It was an ugly day for US equities. Other markets like silver and EURUSD didn’t seem to react much to equities day long collapse. We look inside their Elliott wave charts.
The video above is a recording of a US Opening Bell webinar from August 5, 2019. We focused on the Elliott wave patterns for key markets such as silver, gold, S&P500, Dow Jones, DXY, EURUSD and USDJPY.
Silver price forecast looks higher after wave 4 dip
Since July 22, we have placed the $15.94 silver price level in our sight. This is the level that if held, would support further rallies. On August 1, silver prices did drop down to $15.92 and rebounded sharply. As a result, we are viewing this correction as part or all of wave .4. Therefore, wave .5 would likely rally to new highs and possibly up to $16.82 or $17.38.
If wave .4 is not complete at the August 1 low, then wave .4 may be carving out an Elliott wave triangle pattern. This implies further sideways grind that likely holds above $15.92 and simply delays the forecast above.
Though not expected, if silver prices break down below the August 1 low of $15.92, then we will consider other bearish alternatives.
EURUSD correction may be over – keep an eye on 1.1412
During last week’s webinar, we highlighted how the Elliott wave patterns appeared incomplete to the downside so we were anticipating more pressure that may push EUR/USD lower. On August 1, EURUSD did push down to 1.1027 prior to rebounding sharply. There are still some Elliott wave counts on both sides of the coin. I suspect the downside is limited and the potential for a larger rally is growing. In these scenarios, a break above the beginning of the impulse wave at 1.1412 (June 25 high) eliminates the near-term bearish options.
Longer term, the Elliott wave count for US Dollar Index (DXY) is to hold below 104 en route to the lower 80’s. Whether the counter trend dip in EURUSD (and bounce in DXY) is over is unconfirmed. But simply looking at the risk to reward of DXY ‘risking’ 700 points for a reward of 1200+ suggests EURUSD may have a large rally looming. This was a market we highlighted back in December 2018 for a longer term bear market to make itself known.
S&p 500 eyes support in fear of larger correction
S&P 500 has broken below a support trend line holding up prices since December 2018. The move higher has subdivided in a three wave move thus far. As a result, a break down below the June low of 2732 opens the door for new lows below the December 2018 low.
In Elliott wave terms, S&P 500 could find support between 2732 and 2800 to work itself to new highs. However, the strength of this move lower makes new highs seems like a dream. If S&P 500 does break below 2732, then the December low of 2324 is exposed possibly down to 2029. These next few points in S&P 500 mean a lot from a technical perspective.
Elliott Wave Theory FAQ
How does Elliott Wave theory work?
Elliott Wave theory is a trading study that identifies the highs and lows of price movements on charts via wave patterns. Traders analyze the waves for 5-wave moves and 3-wave corrections to determine where the market is at within the larger pattern. Additionally, the theory maintains three rules and several guidelines on the depth of the waves related to one another. Therefore, it is common to use Fibonacci with Elliott Wave analysis. We cover these topics in our beginners and advanced Elliott Wave trading guides.
After reviewing the guides above, be sure to follow future Elliott Wave articles to see Elliott Wave Theory in action.
---Written by Jeremy Wagner, CEWA-M
Jeremy Wagner is a Certified Elliott Wave Analyst with a Master’s designation. Jeremy provides Elliott Wave analysis on key markets as well as Elliott Wave educational resources. Read more of Jeremy’s Elliott Wave reports via his bio page.
Join Jeremy in his live US Opening Bell webinar where these markets and more are discussed through Elliott wave theory.
Follow Jeremy on Twitter at @JWagnerFXTrader .