Remember the book All I Really Need to Know I Learned in Kindergarten?

It showed the wisdom of remembering and applying the simple things we learned in childhood into life-lessons for grown-ups.

A similar approach also works well for our technical analysts at EWI -- seasoned Elliotticians who know that, when you strip it down to the building blocks, the Wave Principle is as simple as counting to 5 and knowing your ABC's!

Currencies Specialty Service Intraday Analyst Jack Martin forecast the US Dollar-Japanese Yen cross rate (USDJPY) quite precisely this week using pure R. N. Elliott.

Here's a preview from Chapter 1 of Frost and Prechter's Elliott Wave Principle:

Figure 1-2

One complete cycle consisting of eight waves, then, is made up of two distinct phases, the five-wave motive phase (also called a "five"), whose subwaves are denoted by numbers, and the three-wave corrective phase (also called a "three"), whose subwaves are denoted by letters. Just as wave 2 corrects wave 1, the sequence A, B, C corrects the sequence 1, 2, 3, 4, 5.

When an initial eight-wave cycle such as shown in Figure 1-2 ends, a similar cycle ensues, which is then followed by another five-wave movement. This entire development produces a five-wave pattern of one degree (i.e., relative size) larger than the waves of which it is composed.

Elliott Wave Principle, p. 23

This simple form is exactly what Jack Martin observed in USDJPY earlier this week. Five waves up followed by a three-wave correction, in position to be "followed by another five-wave movement."

Here's the set-up Jack described on Jan. 5:

No change. The watch is on for a second wave correction bottom to form , which may have been already set at 81.68, and then for a third wave to carry the [USDJPY] back above the recent high at 82.29…..

We tracked the first-wave rally from the 80.93 low in five-lesser degree waves to alert us a change in trend could be coming. The last step of the plan is to see a three-wave corrective setback. 

Here's what followed:

In his 25-minute chart of USDJPY, Jack counted five waves up to a peak at 82.29 (labeled i), and then a wave ii pullback into the area of the previous fourth wave of one lesser degree (a basic Wave Principle guideline).

His simple count caught a nice "third wave" for subscribers:

This is what we have been waiting for . The Dollar is on the verge of a third wave higher...

The five-wave advance followed by the three-wave setback is exactly what we were looking to see. 

Now there's something you'd like to run and show the teacher!

As EWI Currencies Analyst Jim Martens commented,

Jack warned that a third wave was directly ahead and he nailed it . The dollar soared and has already reached the equality measure at 83.04.

What's next for USDJPY? Our analysts love to count -- they find recognizable patterns in the market so you can plainly see the potential opportunity for yourself.

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