Captain Ewave Key Elliot Wave Counts Update

Gold

We are encouraged with the rally in gold from 1190.70 to 1209.90, as it looks like a five wave impulsive affair to us! The ensuing drop looks corrective, and complete at 1198.40!! The usual retracements for the correction are:

50% = 1200.30;

61.8% = 1198.00

So, even though we did not close above the red down trend line we believe that this will occur overnight or in tomorrow’s day session. Gold cannot really go any lower and still have us believe that the drop from 1305.10 is a wave ^ii^, so we must hold that low.  We have therefore now raised our stops to that low.                                                                                 

We are long 9 COMEX 100oz contract positions, risking to 1190.60!

Crude Oil

In last week’s Post we had thought that crude had completed its first (a), (b), (c) pattern from 44.22 to 54.22, and that a wave (x) triangle was in development after that.

As it turns out our wave (x) triangle has turned into a diagonal triangle. This analysis is based on wave iii ending at 44.22. Please refer to the attached 120 Min Intraday Chart for our thinking relative to wave iv, now:

See the Intraday Crude Oil Ewave Chart

Our current thinking for wave iv involves a double (a), (b), (c) corrective pattern. The first (a), (b), (c) ran from 44.22, our wave iii low, to 51.21. That is followed by a wave (x) that included a diagonal triangle wave -c-, which ended at 43.59. Our second (a), (b), (c) pattern is now well underway, with wave (a), ending at 54.22 and wave (b) at 47.38.

Within our second wave (c) ending diagonal triangle, four out of the five legs appear to complete with wave -iv- ending at 48.83. Legs of diagonal triangle consist of at least one 3 wave pattern, so within wave -v-, it looks like wave .a. ended at 52.70 and wave .b. at 50.72.

If this analysis is correct, then we can project the end of wave .c. as .c. = 1.618.a. = 55.36, as an end to wave -v-, our second wave (c) and possibly all of wave iv. This projected value would put us very close to the blue upper trend line.  If wave iv ends as we suggest, then crude is heading down to our final target of 33.55, which is the 2008 low.

Corrections can consist of up to 3 x 3 wave patterns, separated by (x) waves, so it could be possible that wave iv will subdivide one more time. Even in this case, crude will drop at the completion of our second wave (c), in another wave (x).

Our trading strategy: short crude at the top of wave v.                                                                                                                                                                                                                 

USDX

Since last Weekend’s Post the wave .iv. triangle continues to unfold as we suggested. We have updated the progress of this triangle in the attached 120 Min Intraday Chart.

The USDX Short Term Ewave Chart

Over the past week, waves *d* and most of wave *e* have developed. Wave *d* ended at 94.89 and it looks like we need one more drop in wave *e*, below 94.11 to complete a 3 wave drops from 94.89.

As we have said many times with triangle, they like to subdivide so we cannot rule to the possibility that even wave *c* did not end at 93.85.

Assuming then that no extensions, occur we should see a final thrust higher in wave .v. to at least the wave .iii. high of 95.85. You can see on the attached chart how complex the internal wave structure is of each triangle leg. That is why these patterns are so hard to analysis in real time. Just when you think a leg is complete… it extends! 

The USDX is a very tired and extended market. So, we need to watch for a quick spike higher to at least 95.85, and then a sharp reversal lower. A key reversal day down would be an excellent topping signal.

A break now of 93.38, would eliminate this triangle and suggest that the USDX top is in at 95.85.

Here’s our take on the long term chart:

Out trading strategy is to short the USDX after we hit 95.85.

Natural Gas

We took very nice profits on 6 long NG positions and are now flat. We provided an Intraday Post on this event today.

We are not sure whether wave .c. and all of wave -iv- is now complete at 3.04, or whether only wave *i* of .c. ended at 3.04. If wave -iv- is over then NG is heading below 2.57. If only wave *i* is complete at 3.04, then we should expect a corrective wave *ii* pattern, that retraces between 50 to 61.8% of the wave *i* rally. These values are:

50 % = 2.91;

61.8% = 2.87.

If wave *ii* is currently underway, then we will be looking to go long again at its termination. The low today was 2.86, which is within the lower end of our retracement level. The drop from 3.04 to 2.86 looks impulsive at the moment. This drop could be the first leg of a 3 wave correction also. We will wait and see how it plays out over the next 24/48 hours.

A break below 2.77 would confirm that at least our first .a., .b. .c. pattern is complete at 3.04, but possibility all of wave -iv-.

HUI/GDX 

60 Minute GDX Chart

The HUI/GDX hit a low of 20.21, early in today’s day session. We had a projection of 20.23. We have now satisfied to minimum requirements for a completed wave .c. diagonal triangle. 

We are now looking for a confirmation to the end of wave -iv-, which will come when we break above the down trend line connecting 21.56 and 21.16.

We remain long all GDX positions, with stops at 16.96!

There won’t be any free report this week due to travel obligations for my consulting business, but we’ll be back in action on that front next week!

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Courtesy of Website: www.captainewave.com

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