows:
Sometimes we arrive at a fork in the road. We can see clearly both the roads beyond, but we don’t know which one to take. Elliott Wave analysis of Micro Technologies India Ltd has brought us to such a fork. We have either completed a 3rd wave that traveled 161.8% of the first wave, or we have completed an extended 5th wave. The implications are profound. If an extended fifth wave has been completed at the Rs 38 level, we should soon be on our way to wave ii of the fifth, and this comes at the Rs66 level. On the other hand, if we have just seen a 4th wave unfold as a triangle, we should look for one more move down and then a recovery. What should we do?
15 Jan 2013 update
MICT came to a low of 41.60 today. As your stop is below 38, at this level you are risking less than Rs 4 per share. I am considering we are all LIVE on this trade. Will post an update when a clear move happens on either side.
(Then on 26 Jan, we bit the bullet)
26 Jan 2013 update
We have been stopped out on this trade, losing around Rs 4 per stock. Thankfully, we had kept the position small because we were forewarned that although the returns were attractive if it worked, there was a clear possibility of the count being wrong, and that we could go down all the way to below Rs 32. There is no doubt that some of you are disappointed, and perhaps this is a good time to consider if this service is really for you. Please be aware that professional traders take small losses quite regularly because when they win, it more than adequately compensates for the small losses. However, in order to survive for the big day, you need to keep your trade size reasonably small. No single loss should upset you too much. If this is not the case, then trading is not for you! Most beginning traders give up because they trade too big a position hoping to strike it rich quickly. Unfortunately, in the real world, such notions are pure fiction.
Let us remain optimistic. Our Nifty Trade was a clear winner and there will be many such opportunities going forward
NOw what do you think we did wrong? Unless you are an arm chair analyst, you will realize that we were following a plan. We had identified the opportunity and the risk associated with it. We knew how much to risk, and when to get out. Only Elliott Waves give these advantages, the edge.
Wow! From a low of Rs 73 in May 2012, National Building Construction Corporation Ltd, an Indian company that offers project management, consultancy services and real estate development etc, has climbed to Rs188. Can this rally be sustained, and if yes, how high can it go? Elliott Wave analysis shows we have reached a first key level already at 188.50, being 38.2% of the distance from 0 to 3 (Remember this from my book “Five Waves to Financial Freedom”?) However, is this the end of the move? The fifth wave seems a bit incomplete and shoudl we break above the 188.50 level the stock could easily run higher to the Rs 212 level, which is the 61.8% measure of the 0-3 distance. Also, when we draw an Elliott Wave channel, by connecting the bottoms of waves 2 and 4 and drawing a paralled via the top of wave 1, we see that the 212 level could be reached in the next week or so. That is about 15% higher than current levels, and so is something traders can keep an eye on.
Remember, this blog aims to teach you how to use Elliott Waves. It is not trading advice! Good luck Ramki
Hello everyone..as promised, I will share with you an occasional trade that was sent to the members of the exclusive club. On 3rd January I had recommended trying long EURUSD around 1.3110 with a 30 pip stop, I was betting that we will get a fifth wave type recovery, notwithstanding the fact that there were negative divergences in the daily chart. The support at 1.3080 held for a few hours, and the currency pair bounced around a bit. But eventually it gave way and went all the down to 1.2998. So yes, we had taken a small loss there. I am mentioning this here so you realize that WaveTimes is very transparent. We never trade with a rear-view mirror! Our aim is to capture a good move while keeping losses under control. I had also sent to the members the first chart below, suggesting that Gold will experience weakness from around 1690 and head to 1630. Take a look.
And sure enough, after a brief struggle above 1690, it came off quite aggressively to 1627. Here is the current chart of Gold.
I have recently posted a trade idea covering an Indian stock. (By the way, I now have a direct bank transfer option for members from India). This year promises to be exciting. Our mission is to be alert to low-risk trades. The key to success lies in taking signals whenever they show up. Some will work, some will fail. But those that succeed will work very well, and more than offset the setbacks. There are few approaches that work as well as Elliott Waves. Combine that with sound money management, and you have an edge that is invaluable. All the best in 2013.
Elliott Wave Analysis of Home Depot shows some interesting possibilities. I recollected having posted on Home Depot some time ago, and looked it up. I suggest that you do the same, as it is a learning experience. That old post which appeared on Forbes did not work out as anticipated. The dip was shallow and the stock started climbing again. What did we learn from that? (a) There are no guarantees in the market (b) We should always have a stop (c) We should be willing to turn around and do the opposite if the wave count shows an extension is in progress. However, these are easier said than done. In spite of these difficuties, I can confidently say that few other approaches to the market gives as good results as Elliott Waves. Hence, we should take such adversity in our stride, and profit from those instances where it works.
Today I am presenting you with several Elliott Wave charts of Home Depot. There are comments on each of them, explaining my wave counts. Study them and see how I am arriving at my conclusions. An easy way to read them quickly is to open each chart in a new tab and then look at them one by one. As always, WaveTimes is a place where you come to learn Elliott Wave analysis. Good luck.
Elliott Wave Analysis of IBM presents a fascinating study of how one could profit from the use of this approach to trading the stock markets. Today I present you three charts that show you how IBM stock moved exactly as an Elliott Wave text book would have described it.
Starting from a significant high seen in IBM, we are able to count the waves easily. Observe that wave 2 did not exceed the top of the first wave. We then got a swift sell off as a third wave. You will also see that the third wave was an extended wave, traveling a distance of 300% of the first wave. Elliott Wave theory suggests that at least one of the three impulse waves in a five-wave sequence would likely extend. ie travel an unusually long distance. My book “Five Waves to Financial Freedom” explains that we often consider a third wave as extended if it travels a distance greater than 161.8% of wave 1. Let us now look at the next chart.
Typically when a third wave extends, the ensuing fourth wave travels only 23.6% of wave 3. However, this is not a rule, and we often do see a 38.2% recovery as happened here. Once the fourth wave was completed, we could have easily anticipated the end-points of the fifth wave as shown below.
This concludes another valuable lesson on how to use Elliott Waves to anticipate market turns. Spend the time to learn the techniques taught in this blog and you will soon trade like a pro. Good luck.
The first trade under the new Exclusive Membership was closed last evening, and I thought readers of this blog would love to see how we handled it. I am aware that a few thousand people visit this blog regularly with a view to learning from the numerous real-life examples of using Elliott Waves. So this update is specially for you, folks.
It is important for one to be humble if one is to succeed in the markets. Being aware that NO ONE can tell the future is the first step in that direction. I have been involved with the markets since the early 1980s and even now I freely acknowledge that I do get things wrong. However, because of the time I spend on each chart, the amount that is risked on any trade is usually very small compared to the profit potential. Secondly, I am willing to forget the past. Because I made a superb call yesterday it does not mean my next trade will also be great. At the same time, just because the markets changed after I made a call, it does not mean I have to be running scared of the markets! Every trade is different, more importantly, every trade is NEW. Having a deep understanding of the markets certainly helps. Sometimes the charts ‘speak’ to you. Just by looking at the way a certain move is unfolding is enough to alert you that you have to make some adjustments. This is what happened to our recent EURUSD trade idea.
On 8 November 2012, I sent out an email to all members of the exclusive club that the EURUSD was getting ready for a decent move. The common currency had already come off sharply from 1.2875 to 1.2735 and was trading near 1.2750. I identified three possible levels where a turn could happen. These were 1.2704, 1.2692 and 1.2665. So I suggested buying 30% of one’s usual position size at 1.2705 and 70% at 1.2675. The stop was placed at 1.2650. The risk was thus 34 pips and I was looking for 136 pips in profits, a decent reward/risk ratio.
This is what happened afterwards. The EURUSD came down to 1.2716 and rallied directly to 1.2789! Opps, have we missed it? Patience is a virtue. After a while (on 9 Nov), it came down to 1.2688 and we were long our 30%. The Euro rallied to 1.2739. I observed that whereas the prior rally from 1.2716 to 1.2789 took 16 hours, this recovery from 1.2688 to 1.2739 took over 20 hours. This was not exactly what I had in mind! Little surprise then that the currency started coming off again. This time it broke below the 1.2690 area support and went down to 1.2660. I have no doubt that many of the members were worried sick! This is a normal human emotion. However, our protective stop was clearly in place at 1.2650 and having been willing to lost the 34 pips before the market moved to our levels, there should be no qualms of losing that AFTER the order was filled! This is the subtle difference between doing a paper trade and a real trade. Those who do paper trades are really happy to say I am willing to risk $ xy on a trade. But when real money is involved, the heart starts beating faster, and as the market approaches the stop loss level, some traders can actually start hearing their heart beats! Trading is really not for these people. One needs to have steadier nerves in order to be successful. Fortunately for our members, the market stopped right there and started moving up. I am fairly sure that smart money moved in at the same time, because the EURUSD went from 1.2660 to 1.2724 in under two hours! Now we are in business, I said to myself. However, life is never so easy! Over the next two hours, the EURO almost gave back all of its gains, and it was back at 1.2670. But in the following two hours it recovered back to 1.2723 and then settled down in a sideways movement for a loooong time. I suggested to the members to exit 50% of their position at 1.2710 so that they could buy it back if it dips again to 1.2670. It was clear to me that we are in a complex correction and a new set of tactics had to be employed. I told members to sell the remaining position at 1.2740 and 1.2760. There was a decent resistance around 1.2770 and we should just take some profits and move on.. We did not get a second dip to 1.2670, but many traders sold their first 50% well above 1.2710 because the move happened overnight. The Euro climbed to 1.2757 and came off! So are we going to miss the 1.2760 level after all! It took considerable time, but eventually there was a dash to 1.2778 at which time everyone got out and the EURO has since come down to a low of 1.2715.
The key lesson here: You can’t enter into a position and forget it. You have got to monitor it and make changes as required. Another lesson: Some people think if I write an article in Forbes that such and such a move will happen, and if it doesn’t, it is a reflection of my being right or wrong. As readers of this blog I want you to know that NO ONE can predict the future. However, one can have a trade idea based on Elliott Waves (or any other model). After that, it all boils down to execution of the trade. This is completely different from making armchair forecasts. Thirdly, the position size that you trade is important. Can you afford to lose some real money? How much can you lose on any one trade? How many losses can you sustain, and still continue to trade? These are the really important questions you should ask yourself. It is because most traders don’t think through these issues well enough that a majority of them lose.
Here are two charts I posted for the members of the Exclusive Club. Enjoy! (By the way I will not be able to write such detailed comments every time we have a trade because it takes away so much of my time. But every once in a while I will try and do so. I do recommend that you regularly revise my book “Five Waves to Financial Freedom“. Doing so will help you navigate the markets much better. Good luck.)
My detailed Elliott Wave analysis of Silver was posted via a video on You Tube on 8th October. That analysis is typical of how a general update in this blog appears. The aim is to teach people how to approach the market. The same goes for my comments on Forbes, MarketWtach or Seeking Alpha. Those comments are meant to give a general sense of direction. Occasionally, I might slip in a key level, but the trader would need the comfort of knowing whether the timing is right as the market approaches the anticipated levels. Take my Silver comments of last week, for example. I anticipated that we will come down to 33.16 when the commodity was trading around 34.45. Was 33.15 a good level to buy? It was not, because by the time it reached there, the market had revealed additional clues. A ‘relatively’ safe level to buy was lower down at 32.55, something which I was able to determine by the analysis produced here.
When it was clear that we are getting an extended fifth wave within the C wave of the fourth, I knew that the support was not at the 23.6% retracement level discussed in the video. A quick computation revealed that each of the sub waves within the C wave was respecting all the tenets of Elliott Wave Principle – details that you would have learned by reading “Five Waves to Financial Freedom”. For example, wave 2 was 70.7% of wave 1 as shown in the first chart to the right.
Wave 3 of the C wave traveled exactly 161.8% of the first wave.
The fourth wave recovered to the 50% retracement level of the third wave.
I figured out the target for the extended fifth before it got there by projecting a 100% measure as shown in the next chart. And I obtained added confirmation by analyzing the internal waves of the fifth wave of the extended fifth wave as shown in the final chart. At the time of writing this post, Silver has already reached 33.20. I received a few emails from readers that they have gone long of silver around 33.15 based on my video! First of all, please bear in mind that Wave Times is only there to teach. Secondly, we have to take into account new information as it comes up. And the nature of Elliott Waves is such that it is very dynamic, and allows us to adjust our focus as the subject is moving. When I launch my exclusive program for the high net worth traders, they will get more precise information, including a recommended stop level. I will also be able to recognize early if something is going wrong and share that intelligence with the group. However, the key take away for you is this. Learn my techniques, and you can do the analysis yourself. You don’t need any Guru to tell you what to do! More importantly, don’t risk real money on an update that is 2 or 3 days old, especially if you are a risk-averse trader who can afford only a small loss. Good luck! P.S. If you recall my various comments on how Extended Fifth Waves can make you rich, you will also know that sometimes we get a double retracement! But at other times we don’t! Watch Silver and learn! You should also learn where to take partial profits, how to adjust your stop loss etc etc! All the best