Japan (Nikkei 225)-- moo river drawing practice

I have decided to use Nikkei to show you how I draw the moo rivers, butterflies, WM's etc. I need your cooperation to practice drawing from today onwards and I will continuous provide you with sketching details to complete our drawings on Nikkei 225 in the coming weeks and months. Hopefully, this way, you will be able to do your own moo river watch on Japan and extend that to whatever you are trading as well.


Japan (Nikkei 225)

(based on 30 year advanced data charts)

Yearly

Price Chart: when you look at Nikkei's yearly chart, do you shilver at the giant red candle in 1990, what if you were trading it and you happened to be in the averaging down mode?! When a market turns from the upperbank, its target is its lowerbank, though at the time very few would know where the lowerbank was, hindsight is a great thing. And conversely, look at the years before 1990, what a run there, what if you were a sceptic bear and had averaged up the other way round? If you think daytrading is easy money, think again. The greatest bear of all time Livermore got wiped out a few times! Now let's get down to moo river watch.

If you are a fan of Elliott Waves, you can certainly count 5 impulsive waves down from 1990 to last year. Even the global internet boom and the millenium magic only gave Nikkei enough momentum to meander across half way in the ginormous downstream moo river. However, from 2003 onwards, the bears seemed to find it hard going and the last three waves could possibly be part of a giant W to bounce out the decades long bear market finally for Japan, despite the fear or threat of a nuclear bombing from North Korea, a second time in Japan's history. We have to remember the economic miracle in Japan was actually triggered by the post nuclear bombing western sympathy and support and the hard working by the Japanese people.

Let's draw these five waves down together.

Wave 1: link up candle body top for 1990 to the candle body bottom of 1992;
Wave 2: link up candle body bottom of 1992 to the candle top of 2000;
Wave 3: link up candle top of 2000 to the candle bottom of 2003;
Wave 4: link up candle bottom of 2003 to candle top of 2007;
Wave 5: link up candle top of 2007 to candle bottom of 2009.

Now you need to draw that downstream moo river, linking up tops and bottoms to encompass all the actions since 1990, where you will see we breached the lowerbank in 1992 and breached slightly the upperbank in 2007.

From here, I want you to draw the right arm of the giant W to be resisted under by the extension of Wave 2 as the ceiling.

Having drawn all these, I want you to complete the drawing of a giant reversal butterfly, with veins in the right wing, which will provide resistance lines in the new bull market in Japan, if that is what is going to happen in the coming years.

Have a go and have fun.