GBPJPY Elliot Wave 4-Hourly

Rob Lee extends his Elliot Wave forex practical with GBPJPY

GBPJPY Forex: We closed our long positions as we swapped into a bearish tone on our Elliot Wave conclusion as correction took over.

We began with our 139.45 entry and added 138.00 area. We are looking for B (B3 on the chart) to extend up to 3 of the Elliot wave before adding further lots and taking away our Hedged A-B from 4 (A4 on the chart) with a targeted C at 2 (C2 on the chart).

GBPUSD compounding your analysis

Rob Lee of AiMS continues his forex educational blogs with Mastering Elliot wave.

Using Elliot wave on the Daily chart we track 1-2-3-4-5 points (points, not waves) and then apply A, B and C correction. A goes to 4, B to 3 and C to 2 giving us A4, B3 and C2 sequence and targets for taking profits both with and against the trend using a hedging matrix.

Putting it all together, from previous GBPUSD charts in our blog your see how we find entry and now how we exit.

Remember that there are waves within waves, the last GBPUSD action (March 2010) at the “bottom” for example is a 4-hourly Elliot 5 up to the correction which at the time of writing is at A4 of its correction. have a look on current 4- hour charts and see if you can find it, mark it up on a chart and track it.

Mastering Elliot will take you from a run of the mill trader into the world of super returns with clear trading plans and controlled compounding and positional management.

Hint: look for carry trade positions within the waves i.e. pairs that give you roll over fees in a given direction,  AUDUSD long was a very good option recently until its slight bear bias.

Index Focus – FTSE100

The Footsie (FTSE 100) stayed within its decision zone (A-B) for most of the week, falling just below Support during Fridays London session. The support (A) featured throughout the 2006-2008 consolidation and combined with the resistance found on the 24th August 2008 form a strong transformation zone from bear to bull market and when combined with the Fibonacci of the crash as price finds 61.8% (another decision point).

Time to short? Daily closes below 5475.60 (A) have to be taken serious and any test of the upper zones 5649.10 (B) may provide optimal entry (if the line remains a resistance) for the short trade. Elliot wave also refers the trader to a correctional phase in an uncompleted state, the 5 waves pushing price down (green to red vertical lines) and does display a A-B wave, B-C wave would be next. To finish the analysis we have a channel resistance in place that although broken for 3 weeks has not seen a convincing advance away, any fall in price would initially target this support on the angular.

Summary, I’m very much in a bear bias for the FTSE technically and will be watching daily close for entry.

Stock focus – Tesco PLC (TSCO.L)

Christmas period: Terry Leahy, Chief Executive, commented: “We’ve delivered a very strong performance over the Christmas period and New Year period. It was a great Christmas for Tesco customers with an excellent seasonal range in store and online.”

Group sales increased by 7.5% at constant exchange rates (6.9% at actual rates) in the six weeks to the 9^th January 2010. Overseas business grew over the same period (excluding petrol) by 4.1% constant exchange rate or 2.4% actual exchange rates.

In Europe sales grew 0.8% at constant (excluding petrol), sales incurred a 2.2% decrease in sales when actual exchange rates are applied.

Asia sales (Homever stores) gained 7.8% constant or 8.0% actual whilst United States (Fresh & Easy) concerns had a strong Christmas campaign then last year posting constant sales of 35% (24% actual).

Pre-Christmas

Group sales for the Q3 period tell us a more challenging Christmas tale, the 13 weeks ending 28^th November increased by 8.8% excluding petrol and Group results ending August 2009 posted an 8.3% increase.

Technical Analysis

Technically price is at the conclusion of a weekly Elliot wave closing in on its C-objective classically in-line with point 2. For those not familiar with the Elliot wave concept Elliot wave theory is a principle of crowd psychology (in our case the crowd are investors) and gauges the collectives’ moves from optimism to pessimism, repeat and rinse. The swings create patterns and provide evidence of prices movements and trends.

Within the dominant trend, waves 1, 3, and 5 are “motive” waves, and each motive wave itself subdivides in five waves. Waves 2 and 4 are “corrective” waves, and subdivide in three waves. Technical analysts use symbols for each wave to indicate function and degree, numbers for motive waves, letters for corrective waves.

GBPUSD update – Elliot wave

Elliot wave analysis complete at the Fibonacci 50% mid-term, trend should stage through the ABC correction before continuation.

EURUSD visual update

Yen pushes US Dollar

The USDJPY analysis continued its predicted near-term path this morning ( see previous analysis and chart ), resting around the 76.4% retracement of the near-term trend at the time of writing.

Dow theory remains bull bias on the near-term H4 and a close below 91.24 would be required to signal otherwise (non-failure swing), the near term will look to reverse in this area and a trade signal would be produced from the 91.83-91.24 trading zone for the intra-day/ near term scenario.

Intermediate term along with the major-term, channels remains bearish as the top of channel rejected the initial attack posting a 93.76 high, daily charts clearly showing the bear channel and 50% Fibonacci levels being respected giving swing trader already committed no real concern as we begin wave 5 of the daily Elliot run on daily charts, its worth noting the weekly major-term Elliot looks to be in the early stages of A-B correction change.