Courtesy Elliott Wave International.

A little review of wave degrees.


Wave (iii)=wave (i) X 1.618
Wave (iv) is in the process of formation. Notice that it has already touched the area of the previous fourth wave i.e if you look closely you will see that the the top of 'A' has touched 1.3809. 1.3809 is within wave iv.

Wave (iv), by the guideline of alternation, should alternate with wave (ii). Wave (ii) retraced a great deal of wave (i) and has a simpler structure (i.e a double zigzag, ABC -X- ABC). Wave (iv) is already showing a sideways structure and is expected to have a shallower retracement. Wave (iv) should be a FLAT, a TRIANGLE or COMBINATION.

I don't expect 1.3845 to be touched as wave (iv) forms since that would enter the territory of wave (i). This is the rule of overlap. i.e a fourth wave should not enter the territory of the first wave.

Finally, notice that we still have some room for the wave (iv) to continue forming. This fourth wave should be complete when the wave structure is closer to the top parallel channel.

We should look for opportunities next week. Good luck in your trading.

USDCNY raced past 6.20 and tested above 6.21 last week. It's getting funky. The commodo market will get fried as the defaults scale up. The yuan corp bond market will also throw up a number of "unexpected" events...

Yen vs Yuan. How much lower is abe willing to deflate the yen? Does he have any move left? Jap is an aged population vs chingland. Devaluation won't work in jap without job seekers (aging population). Chingland can devalue and get back to 10% GDP growth with ease.

Buy the yen. Abenomics has no legs from an econ perspective. Jap is stuck in deflation until job seekers return - youth return. Euroland is also heading there. Deflation for a long time as jobs disappear due to aging populace.

Our fourth wave may be complete. I am looking for opportunity to short the market at current levels.

We ran the stops. ;-)