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EURUSD: Bearish Reversal In Progress-More Weakness In View

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June 24 2013

On EURUSD we can count three waves up from 1.2750 low which we believe it represents a corrective, contra-trend price action within a larger downtrend. We are talking about blue wave (2) which is now showing signs of completion around 1.3420 level after sharp decline last week which is impulsive move. As such, we expect further weakness in coming days and weeks, ideally back to April low.



Lower Stocks, Higher USD..Finally!

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June 20 2013

European stock market is sharply lower today following yesterday sell-off on US equities after Ben Bernanke who said yesterday that if the economy continues to improve, it could start to wind down its $85 billion a month asset-purchasing program towards the end of 2013 and end it in 2014.

Metals are moving sharply lower, with gold testing now psychological level at $1300 and silver $20. We could see some technical bounce from here especially if we also consider Elliott Wave pattern which suggests that price is at the end of wave iii), now testing 261.8% Fibonacci support. As I know a lot of our clients were shorting gold since June 10. If you are one of them, then I suggest you to close some % and make very tight stops.

GOLD 1h


E-mini S&P500 is also looking weak since yesterday where we can count now five waves down from latest high. This is impulse that confirms the change in trend; from bullish to bearish mode.

E-mini S&P500 1h


EURUSD also extended its decline at the European open, which means that correlation between EURUSD and stocks are normal for now. USD is safe-haven in risk-off mode so normally traders will be interested in Long USD opportunities.

Market Correlations 1h





GBP/USD Could Reverse Into A Deeper Pull-back, towards 1.5480

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June 18 2013

On cable we can count five waves up in wave A) from 1.5000 psychological level which means that temporary high for this pair could be in place if we consider a broken trend and Elliott Wave theory which suggests that after every five waves correction follows. With that said, a coming retracement could be red wave B) that is part of an incomplete second zig-zag in wave II. If wave B) is already unoflding then keep an eye on 1.5480 support zone.







EURUSD At Temporary Resistance

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June 12 2013

USD extended its losses since yesterday when the US stock market turned sharply lower with the Dow Jones Industrial Average down three days in a row for the first time this year. Correlation between the markets remains unchanged; USDJPY and other XXX/JPY pairs are tracking stock market, while EURUSD and other XXX/USD pairs are moving in opposite direction. As such, EURUSD is at its highs, now testing 1.3380 area.

From a technical perspective, we see all XXX/USD pairs in fifth waves of 3 and we know that after every five waves trend will change, even if just temporary. Below I have a basic structure of a five wave rally on which I marked a current position on EURUSD . I see it at the end of wave three so pull-back is expected.

Basic five wave rally


EURUSD 4h


Members please visit EWC page for 4h counts on other USD pairs

On charts above I see it at the end of wave three so pull-back is expected. So what this tells us? Well, I think a lot; first if you are long you could be out of the market here, or if you want to get in and ride the EURUSD trend then it’s probably better to wait on correction. Then it also tells you a lot about the other markets. If correlations will remain as they are and if EURUSD will turn lower from 1.3380/1.3400 resistance then stocks will probably find a support that will cause some rally on xxx/JPY pairs as well.

Market correlation 1h


Bottom line; be aware of a trend reversal in the near-term; don’t chase here!




GOLD: Downtrend Continuation

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June 10 2013

Sharp reversal from 1423 through the lower side of a corrective channel suggests that rally from 1337 is complete and that market is headed lower. As such, we expect further weakness on gold, ideally close to 1340 in this week with impulsive personality. Trend is bearish below 1423 is critical level.





OIL: Triangle Pattern Could Send Prices Higher Later This Year

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June 03 2013

Oil is slow, choppy and overlapping since September 2012 , so we think that whole price action represents a triangle pattern in red wave B) that is part of three wave rally in wave (D) from June 2012 low. If we are correct, then we know that we need five sub-waves within a triangle before we may look for a push higher into C) of (D) towards 102/103 mark. Well, current reversal from around 97.00, trend-line resistance region seems to be a wave E pull-back, final leg in a triangle pattern. As such, triangle could be near completion, but based on Fibonacci levels we see room for even deeper pull-back, towards 88.00 area before market may turn bullish again, but it should sometime this year.



WHAT IS A TRIANGLE?

A Triangle is a common 5 wave pattern labeled A-B-C-D-E that moves counter-trend and is corrective in nature. Triangles move within two channel lines drawn from waves A to C, and from waves B to D. A Triangle is either contracting or expanding depending on whether the channel lines are converging or expanding. Triangles are overlapping five wave affairs that subdivide 3-3-3-3-3.

Contracting triangle

 
• structure is 3-3-3-3-3
• each subwave of a triangle is ussaly a zig-zag
• wave E must end in the price territory of wave A
• one subwave of a triangle usually has a much more complex structure than others subwaves
• appears in wave four in an impulse, wave B in an A-B-C, wave X or wave Y in a double threes, wave X oor wave Z in a triple threes


AUDUSD: Correction Within Downtrend

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May 27 2013

On AUDUSD we see evidences of a temporary low in place after five waves down in black wave 3. We know that after every five waves correction follow, so we think that current sideways price action represents wave 4 pull-back that should be sub-divided by three legs. As such, we think that corrective, temporary rally is incomplete and that pair may test 0.9830/0.9890 resistance area in this week before new sell-off occurs.

Traders, who want to join the larger trend should wait on completed wave four first and then look for short opportunities.







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