Capitaland brokeout on the side from the channel line and came close to testing this channel line but did not touch it. This is a bullish sign. The move so far is labelled as Minute [i]-[ii]-[iii] with wave [iv] in progress probably in a Triangle. The next move is Minute wave [v] which is target at 2.90 region. There is resistance at 2.75.
11 Nov 2011 Capitaland Primary Elliott Wave Chart
MACD
MACD is turning down and I believe that it will approach the zero line before turning up which is bullish.
Volume
This whole move is confirmed with volume as the up waves were with higher volume and the down waves with lower volume.
Alternate View
The Alternate view is that the move up is Minute wave [w-x-y] which has completed and the move down has started with Minuette wave (i) completed and Minuette wave (ii) is in progress. This is a low probability move but with issues in Europe and US, the markets could turn down so watch the markets closely for signs of this.
11 Nov 2011 Capitaland Alternate Elliott Wave Chart
Midas is also setup quite nicely for a bullish move which could last a few weeks. The move up is textbook Elliott Waves. I’m going to run through the move in detail with reference to Elliott Waves rules and guidelines as well as wave characteristic. I think that this is a very good example for Elliott wave newbies or a refresher for Elliott wave practioners.
The move up from 4 Oct 2011 till 27 Oct 2011 is labelled as Minute wave [i]. This whole wave is further subdivided into five waves according to the concept of fractals in Elliott Waves and is labelled as Minuette waves (i-ii-iii-iv-v). Let’s run through each of the subwaves.
11 Nov 2011 Midas Elliott Wave Chart
The first wave, Minuette (i) moved higher with very low volume and this wave was corrected by Minuette (ii) with also low volume. The second wave, Minuette (ii) did not retrace the complete Minuette (i) as one rule of Elliott Wave is that wave 2 never retraces wave completely.
The third wave, Minuette (iii) was sharp, swift and powerful as can be seen in price as well as volume. It travels typically by 1.6 x wave 1 but in this case, it powered ahead by 3.3 times of wave 1. This was corrected by wave four, Minuette (iv) with lower volume that wave three. Wave four, should not overlap with the wave one and this rule was also met.
And finally wave five, the Minuette (v) brought the price even higher than end of wave three and the volume is lighter than wave three.
A channel is formed by connecting the ends of waves 2 and 4 for the bottom channel line. For the top line, run a parallel line to this cutting through the top of wave 3.
So that’s basic Elliott waves in a nutshell and at least that is how I determine the waves based on character, volume, and price action. In order to fully understand Elliott waves please visit the Elliott Wave Internation website as they have very good write up over there. You could also refer to various books such as the Elliott Wave Principle by Robert Prechter.
With the completion of Minute wave [i], the expected next move is a corrective Minute wave [ii]. Waves two are typically zig-zag in nature and retrace 61.8% of wave one. That is how the wave panned out and it retraced 69.2% which is slightly more (by 0.01 cents) than 61.8%. Volume is also much lower than it was on the way up. Wave two will be followed by wave three. It is with all this knowledge that we can confidently call for another five wave move up to complete wave three. That is the beauty of Elliott Waves. It removes guess work and gives clarity to market moves.
We know that wave three is typically 1.6 times wave one. That gives us 0.57 as one possible target. There is also an inverted head and shoulders formation (depicted in gold) which if becomes valid (after price moves above the neck line), gives us a target of 0.58. The top blue channel line will provide resistance but waves three are supposed to be strong and it should break this line.
Strong buying volume should be coming in soon and that would indicate whether are we in the right direction or not.
This move will be invalidated if the price drop below 0.32.
Alternate View
It is extremely important to have an alternate count to the primary count as the market could head in the opposite direction as well. This would allow us to be prepared in case the market moves against our primary view. We can place stops, change our views and be better prepared with having alternate views.
The Alternate view is that the Minute wave [ii] has not ended and might go even lower. This view is supported by a head and shoulder formation that is depicted in red lines. This move though has low probability at this stage and I expect this formation to be broken.
STI got sold down heavily end of last week similar to HSI. The volume of selling is very heavy and is most likely the final blowoff selling. Here’s the Primary Elliott Wave Chart. The Primary count is that Minute wave [i] and [ii] has completed with Minute wave [iii] in progress. The next expected move is Minuette wave (iii) of Minute wave [iii]. The target for this move is 3100 region.
11 Nov 2011 Primary Elliott Wave Chart
Alternate View
This is the Alternate view for STI which is a bearish view. The move up so far is a Intermediate wave (2) and the recent down move is the beginning of Intermediate wave (3). Minute wave [i] and [ii] of this move has completed and Minute wave [iii] is in progress.
11 Nov 2011 Alternate Elliott Wave Chart
I’m expecting the STI to move up next in a relief rally from last week’s selldown. The character of the relief rally will help us determine whether the next move is going to be bullish or bearish.
Elliott Wave Analysis 