Elliot Wave Analysis of BHP Australia

Jasmit has requested for a chart of BHP and CBA, and I suppose an Elliot wave analysis of the same. I would love to do both, but being a treasury manager, my day is already too full. So here is just the chart of BHP for you, Jasmit, and all our fellow Elliot wave fans! The chart also partially answers a question posed by yet another reader, WaveWatcher, who is wondering about how one can say the top of the SNP500 can exceed the point where a fifth wave has ended.

One of the most useful things to spot in a market that is developing is when a wave seems to extending. It becomes easier still if both the first and third waves were of normal length, because then there is a pretty good chance for the fifth wave to extend. You are all the more certain of a fifth wave extension in such cases if the fourth wave was shallow. Anyway, once the fifth wave extension is over, you should NORMALLY expect a double retracement. The first sell off is the first retracement of the fifth wave. It usually comes to about the minor 2ndwave of the extended fifth wave (but sometimes it stops at the minor 4th wave itself). Then we get the second retracement of the prior move, ie we see another “go” at the top, and often as get a ‘throw over” the prior top, or a channel that you could draw using Elliot wave principle. This constitutes the so-called unorthodox top. Here, dear readers, is where you should be extremely careful. The “C” wave that starts after such an irregular “B” wave top will be so devastating that it could go down all the way to the fourth wave of one higher degree, or worse, to the top of the first wave itself. This has happened in BHP Australia, and has happened in SNP500. Indeed, in SNP500, the collapse of the market is a correction of cyclical proportion, because we are not just correcting the last five wave move up from the low of 768 seen in 2002, but we are correcting the excesses of a much bigger rally, the one that started in early 1980s. Ramki

Update on 29 September 2020:

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9 Comments

  1. Ouch! That hurts! I got an email from another irate reader who bought Citi in the low $7 area, only to see it tank. If anyone believes that one could simply read a chart, listen to a so-called ‘guru’ and get into the market, he/she is sadly mistaken. If it were even remotely possible to make fabulous riches just by good analysis, then I shouldn’t be working for a bank. Truth is, no matter how good one is in analysis, it has to be followed up with strong money management. Technical analysis is a useful tool, provided you take all recommendations, and more importantly, learn to limit your losses. I myself bought Citi at 11.75 and 10.50 and got out at 9.78 on the rebound (before it went to $10.11 and collapsed). We need to know when to get out, and we need to have the courage to take a loss. Else, we should not be trading. Sorry you lost some money there, pal. Rememebr that the time to buy BHP is not now, but after another dip. You should have a clear strategy in place about where you will buy, how much you will risk, and when you will get out. Good luck! Ramki

    1. Hi Ramki, I sent you an email few days ago asking about your online course but not yet received a response. By the way, with this comment I’m a bit worried, I am trying to be a full time trader, do you believe one can make live with it?

      1. Hello Nick,
        I dont seem to have received your email, as generally I am quite prompt in responding. As for your question on trying to be a full-time trader, a lot depends on your mental framework as well as having a reasonable capital. There is a tendency for most of us to be optimistic about our abilities, and to scorn those who advocate caution. Also, those who try to get rich quick invariably fail. The corollary to this is you need to give yourself sufficient time to build a winning set of tools and strategy. My on line course will help in preparing you, whether you decide to make trading a side business (a safer option), or a full-time endeavor. Good luck.

  2. My wife has forgiven me now that citi recovered and I can buy her a diamond with the fortune I made CFD’ing BHP yesterday. 100% return in 1 day. God bless you Ramki. Doug.

  3. Hi Ramki,

    I would be grateful for an update on BHP

    On a daily chart is the nov 27 high the end of a expanded flat wave 4 (of a 12345 down from may 08)

    or is it the wave 1 of a new cycle move?

    Regards indy

  4. I am really thankful to You RAMKI….you hvae written such a fascinating book…about
    E.W.P…I am still studying that,
    If we get fith wave extention of fith wave extention,then the following correction will retrace up to where??

    1. Swarup, the 5th wave is considered as extending BECAUSE its own fifth wave is extending. So as a first step, we will get to sub wave ii of the extending part. Later on, we will get to wave 2 within the 5th wave.

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