Tag: elliott wave

The Secret Word: Deflation - And the Next Five Years of Financial Turmoil

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The following is a sample from Elliott Wave International's new 40-page report, The State of the Global Markets - 2013 Edition: The Most Important Investment Report

You'll Read This Year. This article was originally published in Robert Prechter's July 2012 Elliott Wave Theorist.

In the first five months of 2012, there were 20 times as many Google searches on "inflation" as there were on "deflation." This is down from a

ratio of 50 times in June 2008. If any theme has been overdone over the past six years, it is the theme of inevitable inflation if not hyperinflation.

Inflation reigned for 75 years, from 1933 to 2008. People are so used to it that they cannot imagine the opposite Continue reading "The Secret Word: Deflation - And the Next Five Years of Financial Turmoil" →

Learn to Label Elliott Waves More Accurately

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Are you looking for an easy way to improve your confidence as you analyze the charts you trade? Take a quick look at this chart (adapted from Jeffrey Kennedy's December 26 Elliott Wave Junctures lesson) to see how divergence relationships help clarify your analysis.

According to Jeffrey, divergence relationships are easy to identify. Whenever prices make a new extreme, look for underlying indicators to move in the opposite direction. Specifically,

The momentum relationship most often seen in waves 3 and 5 is divergence. Bullish divergence forms when prices make a new low while an accompanying indicator does not. Conversely, bearish divergence occurs when prices register a new high while an accompanying indicator does not. Bullish and bearish divergences are common to waves A and C, just as they are waves 3 and 5.

Notice the bearish divergence between waves 3 and 5 in the daily price chart of Halliburton Company (HAL) -- Prices reach a new high, yet the MACD indicator moves in the opposite direction: Continue reading "Learn to Label Elliott Waves More Accurately" →

Don't Expect the News to Tell You Where EUR/USD Is Going Next

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By Elliott Wave International

On December 27, EUR/USD shot up as high as $1.3283. Forex news headlines were quick to comment:

"Dec 27 - The euro slightly extended gains against the dollar after strong U.S. new home sales data last month further lifted the market's appetite for riskier currencies."

But after EUR/USD hit that high, it promptly reversed and fell back down to the $1.3200 level, where it had been stuck all week.

You may ask: What happened to that "appetite for riskier currencies"? Continue reading "Don't Expect the News to Tell You Where EUR/USD Is Going Next" →

U.S. Stocks On a Collision Course with Market History

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The past offers answers about the future; market patterns do repeat themselves

By Elliott Wave International

Next time you look at a clear night sky, keep in mind that what you see is the distant past.

Most stars are so distant that it takes millions of years before the light is visible to us.

Even so, astronomers can learn much about the future of the universe by studying the past.

NASA astronomers announced they can now predict with certainty the next major cosmic event to affect our galaxy, Sun, and solar system: the titanic collision of our Milky Way galaxy with the neighboring Andromeda galaxy.

NASA, May 31, 2012 Continue reading "U.S. Stocks On a Collision Course with Market History" →

Third Waves are "Wonders to Behold"

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The Elliott Wave Principle states that in financial markets, prices unfold in 5 wave patterns:

In wave 1, the trend has begun. Wave 2 makes a sucker outta you. Wave 3 is a powerful sight to see. Wave 4 is a corrective chore. And wave 5 is time to look alive -- once more.

Elliott Wave Principle -- Key to Market Behavior (the ultimate resource for all things Elliott) provides this definition for wave 3:

"Third waves are wonders to behold. They are strong and broad, and the trend at this point is unmistakable. Increasingly favorable fundamentals enter the picture as confidence returns...

AND: "It follows, of course, that the third wave of a third wave and so on will be the most volatile point of strength in any wave sequence. Such points invariably produce breakouts... and runaway price movement."

This chart shows the personalities of each of the five waves. As you can see, wave three usually begins just when investors are convinced the bear market is back. (You can flip this chart for a five-wave move to the downside -- in which case, wave three begins just as investors think the bull market is back.) Continue reading "Third Waves are "Wonders to Behold"" →