Tom Scollon                            

Some think that the battering for the lil Aussie battler is over.

Let’s take a look:

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So on a daily chart it appears that a wave five low has been reached but note the 5 it is ‘grayed’ and not a solid colour. 

That is the daily chart so we look at a weekly chart for further clues:

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The wave three low is also grayed on the weekly chart – that is we cannot be sure that this is wave three. Wave three could be lower still. Remember Elliott counts have three levels. In particular wave three and wave five. They have three levels. That is after the first wave three has been hit and there is not a clear reversal then there is a prospect of a second level of wave three being hit and even a third. But generally a third level is unlikely but a second level is highly possible. So the Aussie could head lower in this instant.

Note in the weekly chart the next move could also be a wave five recovery over the next two years before another slide down to a final wave five capitulation. But that is another 4-5 years according to the chart. And as I always think anything can happen between now and then. But the slide could be toward 70 cents and the wave four recovery could be over ridden.

The monthly chart throws up a useless and not very plausible scenario:

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So I revert to the weekly. And I look for further answers. I ponder which is more likely of the two scenarios – a recovery in the coming weeks or a further slide? 

The charts cannot tell us anymore. In investing and life I don’t try to fine tune major turning points. I look at the big picture and try get the big moves right. So I don’t try to ponder too much such small curves in the road such as this.

But this big move down of the last four years is largely over and while there may be more easing it is not likely to be dramatic. Famous last words. Well I say at this point it not likely to be over dramatic.

But in general we are in heady times and many markets are over stretched and when this happens it hard to know which string of the bow will break first.

We tread carefully.


Enjoy the ride

Tom Scollon