The easiest way to make money in any market is after a fifth wave extension. While identifying the precise end point of an extension is often a challenge, you can become quite rich by joining in once the correction starts. Typically, a market comes down to the level of 2nd wave of the just completed 5th wave (as wave ‘a’), corrects higher (as wave ‘b”) and thereafter collapses as wave ‘c’ to reach the 4th wave bottom (or lower!). In the last 3-4 months, there have been innumerable instances where we have seen this happen. Regular readers of this blog have been alerted to the opportunities. Today, I am going to review those trades so that you can have a permanent record in one place of how fifth wave extensions should be used to our advantage. Let us start with Oil.
If you had been on my mailing list before this blog was started in October, you were warned when Oil was above $140 that we will go down to $50. As recently as 5th October, and on this blog, you saw this post. 
Today Oil is trading close to $52 as shown in this chart.
Now let us look at the S&P500. On 3rd April, I emailed several of you that we could recover from the current level of 1367, but failure to stay above 1415 could trigger a sell off to around 1050. Here is the chart of April 2008, followed by the chart of 20th November 2008 (today).
For those of you who are interested in GOLD, this chart should open your eyes! Just a few weeks ago, on 8th October, I wrote in your favorite blog that this precious metal was ready to collapse. That was when the commodity was trading at 910, and analysts at Credit Suisse put out a bullish report on Gold. Take a look at this chart below and judge for yourself. Gold has traded well below $700 before recovering recently.
Let us look at a specific US Stock. Bank of America! This blue chip was at $26.61 back on 30th June when I alerted you that we will see it down to around $18. In fact, some of you will remember we bought the stock near there and made between 40 and 65% in a matter of days! (that was the ‘b’ wave rally). Here are two charts for your study.
Next, let us take a look at the Euro dollar. The EUR/USD was trading at 1.3560 on 12th October when I warned you that we are on our way down to 1.25. Sure enough, it has gone there already.
Are you an emerging market buff? Then this chart of the Bombay Sensex should be revealing.
What is the lesson here folks? Technical analysis can be used to considerable benefit. Yes, when it comes to pulling the trigger we all are scared. (Honestly, I made money in only some of these recommendations because my stops were too close! And even then I could not risk a very large sum. But those who had the staying power made millions. One of my clients saved over $7 million by shifting his GBP deposit into USD just before the collapse. But coming back to the average Joe (the plumber 🙂 or trader) we should definitely take small risks at the end of fifth wave extensions. Please bookmark this post andshare with your friends. With best wishes. Ramki
Update on 29 August 2019:
Quick Question: Did you wish that you could learn directly from me on how to trade using Elliott Waves? Then you need not wait any longer. I have published what is now being acknowledged as the BEST course available online for traders. Check out https://elliottwaves.com and judge for yourself. Listen to the testimonials of people from around the world! Act now!
Related S&P500 links:
Was that the stock market bottom?
SNP500 revisited
S&P500 and Citi
What is a significant rally in the stock markets?
Harmony in markets: S&P500
S&P 500: Potential Ending Diagonal Triangle
Ending Diagonal Triangle in S&P500?
S&P500 Elliott Wave update
S&P500 index: is a top already in?
S&P 500 update: where is the top?
S&P500 continues its rally
S&P500 remains resilient
S&P500 ready to dive?
S&P500 Update: May 19, 2009
S&P500 Elliott Wave update:21 May 2009
S&P 500 breaks higher: update 2 June 2009
36 Comments
Certainly a library material. Thanks.
hi ramki,
i really enjoy your trading style and can only regret that commence receiving your update very recently
in regards your last post, please can you have a look on USD/CHF as i have a feeling that this, what you have said about the fifth wave extensions, is slowly developing in this pair
once the 5 wave reach the top, can anticipate to come back as A up to about 1.1600 – 1.1700,
than B – lets say, up to somewhere below the top and C – all the way to 1.07 !!!!
it will be my pleasure to receive your comments
thanks and good luck in your trading
with best regards
Dear Ramki,
thank you for explaining the waves in such worth seeing way. I am fascinated by Elliott Waves but not able to count them by myself. The basic tenets are quite easy to use, but there are a lot of specific features, like failure fives, irregular flats or even double and triple threes.
You count the SPX high in 2007 as an overshooting B wave. Other wave counter label this as a wave 5. I am really interested to know how to identify such overshooting B waves. Would you like to explain, what makes you count this SPX high in 2007 as a B Wave?
Thank you
WaveWatcher
Hi
getting interested in your work, could u be kind enough to chart australia BHP and CBA
thanks – rgds
I need to understand the wave with respect to DPworld. I also need to understand it for the Dubai and Abu Dhabi financial market.
Thanks.
Hello Amal, I will take a look on Sunday (May 17th) and post my comments.
hi mr ramki could u kindly explain outcomes of 3rd wave extensions as well as 1st wave extension? thank you
Hi Lutfi, I recommend that you read a good book on Elliott Waves for that, and come back to this blog for examples. Many people find FWTFF a good resource. All the best
Dear Ramki, hope all is well. I want to thank you first for this wonderful site and the tremendous work that you do. I know you are busy, but a quick question.. The Dubai index is undergoing a sharp correction, after a 5 wave pattern. I was reading ‘fifth wave extensions can make you rich’, trying to figure out a relative safe entry point and thought i’d ask your opinion.. i’m thinking 1750-1850-1950 are the possibilities, but i could really use some expert opinion. Best regards, and thnx
Hi Farah, while it is true that the Dubai Index has seen a smart bounce, I am not entirely happy with your labelling the final wave of the PREVIOUS decline as an extended fifth. I am of the view that the low of 1427 was either the end of a ‘normal’ fifth wave, or more likely the end of an extended third wave. Consequently, the upside targets as wells as the speed of the recovery will need to be reviewed.
Hey Ramki, now that the potential head-and-shoulders turned out to be a bear trap, do you think we just saw a short-term fifth-wave extension in SPX? It the fifth-wave extension was of minor iii, do we have to wait for a (triangle) minor iv and another five before the selloff?
Hi Kevin, The trouble with elliott wave analysis is one could label the waves in a variety of ways. No one can know which is the right wave count until a move is over. I am sticking to my original count from the beginning because that count has not been violated. Sure it has taken a lot of time for the move to finish, but a serious set back is going to happen in the not too distant future. What will trigger the move I dont know. Sometimes, even a good news can trigger a sell off, perhaps because the market was anticipating good news and it was already built into the price. Sometimes, an insignificant news can cause a huge move, just like the last straw that broke the proverbial camel’s back.Let us see what happens, and it will be a great learning experience for everyone who has been following wavetimes.
hi ramki,
are there any 5th wave extensions currently for any of the following pairs:
eur/usd; gbp/usd; gbp/jpy; eur/jpy; aud/jpy; usd/jpy; usd/chf;
usd/cad; aud/usd; eur/gbp; Do You offer a recommendation service where You would suggest entry and exit points? If so, how much is this service?
Hello PJ. That is an interesting question. I am currently not offering any recommendation service because I am still employed full time as a Treasury Manager. Elliott Wave Analysis is just a passion, and I am sharing these charts just to remain in touch with fans like you. I am offering seminars and lectures, and if invited, will consider such requests.
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Sir, could you possibily comment (Email me) on a extended 5th wave upside breakout from a broadening triangle.This seems to me to be a unique and rare pattern, are there any things that one can predict from this pattern.
Volume/Momentum indicators would seem to work well with 5th waves.
An admirer from the UK,
Hello Jeremy, A complex fourth wave can take several forms, including a triangle. An expanding triangle could conceivably one such variation. Should the fifth wave (that comes after the expanded triangle fourth wave) undergo an extension, you will still anticipate the correction after the fifth wave finishes to come back to wave 2 of the fifth itself. Your question will become more interesting if the weakness takes the price deeper. How far can it go? Can it reach the bottom of the last leg of the triangle? It is possible, but I would try to see if any fibonacci projection takes the C wave of the correction to the apex of the triangle, and if it does, that will be my first obj.
So much easier to see after the completion of the 5 wave pattern…but very hard to determine during.
Dear Mr.Ramki,
I was just going through your page on fifth waves extensions.
I read it in an article that if you put 10 Elliotticians in do Elliot analysis for a same chart, they will come up with 10 different Elliot waves. So I understand its hard to give the right labeling for the waves until we have some standard procedures with the help of other technical indicators like RSI, Stochastic, MACD etc. I hope there may be some. But I am not getting it.
I am finding it really hard to give the right wave labeling ,so do I miss the real treasures.
I request you to share if you have any material to related to wave counting with the help of other technical indicators.
Because, If I analysed the chart “http://www.wavetimes.com/wp-content/uploads/2008/11/gold-8-oct-081.jpg” then I would have marked wave 3 ending at when the wave had a peak just under 450 when it was around sep-oct 2004.( pardon me, I just mentioned X,Y coordinates roughly based on your chart) and I would have marked the subsequent correction and ended around june or july 2005. The reason I considered this as wave 4 even though the correction was not deep, by keeping in mind the law of alternation of EW theory. Because here wave 2 was deeper, so we have valid reasons to consider wave 4 as shallower, I dont think it has to retrace 38.2% exactly, If the market is too strong then it could end its retracement around 23.6% or just below it. And then I would have marked your wave 3 as my wave 5 and the subsequent correction as my abc by considering it as one of the flat type correction and having the C ended around 650 in mid of 2007.
I am sure I may not be correct. But that is why I am requesting you to educate me on how to do the wave numbering properly with the help of other technical indicators or some other way. I dont know if there are any other ways to do the wave counting properly. But as thought I mentioned wave counting with the help of technical indicators.
Looking forward to your reply.
Thanks you.
Regards
john
Hello John, Thank you for writing. If I had looked at the chart in 2004-2005, I would have done the same as you. The main takeaway for you, then, is wave counts are not cast in stone. Use them till they serve their purpose and discard them. They are not our children that we cannot abandon them! No, I don’t have any indicators to help in labeling. Good luck
Hello Sir Ramki
I read your book and it gave me a cutting-edge in trading.I want have no words to say thank you for such a good book.
Recently we had FIFA world cup
I figure out golden ratio in football too.
Football have 20 hexagonal and 12 Pentagon’s.
If we divide 20/12
I got 1.666
Which very close to Golden ratio.
Sukhjinder, Thank you for writing and best wishes
Thank you for your response. If there are no indicators then how do we spot the right counts. People always make the excellent counts after everything happened. But the key things is that finding upfront is helpful. I have been struggling to spot the right waves. Could you please refer any books which can help me to spot the wave 1 extension, wave 3 extension and wave 5 extensions.Thanks again
John, If anyone can tell in advance that a certain wave will be extended, he is more than a superman. There are certain tendencies and guidelines and these have been explained in my book FWTFF as well as in other good books that you can look up at Amazon.com
Hi, I have a question on Golden crossover. In some charts crossover occurs and we expect the market to go up but stock falls and makes Death crossover but it doesnot proceed with Death crossover too further. Rather it again makes golden cross over and goes up. My query is how to find out the legitimate golden crossover and how to recognise false cross overs and when to enter based on these cross overs. Could you please throw some light on it. Thanks
Hi John, I don’t pay too much attention to moving averages because they tend to lag the price action. With ELliott Waves we are able to anticipate the price action (and have contingency plans if things turn awry). So I am afraid I am not able to give you a satisfactory response. Thanks for writing
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Ramki Sir,
It has been observed quite often that in Zig-Zag pattern,Wave C tends to finish at 61.8% projection of Wave A.From Elliot Wave rules pespective,is this acceptable.I have observed this in mid-cap or small-cap equities.
Prabh, Yes, this is indeed acceptable. The more appropriate response is ‘who are we to tell the markets which ratio to trace out’ – rather, shouldn’t we thank our stars that there is a seeming order even in the midst of chaos!
Hi Ramki,
Need to know how do you trade the 5 min charts on elliots wave for the significant low. do you have to look at the last three – four days low or is there any other time frame to validate the same.
Thanks,
Gerard Dsouza
Gerard, the process is exactly the same whatever the time frame you are trading. Read FWTFF again and things will become clearer. Good luck
gd evn sir
ur work is immensely helpful to all of us.i have learnt a world of things from ur highly book of repute.but sir onething is not clear to me even though I have gone though it again again .and that thing is normal wave 1.could u plz provide us a chart.sir,in ur book there are few of the lines which I havnt get…like u said somehere there if there are no subwave within wan1 that too extended? and one onething more wile discussing fig 10c of (FWFF) USD/CHF u said wave 1 and wave 3 is normal but how?here wave 3 is extended(10618 % of w1)
sir please please helpe out!!!!!
thnakyou
Narayan Singh, Thank you for your comments. I see that you still have some doubts about the concepts. Many people have said that a second or third reading of the book reveals insights that they had missed the first time. So I recommend that you read the book all over again, and of possible, sign up for one of my upcoming seminars (although this is not required!). That will give you an opportunity to ask several questions and get answers. All the best.
Wave 3 can’t be shortest of 1, 3 and 5. Is GSPC marking wrong?
Ron, If you are referring to sub wave iii that commenced from June 2006 at 1219 and ended at 1461 in Feb 2007, then that wave was longer than sub wave v that went from a low of 1363 in March 2007 to end at 1556 in July 2007. So wave iii was NOT the shortest of the three impulse waves.