AUDUSD and Mr. Elliott--Friday, June 5, 2009
As an imaginative exercise, counting the waves in a daily AUDUSD chart.
In this suggested pattern, 3 waves of a classic 5 wave pattern have completed themselves, and we are in the midst of the 4th wave. One "rule" of Elliott would imply looking for this 4th wave to end somewhere in the region of the 4th wave of lesser magnitude--which would put the projected low somewhere below 0.7800 (but above 0.7700). Then we would be off to the races, with a new upthrust taking out Wednesday's high.
In this chart one can see that the suggested wave 3 pattern is almost exactly 1.618 times the length of wave 1.
But wait--there is another pattern which could be suggested. This pattern would show a completed 5 wave pattern. Projecting the length of wave 1 down from Wednesday's top, one finds the lows of May 18th, which could be seen as the start of wave 5 (and thus the end of wave 4). Wave 5 = wave 1? Well, yes, that would correspond with a tenet of Mr. Elliott's theory. But, oh dear, that would make wave 3 the shortest of the 3 uptrending waves--and I believe that is something he said could never happen.
Oh well, as Emily Latella (and Kurt Cobain) used to say, "Never mind."