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Mercury

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Everything posted by Mercury

  1. Both Gold and Silver are still following my road map however both have hit an interesting juncture, which could prove to be an early turning point. I am still favouring the Fib 50% for Gold, a long term reliable Fib level for this market (however it does not occur at a strong price action support level this time so a further deeper retrace could be on the cards) and if that happens then Silver retesting the long term supporting trend line is also on the cards. So much for that, what about the case for the current levels? Gold: Complex form retrace (EWT) completed (that is an A-B-C with internal A-B-C forms on each leg) Pos Mom Divergence at the current price point on Daily and 4 Hourly charts RSI and Stochastic both over sold Credible 1-5 wave down to current price point Bounce off the Fib 38% and associated support zone Potential Triangle breakout and retest then rally away on 4 Hourly chart Similar on Silver, although perhaps less compelling. I might expect a further drop on Silver with Gold holding or rallying slowly. I am Long Gold at the Fib 38% with tight stops just below the turning point for a very low exposure trade. For me this was worth the small loss if Gold carries on down but there may be another chance to get Long on a near term EWT 1-2. And maybe Platinum is showing the way...
  2. GBPUSD also still following my road map. First chance for a rally for me is the Fib 62% zone where the previous channel breakout occurred and a previous retest failed. Chance for a test of strong support at Fib 6/78% cannot be ruled out and this pair is spiky so could easily occur. All aligned to directional price action on EUR and AUD as well.
  3. EURUSD is still following my roadmap. I am tracking another small leg down to the Fib 76/78% to complete an EWT1-2 retrace prior to ta strong rally in wave 3.
  4. Mercury

    AUDUSD

    Looking a bit further in on AUD it looks like a potential channel breakout that may be followed up by a channel line retest. If this fails then a strong rally could ensue, supported by RBA dovishness. I have market up an initial target of 7650, the zone where the bearish breakout of the previous Triangle consolidation occurred (plus a failed retest) however if this pair gets a strong following wind the consolation Triangle line could be retested around 8000. Could all of this coincide with a similar rally on GBP and EUR?
  5. Mercury

    AUDUSD

    I haven't been looking at the Aussie Dollar much but now it looks like it is aligning to other USD pairs in a retrace rally.
  6. Comparing the primary USD crosses to this Triad cross is always important for me to check my analytic conclusions from the main USD pairs. My conclusions are that EURUSD is set to rally while GBPUSD will fall a little further before rallying. So I would expect to see evidence of EURGBP bullishness and this is what I do see, which has not changed since my last post. A retest of the Weekly chart Triangle lower line is my lead scenario, with the breakout zone a possibility as well. A short campaign off this potential turn could be very lucrative, although it depends on how other markets are shaping up around the same time of course. The key points of this analysis for me are as follows: It supports my short/medium term view that EURUSD can rally despite GBPUSD falling, although I expect GBP to follow suit eventually. It supports my view that EURUSD will be a big looser and ripe for a major Short campaign
  7. As is often the case, the markets are taking their sweet time to develop against my road maps. There have been some swings up and down since my last post on GBP but overall it is still following the road map. The previous Triangle breakout zone remains the favourite for a wave B turn into a rally to complete the A-B-C retrace. Although with GBPUSD you can't rule out a spike low to the next level. Could be a tricky one to trade. That is why I prefer EURUSD but it is important that there is congruence between these 2 markets for me so I continue to track it and the related Triad cross (EURGBP). The top shout for a rally end is still the 14,000 level for me.
  8. The currency vs stocks relationship does not hold over the long term @Kodiak. If you look at the respective charts there are many periods where there is no correlation at all or stocks go up while currency also goes up. My feeling on this received wisdom is that it only seems to happen when the more important drivers are not present and the market drifts. Much more important for me is the intrinsic driving factors in any market. The idea that short term moves in currency has any material impact on corporate performance, and therefore stock price just doesn't track in practice. Corporates are pretty good at managing exchange rate risk, something I used to do myself. After the current move set (i.e. USD bearish phase prior to a major rally; precious metal bearish phase prior to a major rally; stocks bullishness a last hurrah, prior to a major crash and a related industrial commodities crash) I expect to see European markets fall heavily while their currencies also fall. US stocks to fall while USD rallies but USD will be rallying in a flight to safety as a result of stocks (and other markets) crashing rather than being a driver of said crashes. For stock markets in particular, and especially so these days, the key driver is sentiment rather than fundamentals of economy or the individual company valuations. The days when sound valuation drive the markets are well behind us. M&A and IPO valuations are off the charts ridiculous and corporates have nothing better to do with their low interest debt than buy back their own shares (at the top of the market!). This is the kind of situation that screams sell, sell! Just takes time to crystalise.
  9. I would have expected a turn earlier than where we are on US Stocks if October 2018 has been the top of the market and while a double top remains a possibility the profile of the long term waves since the 2015/16 retrace leads me to a different conclusion. I have been wondering for a while now whether the previously annotated EWT 3-4 in 2015/16 was in reality a Flag. "The Flag flies at half mast", or so the saying goes in stock market lore, which means this kind of Chartist formation marks the halfway stage in a rally phase. The Oct 2018 Top, if a wave 3 end rather than a wave 5 top out, is a similar distance from the Flag as the Wave 2 end (Oct 2011) so this certainly fits. The bearish move to Boxing day 2018 does seem to conform more to an A-B-C, although so did the the 2007 first stage drop but that turned out to be a retrace rather than a trend change, this may be the similar. If this be the case then the Bulls who have been calling out for a Bull run end much later, maybe 2021/22, will be in full voice, that is their bias. So much the better for contrarian Bears as one of the hallmarks of a Bull top out is positive sentiment off the scales, which it isn't quite at just now. I remain Bearish for many reasons, previously posted, but the overarching reasons are that; the Bull is running on the fumes of Central Bank intervention; a return to money printing will be a signal that all the intervention in the world cannot change the fact that the economy has not responded to this massive and unprecedented accommodative policy. For all that intervention the worlds' economies remain perilously weak and the inflation Central Banks have been aiming for hasn't materialised. the air is too thin up at these levels, prices are too high in most asset classes (just look at house prices! No one can afford to buy.) the slightest Bearish shift results in very significant drops to 10, 20% is a matter of a few months. The markets are overall very skittish. The risk to the downside is too high. The upside is far less appealing than the downside and higher risk. Buy low, sell high is the single truth of the markets, something most people ignore, often on the advice of money managers in whose interest it is to keep their client money in the market. Talk about a conflict of interest... The current ATH was only a fraction above the previous one and I anticipate another such event. Why? Let's look at the technical picture over the long term. My monthly chart on the SP500 shows the extent of the Bull run since Bretton Woods in the late 1970s (this is when Nixon removed the USD from the Gold standard and in so doing ushered in a period of unprecedented "money" creation through debt). Black Monday in 1987 was a blip by comparison to where we wound up, though that was not what it seemed like at the time. There followed the 1st Tech boom, Credit Crunch and now the mother of all manias, the Central Bank fueled bull run since the Credit Crunch. Along the way we have also seen Peak Oil and Peak Commodities (Copper and precious metals at any rate but other commodities show similar peaks too). All of this has been encased in an expanding Wedge (some like to refer to this as a megaphone). The upper line has proven to be significant for resistance of late and it may be noteworthy that this line intersects with 3000 in the near future. This analysis holds only for US Large Cap markets. The European and Japanese markets (and the Russell 2000) are showing a much weaker profile and a different technical set up such that market tops having already been posted for these is more likely, unless a major rally occurs in the next few weeks. If we see this then it is the kind of divergence between markets, otherwise in lockstep, that would be indicative of a trend change. So if Oct18 to Christmas 18 was a retrace what about the subsequent rally? Well it has been almost vertical in nature but not as vertical as the preceding bearish move and latterly it has been running out of steam as negative momentum divergence builds and builds. If we look at the Daily chart we can see an EWT 1-2 and 3-4 (probable) have been posted so that just leaves a final wave 5. The wave 5 is typically shorter than the wave 3 so I don't see the potential for this to carry on and on as the uber Bulls do. Short term I expect a few twists as the market approaches the upper trend line and the 3000 mark. I will look to other more lucrative and safer markets for now until I see evidence of a reversal and keep stops on my Longs at a sensibly near level to maximise gains.
  10. Did indeed get a rally and I got Long accordingly but what next. Markets sometimes take off and just run and run but I am not sure we are quite there yet on this market and, as this is likely to be a medium term counter trend rally, there could be a bit of volatility yet. At present I would not be adding to my Long positions until I see a decent bearish retrace and we may have seen the beginning of that late last week. A break of the upper line of the consolidation Triangle is important for Bulls, after which we could see a strong run up to the indicated resistance zones. This scenario would align to my Precious Metals scenario (see Gold post).
  11. Still following my road map. What could continue to drive precious metals lower? Intrinsic market sentiment of course but also perhaps lower USD and high stocks. Hmm! I am seeing a rally in EURUSD (hence lower USD is on the cards and stocks? Could be another ATH on the cards? But if so then not for long as the key support areas for both Gold and Silver come up in fairly quick order. One to watch and wait for a Long campaign that could run and run.
  12. The short term support was not breached and the market continued to grind up. Looks like a strong channel has emerged, the breakout of which would herald a long Bearish phase but before that some I am looking to see a turn back from a significant resistance zone; maybe the Monthly 38% fib (underside) or the previous bullish phase channel breakout zone. Given the placement of the Flag I am favouring the latter resistance area but we may well see an EWT3-4 retrace with the channel and another test of the lower line before we see that high. NMD is building with each new mini high and there is strong NMD on the hourly charts as well. Oil is, as present, following a similar path to Stocks. A Summer top out is on the cards, given the wave profiles on both.
  13. Certainly on the cards @Kodiak but the Nasdaq is exceptional bullish, to be expected in a tech led bull market I guess. Price has stalled at key resistance levels (last chance saloon for Bears maybe (see my "are we there yet" thread). However the jury remains out at present as US stocks teeter on the brink of either fresh all time highs or a significant bearish move. One thing is for sure, the Bulls are not going "quietly into that good night".
  14. Nearly there! At least in terms of the market finally revealing its true nature. The rally off the Christmas low has been very strong; strong enough to turn many of the perma-bears and MSM copy back to Bullish with Bullish sentiment back at "Greed" levels again. Check out the article below from CNN for an example. https://edition.cnn.com/2019/04/05/investing/stock-market-ahead/index.html Bulls will read this article as confirmation for them, they may be right, at least temporarily, but the article doesn't address the following points for me: Why has the Fed turned dovish again? Could it be fears about a slowing global economy and getting the blame for a crash by raising interest rates? The Donald is certainly position for this... "Some concerns remain. There are still questions, for example, about how much markets have priced in what is set to be a disappointing round of first quarter earnings." Well how could that be priced in? The markets have rallied... And are nearly at all time highs again! "Earnings for S&P 500 companies were expected to decline 4.1% as of Thursday, according to FactSet. If this happens, it would mark the first year-over-year decline in earnings for the index since the second quarter of 2016." And yet, "Analysts generally believe that companies have adequately managed expectations, and markets have already baked in weaker numbers." Wait a minute, the article just said there were concerns about this. And if they had baked in such a decline how come the markets have rallied? Surely earnings drive price? Ah! maybe therein lies the problem... "most market analysts expect stocks that perform well in a strong economy will continue to do well throughout 2019." Err why? Are they expecting a continuation of a strong economy or are they saying said companies will perform well in a stagnant or deteriorating economy and if so why? Could it be financial engineering? Does they mean company share prices will perform well or company earnings? "A so-called yield curve inversion, in which short-term rates jump above long-term rates, has preceded each of the last seven recessions. Many investors are brushing aside the flip. [...] "It tells us what we already know, which is that a recession could come in two years," said Jason Draho, head of Americas asset allocation at UBS Global Wealth Management's Chief Investment Office. "The markets could still perform quite well before then." Could is the operative word, they have no idea when they just know it will come so they kick the can down the road. But hold on, earnings are falling, err... Or course analysts are not paid to encourage investors to get out of the market... "Peter Boockvar, chief investment officer at Bleakley Advisory Group, said the divergence between rallying stocks and depressed bond yields may have an easy explanation. Maybe it's "just as simple," he said, as the flattening of the bond market curve reflecting the current slowdown. He added that the stock market may just think these issues are temporary, and a "rebound in growth" is coming soon." Maybe? May? He doesn't know, no one does. What if there is no rebound in growth? Earnings have been under pressure for quite some time and Corporates have emptied their war chests propping share prices up for a few years now. And by the way, nothing in the financial markets is "just as simple as..." "The consensus view at present seems to be that US economic growth will slow but will not go negative 2019. and the second half of the year could be stronger economically than the first." In financial forecasting circles we call this the "hockey stick" forecast. It rarely, if ever, comes to pass. "Seems to be"? Well is it or is it not? "JPMorgan Chase CEO Jamie Dimon said, Employment and wages are going up, inflation is moderate, financial markets are healthy [under what measures I wonder?], and consumer and business confidence remains strong, although down from all-time highs." But markets don't always reflect real economic conditions, and volatility in the fourth quarter may be a "harbinger of things to come." Well at least he hedged his bets a little right at the end... Hmm, maybe he is not so all fired bullish after all... As a contrarian I love these kinds of articles. I need to see them to be confident a turn is on the cards. This is a critical indicator for me, not to trade but to get ready to pounce on any likely move that triggers all of my other indicators. So much for that, what about the only thing that matters, market price movements (Dow, SP500 & Nasdaq charts below) - this is a case for the Bears, I'll leave others to make the case for the Bulls: Weekly charts are looking like a possible symmetrical Head & Shoulders may be on the cards (LS/RS at same price zone), IF price turns back next week. Looking at the LS back in early 2018 a sharp weeks rally was immediately reversed and exceeded the following week (Sell strength was the order of the day back then, will it be again on Monday?) Daily charts continue to reflect a very significant negative momentum divergence (Also on RSI and Stochastic) with a retest of the narrowing channel breakout off the all time high underway. Dow ended Friday with a drop to a rising Triangle support line and a Daily chart pin bar, that could turn out to be a reversal signal. There is an un-closed gap below and the whole of the move since before the Christmas Bear is peppered with gaps, all closed, which is a sign of volaitlity and agitation in the market for me as Bulls war with Bears. I see no reason to expect the current un-closed gap to remain so. There was a Death Cross (50MA cuts 200MA going down) during the pre Christmas anti-Santa Claus rally (🙄). This has now been reversed but this often happens before a second Death Cross that is the true harbinger of doom. The driver for this is a large scale EWT 1-2 retrace, and we may have had a huge one now. On the 1 hour chart the Dow is knocking on the door of a Triangle breakout to the downside. However SP500 and Nasdaq are not. Divergence is another sign of that market agitation I was referring to above in the context of price gaps. The Nasdaq is a bit more buoyant that the others and we could see a double top (i.e. a slightly lower low) on this one before the end. Any turn between where we are and the previous all all time high is an effective double top for me. So that's case from a Contrarian Bear but the market will decide in the end, all I aim to do is be ready to react to confirmation of my signals and set ups. Setting up to be an interesting week or two, be careful out there!
  15. You need the stop loss @eloronz you just need to place it at a point that makes sense within the context of your set up (i.e. just after the point at which your premise on the direction of the market would be altered). This should be wide enough to avoid temporary retraces but not wider than you can afford to lose on any one trade. Conventional wisdom on the latter is 3% max of you account balance.
  16. The bounce back off my upper channel line continues after a pause over night. That is a technical small EWT1-2 which could suggest a strong move down now through the near term support zone. Of course it is equally possible we see a further retrace before such a move down so the key for me is whether we get a strong break through the support zone and the lower channel line. I am Short off the potential Wave A rebound.
  17. EURUSD may be at a turning point, certainly not far to go below to the recent low. The triangle breakout, redrawn since my last post, has retested the breakout zone and failed to break lower. We may yet get another retest. A break of the overhead resistance could be swift and reveal a strong move up into a final wave C of the retrace rally I have been stalking for many months. It always surprises me, through it shouldn't, how long it takes a move to evolve and trigger once I have identified the possibility. Patients is certainly a virtue vital for successful trading, and one we rarely hear people talk about. Obviously a break below the recent low requires a reassessment.
  18. I would suggest EURUSD @eloronz for the following reasons: It is the largest FX pair market by volume and value and therefore the most stable, least prone to flash moves, which are a killer for new traders (and old I guess but old hands are more aware of this phenomenon) GBPUSD can be a bit spiky from a technical perspective, often spikes through a support/resistance zone before conforming, which makes stop placement more challenging USDJPY is often impacted by flight to safety Yen buying With EURUSD you are effectively trading, it is a better proxy than the USD basket (DX) EURUSD may be impacted by Brexit nonsense short term but is less prone to spikes around this than GBPUSD I would steer clear of non USD pairs for now, it is easier to focus on the USD impact EURUSD conforms well to charting and other technical analysis
  19. Possible Wave A top! Price has hit the upper line of my narrowing channel a second time and bounced back hard (not yet closed on the 1 hour). All my technical indicators remain Bearish. A lower low on the hourly will be indicative and a break of the Daily channel lower line will be a strong signal for a BEarish phase. Will stocks follow?
  20. My road map on EURGBP has worked out exceptionally well, and I made some good gains on this one, but I have been expecting a strong retrace and retest of the Weekly chart Triangle breakout zone for some time and looks like this pair have started this retrace journey. The EWT count to a wave 1 (green) is sound and there was strong PMD and positive divergence on RSI also. Now a possible A-B has been posted with a higher low so a further rally is indicated. If GBPUSD falls, as I have suggested in a separate post then EURUSD must rally (or fall more weakly).
  21. So far GBPUSD is following my road map from mid March. Looks like a Wave B (green) in the an A-B-C format. If we get a lower low the breakout zone support level is a likely turning point. Question though, can EURUSD rally while GBPUSD falls? Well the reverse has happened so why not. To check this I look at the final leg of the Triad (EURGBP), see separate post.
  22. Hi @uow513, thanks for the comment. Perhaps it is perseverance more than patients... I try to be patient but wish I was more so. For me the trick is not to assume I am right when I eventually go into a contrarian position but stop protect carefully and actively. In so doing I am aiming to live to fight another day if/when I get a reversal, which can happen a lot when stalking a major trend reversal. US stocks is a good example of this recently. No risk, no reward! I persevere with a road map until it is proven incorrect, after which it is folly to stick to the initial view. We are not quite there with USD, although it is getting close. A break out down through key support would probably be enough for me to reverse my position. There is a technical scenario which supports a EWT1-2 retrace having already been posted, albeit a small one. If stocks commenced a major turn and central banks start pumping the money printing and revert to lower interest rates then all bets are off. I anticipate an interesting few months ahead in this regard, Brexit is a side show, except insofar as it puts the focus on the EU instability.
  23. FX has been a bit up and down to be worth trading of late but we could be coming to the end of that. I have a short term potential ending diagonal/triangle formation that, if valid, has been broken and retested into last Friday. A strong bound away on Sunday/Monday would be needed to confirm this. A break back through and lower low would set up a retest of the Weekly Triangle consolidation line.
  24. Frustrating business this trading at times. A strong Bearish move was almost totally reversed last week but not quite reversed. Will it be? The Bulls certainly think so but then that is all to the good for me, I always worry when the pack (and the MSM) align to my way of thinking too early. For now, at least until past highs are broken, I am minded to expect a lower high reversal into a strong Bearish move, after a short continuation of last weeks bull into next week.
  25. I was expecting an EWT1-2 retrace and not surprised by the strength of the rally, especially on Oil. However the 4hour chart pin bar rejection on NMD suggests to me that this is a retrace and not a motive wave so my road map remains intact unless we see a higher high int he coming days. I might expect a small retrace against the pin bar but if this fails with a lower high then cue significant bearish move. A break of the narrowing channel will seal it for me but there are better opportunities around if Stock resume a bear move and EURUSD decides on a rally. That said if Oil is a first mover I might get in with a small Short if I see the reversal confirmation I am seeking.
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