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Apr 09 2013

S&P500 fell sharply lower on Friday, but only into third leg down from 1573 top. Decline from the top is labeled as an a)-b)-c) which is a corrective pull-back, called a zig-zag. This is a bullish pattern which means that uptrend could resume while 1540 is not breached, especially if we consider that recovery from latest swing low is already showing impulsive qualities. The next thing is that we want to stay with a larger trend, which is clear up on stocks, so push back to the highs should not be a surprise.

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Apr 05 2013

GBPUSD found a support yesterday 30 pips above 1.5000 psychological level from where intra-day bulls lift the pair in impulsive manner back above 1.5200 level. Notice that prior that rally, pair made actually only three waves down from 1.5260 high, which is structure of a corrective move. As such, we believe that this was only wave B) pull-back, part of a three wave rally in wave (4) headed up to 1.5350-1.5400. Pair remains in bullish mode for now as long as 1.5030 support is not breached.

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I hope you had some great time during the holiday break, but unfortunately it always ends too fast, but we are lucky that we love our job, right?

Before we go to charting today, let’s see what could happen on this market based on sentiment and psychology. Those who are following me on twitter will know that I highlighted on Thursday that holidays are approaching which is usually the reason for a change in trend because of portfolio adjustments and so on. At that time, we were expecting higher EURUSD, which was clearly the case in the last few trading days. The same was expected on S&P futures which also changed the direction few sessions back. Well, we need to keep in mind that in normal trading days, money will flow back into the market, so what this means is that primary trend, which was down on EUR and up on stocks could resume. With that in mind be aware of continuation of a trend that was ahead of holidays.

In fact, from a technical perspective we can see only three wave rise on EURUSD from the lows which is corrective movement that also reversed down from swings of wave four of a lesser degree. Pattern is bearish on the EURUSD which could fall beneath 1.2750 in this week. Resistance is at 1.2870-1.2940.

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