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Mercury

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Everything posted by Mercury

  1. While there is some divergence between the major indices in general recently the FTSE100 seems to have been much more reluctant to rally. I don't see this as a material divergence however but merely a delay and maybe we will soon get a catch up rally on the FTSE? The other indices seem intent of testing the next levels of resistance and, as I noted in my US indices thread, there are some unclosed gaps out there. There is one on the FTSE as well, which I expect to be closed before any major Bearish move. My reading of the FTSE is as follows: Overall I remain biased towards all stock indices being in a retrace (or relief) rally rather than a motive wave that would see another ATH). I think other indices (especially US) have put in an A-B and are currently in a strong wave C, which would - if true - end at a suitable resistance point yet to be determined) FTSE100 however looks to be behind the curve, and may be posting a wave B turn at the Fib 50%. There is also strong PMD on the 1 hour chart and Stochastic over sold on the Daily (a typical indicator for an interim wave ending such as a wave B - i.e. the longer term move is not yet complete, rally in this case). The wave B looks like a straight forward 1-5 down ending with a Bullish pin bar that bounced off the Fib 50% and then put in a small 1-2 before the current rally away. Watch out is that further bearishness in other markets could pull the FTSE back down to the Fib 60% so stops just below the Fib 50% make sense to me. For me this could be a nice short term trade before I resume my search for the next Bear, I am long off the small 1-2 rally.
  2. Mercury

    US Indices Short - the big one!

    With gaps all closed across main indices now and getting stopped at key resistance this looks like a credible trend turn. If we see a short term retrace turn (lower high) and drop to lower lows (1 hour chart) that will confirm the trend change for me. What I don't know is whether this could be a return to the big Bear or an interim stage (wave B) in a much longer retrace. On the SP500 the last 2 weekly candles have poked through and returned below a possible Head & Shoulders Neckline in and around the Fib 62% line. However a second test of a neckline is common enough so I cannot rule that out so 2 scenarios are in play for the Bears. The Daily chart shows NMD at the current turning point and on the Hourly we have a 1-5 down and so far a partially completed A-B-C retrace.
  3. Feeding from post on the "Great Bear is Upon Us" thread, where I posted the Daily chart for the Dow in the run up to Dec 2007 and the comparison to today's price action I now have a turn at the wave 2 (blue) point previously identified, which is a lower high than the 8 Nov high (it the turn and drop holds of course). The case for the top already being in is already made but just to briefly reprise (weekly chart below): The EWT count is credible for a Wave 5 completion (and super cycle wave 5 completion) at the Oct top The Oct top is an effective double top with the Jan top, just a bit higher, which is similar to 2007 The bearish move down to late Oct/early Nov is consistent with a 1-5 motive wave, which is suggestive of a trend change (unconfirmed) The rally back up to Nov 8 is an A-B-C form, which turned on the Fib 76% (very high but consistent with a counter trend rally). This adds to the notion of a trend change Now we have a lower high rally ending on a gap, which is about to be filled - over exuberance in a last gasp? There is NMD at the Oct top (and additionally divergence in other oscillators, which were all overbought on the weekly chart and not yet oversold - more to go in the Bear, phase 1!) The pattern is consistent with 2007, doesn't have to be but doesn't hurt... The volatility of the whole of the 2018 price action is suggestive of an ending pattern as bulls and bears slug it out. This means that the Bear camp is growing in numbers and power. The recent rallies are too strong. What I mean by this is that normally rallies build slowly at first if they are going to have staying power, this one burst out too quickly, expending all it's momentum and now may not have any more drive. For this current rally to have staying power it would be signaling a massive Bullish phase to come (from an EWT perspective). So I find myself having to either remain Bearish or seek a 5000+ point rally. I just can't get with the latter on a Fundamentals perspective (yet!). So where are we now? The charts below show the Oct Top on the Weekly and the pattern I have discussed before on the Daily, including the turn at wave 2 (blue). The Daily and Hourly charts shows the turn close up, which was on the Fib 88% (I have noted that recently we have seen a lot of 88% and double top/bottom retraces as things get volatile. On the Daily Stochastic is over bought again, which often happens at a retrace end. On the hourly, I have a set of channel lines, just broken this morning and being retested (however similar channels are not yet broken on other US markets). I have a credible EWT count for a retrace on the rally to yesterdays turn (albeit very powerful, almost straight up..!). Alas I do not have NMD, which I would ideally like but may not get owing to the strength of the rally, however this means I cannot yet rule out another leg up. The Gap is not yet closed, nor on other US markets. In summary then this is not ticking all my boxes but is a credible set up for me so long as other indices are aligning. And boy is the Nikkei aligning... I also have Gold and Silver rallying as projected, although that may have more to do with the USD at present. The USD bearishness is the only nagging doubt, however if you look at 2007 you will see that USD (DX) did continue down for a few months as the 2007 bear started and only rallied when the market realised the game was up on stocks, so perhaps this is also aligned... In the final analysis, in trading, you have to take a chance. The point of technical analysis is to help identify big picture turns and trends (together with Fundamentals) and to identify higher probability that 50/50 trading points. After that it is in the lap of the gods so good money management is required. If this works out the the Dow could offer 5000+ points Short in the first phase. This would dwarf any other set up (including Bitcoin and it's ilk) in my view.
  4. Agree @elle @ProjengENG, I closed all my tactical Longs on Friday, not wishing to carry short term trades over the weekend. I am watching for a reversal signal as the case is building across the indices. All of the Gaps (except Nikkei) have been closed now and FTSE100 as, it appears, returned to the pack in terms of correlation. With key many markets at or near key resistance zones a direction change seems on cards in the next few days. At a minimum caution is indicated for Long holders and for Bears we just need to see those triggering price action signals. Medium term I am not sure yet if any direction change is a completion of a retrace as part of the long term Bear or an intermediate phase in a more complex and drawn out retrace. The market will reveal itself on this in due course.
  5. I don't worry much about Brexit shenanigans @Kodiak, except for short term volatility from an entry and stop placement perspective. To me Brexit has not changed the long term trajectory of key markets it might reasonable be expected to influence (e.g. FTSE100, GBPUSD, EURUSD). As a long term swing trader I am less concerned with short term volatility. My long term Fundamentals assessment has not changed post Brexit referendum nor as a result of the pantomime that is the leaving process (see posts elsewhere on the Euro and stock indices for details), in summary though I see the Euro as a doomed currency, at least in the current structure, and the "United States of Europe" dream of the so-called elites as just that, a dream. When the global economic realities bite the valuations of many assets and currencies will unravel and this will have little to do with Brexit. The only area where I do see it a relevant is as the beginnings of a groundswell of protest votes against the status quo. We then saw Trump elected a change in leadership in France, Merkel's popularity and support base plummet (she won't survive to the next election), multiple alternative political groups gaining ground across the World and several independence movements making noise. Add to that the China/US thing; US and everyone on trade negotiations; US apparent return to politics stopping at the waters edge footing (now including at the "wall"), meltdowns in countries like Venezuela, economic reversals in key BRICs (Brazil in particular but China is not looking too rosy right now) and so on. Brexit may have been one of the first major status quo changes but in and of itself it is small, insignificant, next to the backdrop of political and economic uncertainty that may and to a fundamental shift in the geopolitical and geo-economic status quo. This is the basic set of fundamentals that underpins my long term assessment of financial markets direction driven by depressionary forces, which can be summed up as follows: Stocks down (big time!) USD up Gold/Silver up Industrial commodities down (at least initially) - based on economic activity contraction Happy days...
  6. Mercury

    US Indices Short - the big one!

    Is the rally over? Not sure but the US larger caps have been stopped at key resistance zones. Take the SP500 for instance, really the bell weather index and important to analysis and watch whether you trade it or not. Currently this market has been stopped at the Fib 62% (the most popular Fib for retrace turns). What else? Well there is a significantly weighty Neg Mom Div on the Daily and all shorter timeframes and a credible A-B-C EWT labeling. What I cannot assess is whether this is a potential large scale Wave A termination or a wave 2 end, which would then result if the beginning of a major Bear wave 3. Of course I also cannot rule out a longer rally but the indications are that a least a short term Bearish period is set to kick off and after all we have had a fairly strong bullish period since Boxing day... So we are due at least a correction back down. I certainly would be hesitant about going Long a this juncture. Other than a continuous rally to infinity and beyond (ha ha!) I see two plausible scenarios: This is a Wave A so we should see a Bearish move to a wave B termination above the recent low and another rally to a Wave 2 end This is the end of the retrace (wave 2 already) and the beginning of the big one! On the negative side the Nikkei has yet to close its gap and FTSE/Dax could still have a bit to go to their critical turning zones. We could see these indices do this on Monday with US indices treading water until their open and then all dropping. My trading strategy is to chose safety first. I have cashed all my tactical longs for a tidy profit and will await developments with a Bearish bias.
  7. Mercury

    Gold & Silver in a LT rally

    So if Indices are close to a top, as I have suggested in other posts, and USD is closing on a strong rally phase (maybe a month or so to go) what of Gold/Silver? Of late these precious metals have been impacted by USD (travelling inversely to the dollar) but if Indices do begin a major Bear phase then the flight to safety would push both USD and precious metals into a strong rally. In fact I believe USD has already started a strong long term rally and of late has been in a natural retrace prior to a major push north (see my post on the "are Indices over-valued" post. But what about Gold and Silver. The monthly Gold chart shows a very long term support trend line, which remains strong. We can see the major rally to the commodity highs in Sept 2011 and since then a classic A-B-C retrace. If this holds (i.e. if the market does not break below the LT trend line) then we have already seen a major 1-2 wave move pointing to a huge motive wave rally to come. The Weekly chart shows a series of 1-2 retrace moves [Purple and Pink labeling] within a large Triangle formation with the LT supporting trend-line as the bottom line of the Triangle. Furthermore there is a potential Head & Shoulders formation (blue circles) and a very nice associated neckline, which is also the top of the aforementioned Triangle. This is a strongly Bullish set up in my opinion, which will only be negated by a significant break of the LT supporting trend-line/Triangle. Zooming in to the Daily we can see a pair of tramlines [green] on the retrace move down to the recent bottom where a significant reversal pin bar can be seen on both the Weekly and Daily charts (very bullish). And it looks like the LT trend-line is still strong with a short term 1-2 retrace completion {blue labels} that occurred on Friday. My hourly chart shows this move in more detail. I am expected another 1-2 retrace either before a breakout from the tram-line or afterwards with a retest of the tram-line. Either way a breakout of the tramline is a Long trade trigger for me. I am long from the LT tramline and looking for confirmation of the move to add a long term rally campaign. Out of interest Silver looks to have already broken out. I will be waiting for a retrace back to support levels to seek a Long on Silver also. Thoughts?
  8. Yep it's motoring now, which is what I was looking for, and that gap remains unclosed. Similar picture on SP500 and Nikkei (see former below). Dow is also now motoring up to the Fib 62% but the others still have some way to go. I wonder whether the Dow will plough on up to the next resistance zone of diverged in consolidation for a while? I would be reluctant to attempt a Short until these indices get their ducks in a row... For now I will hold my tactical Longs a bit longer (now stop protected at BE).
  9. Agree @cryptotrader, just now (almost 9pm UK time) GBP is pushing down but likely to be temporary angst over the Parliamentary vote, which as you know is non binding and anyway not in the gift of Parliament to give. I expect things to stabalise and GBP to continue up in due course. FTSE is just doing its own thing, it was interesting that US indices, especially the Nasdaq, were a bit off today but the FTSE just kept going. As many people who comment on this forum constantly remind us, correctly, trade the price action.
  10. I have been waiting for a USD Bearish move, which I believe will be a retrace rather than motive move (i.e. a counter trend move) for some time but so far it hasn't arrived. It goes to show that patience is a massive virtue when it comes to successful trading, that and careful money and risk management whilst seeking the right set up. I have re-looked at USD using the Dollar Index as a guide and come up with the following assessment. Long term (Monthly chart) the overall picture of a major USD rally remains unchanged at this juncture as nothing in the fundamentals or technicals has materially changed and a rally is consistent with my Bearish bias for stocks and the Euro (Fair warning on my bias!). The market bottom is the Head of a Head & Shoulders formation with the Neckline as the upper part of a coiling Triangle. The breakout of this Neckline/Triangle produced a very strong and fast rally. I think the long term chart now shows a potential consolidation Flag formation (very strong lower line in terms of unsuccessful retests of this line as a supporting trend-line), however the upper line is weak. If correct then we may expect the upper line or thereabouts to offer resistance that pushes the USD into a Bearish move. This Move could either return to the lower Flag line or bounce of nearer term resistance to set up a retest of the upper line. Looking at this on the Weekly chart you can see the latter retrace scenario in the form of a coiling Triangle 1-2 (pink), 1-2 (blue), which, if correct, may retest the channel breakout zone at the Fib 76/78% level before rallying away. However the Pink 2 could easily be a wave A that would result in the alternative scenario proving correct but I am not too worried about that at present as both scenarios as Bearish and price action should reveal which one is valid in due course. The Daily chart shows a possible road map for my lead scenario. A drop in a form that shows an A-B-C pattern that culminates and rallies from the Fib 76/78% would be a strong indicator that the big USD rally is on. I will be looking for correlations from other markets for this potential USD rally plus Fundamentals support such as deteriorating global economic conditions.
  11. Mercury

    What is the USD doing?

    I am expecting a short term retrace on EURUSD and DX is showing signals of the same in reverse at present. I think there is a bit more in the current move before any retrace. The point here for me is not to spot the turn and trade it but to be prepared for it and pyramid the EURUSD Longs when the retrace ends. Trading strategy: Stop protect at BE or cash any Longs within the Fib 50% zone. Seek to identify the retrace end and turn to add to early Longs. Regarding GBPUSD it is similar, although we may only see consolidation price action here. If so I expect a further bearish move on EURGBP.
  12. Looks like the FTSE100 is off to close that Gap. If it does let's see what happens next but I would expect a continuation of the rally once the gap is closed and perhaps the Fib 50% resistance zone is favourite for the next Bear attempt, although first we have the Fib 38% zone and need to keep an eye on other indices for clues. I am Long off the channel breakout, stop protected just below the 6760 prior small low for a low loss risk trade with lots of upside potential. As I am long term Bearish this is a swing trade off what I think is a wave B conclusion leading into a wave C, which should run fast if correct. Medium term I don't know whether the FTSE100 is ahead of or behind the other indices but it seems out of sync and this could give some clues as to what the others are doing as the move progresses. For now I am content to sit on my Long and let it play out.
  13. Ah Brexit! The source of all mysterious and inexplicable market movements...
  14. Mercury

    US Indices Short - the big one!

    Bit annoyed with myself today. I failed to spot a price gap which was eventually closed on the Dow with a higher high on Friday. Interestingly a similar gap on Nasdaq and Dax has also been closed but not on SP500, Nikkei nor FTSE100... This suggests to me another Bullish period to the next resistance levels before the chance of a resumption of the Bear will come into question again. And the FTSE is the most interesting one.
  15. Mercury

    Gold & Silver in a LT rally

    Hmm, it seems like you are asking for a tip @gautamhait, I don't do tips. There are some services around that do this if you are interested but of course they charge for the service. If you are asking how far I think Gold will go I can say that I think (think being the key word here) that Gold (and precious metals generally) will go into a long term Bull run coincident with a major bear market in stocks. How far, how long? No idea, I let the market decide that and act accordingly using my trading methodology. In the short term I think Gold/Silver will continue to rally, which is something I highlighted as a possible scenario early in this thread. My next targets are 1360 (Gold) and 1750 (Silver), although naturally the markets could fall short of that or push through a bit further. At some point I expect to see reversal indicators that will signal a bearish phase. Depending on the price action that emerges I will look to see whether this is an actual trend reversal or just a retrace of the current Bullish trend. Nothing is certain, the markets will reveal themselves in due course. However, so far Gold/Silver is playing out according to my lead long term scenario, as outlined in this thread, so I would be foolish indeed to start second guessing myself. I am focused on 2 things in precious metals markets: Maximising the opportunity my scenario is offering in a risk managed fashion - so far so good Watching out for price action that may call my lead scenario into question - nothing so far... Let me ask you what you think Gautamhait? This is supposed to be a discussion forum after all...
  16. Mercury

    What is the USD doing?

    Just to complete the FX picture with respect to other posts, here is my take on DX. Nice hit and turn on the Fib 62%, after a 1-5 wave A down, so looks like a wave B completion (unless it is a 1-2 of a much bigger drop but time will tell). If DX does run consistently down from here then EURUSD will do the reverse. Either way I am looking at a significant bearish retrace move to set up a long term rally in due course.
  17. Mercury

    Gold & Silver in a LT rally

    It rather seems that USD price action is driving precious metals at present with USD weakness supporting rallying Gold/Silver. Looking at the technicals on both it is simply an end to my anticipated consolidation part way through the medium term rally, which presents as a Flag or Pennant. In both Gold and Silver we have seen a breakout of this consolidation and in the latter a break through over head resistance. I expect both these markets to continue to rally for a while to complete the medium term wave 1 before a more significant wave 2 bearish retrace that will set up a very long Bullish trend. My trading strategy is to go Long on the breakouts, mentioned above, watch out for any short term bearish retraces as an opportunity to buy the dip until I see signals of the wave 1 end and then exit all swing Longs (keeping only those I took at the beginning of the rally as long term trades) and wait for the retrace to compete before entering a long term Long buying campaign.
  18. Mercury

    EUR/GBP/USD Triad

    EURGBP has turned out to be my best trade at present, closely followed by GBPUSD, but the difference here is that while GBPUSD is, IMO, a retrace trade EURGBP is looking increasingly like a long term trend down. I have been patiently tracking this as the consolidation evolved, taking several "false dawn" positions but now with a potential breakout of the Weekly Triangle (close below on the weekly candle) the Bear could be on. However we need to watch out for the retest of the breakout zone and I can see 2 potential scenarios: a further bearish drop before there retest (blue arrows) a near term retest and then strong drop away there is also a chance we get both in a double retest (which would be a very strong Short signal) If we see a strong 1-2 bearish retrace of EUR and consolidation on GBP scenario 1 will emerge. If GBP retraces hard then scenario 2 will result. If both GBP and EUR reach my full retrace targets then EURGBP will drop away from the breakout zone and the long term bear will be on. I anticipate EUR will be much harder hit than GBP in the coming global recession. For now I am happy with multiple Shorts all stop protected above the Weekly Triangle consolidation line so mt strategy is to Short on failed retests of the breakout zone in a sell the rally mode.
  19. Mercury

    EUR/GBP/USD Triad

    I like to look at FX Triads to keep my analysis honest (or at least to identify where something doesn't look right). Not always easy to assess, especially when the two main sides to the Triad (in this case EUR/USD and GBP/USD) are going the same way. I am looking at EUR/GBP with a contrarian bias (Warning! I have a bias here but at least I recognise it...) in that I believe the majority view that Brexit is doom for the UK to be misguided. People will point to GBP/USD as proof but I believe this will turn out to be confirmation bias as if you also look as USD across the board you will see USD strength and others do not have Brexit issues to contend with (EUR, CAD, Yen, etc. etc). Anyway back to the only data that matters to me, price action. On the weekly chart I have a very strong Triangle consolidation formation since the 7 Oct 2016 market top, which I believe to be a wave B top leading to a strong Wave C Bearish move (check out a Monthly chart to see this more clearly). The alternative assessment, aligned to the anti-Brexit viewpoint, is that the Euro will charge up against GBP and that this Triangle consolidation is building toward this move but I find it hard to see such a strong move against GBP if the Euro also drops heavily against USD. Either way when there is a breakout of this Triangle it will be a trading opportunity, especially if it is to the Bearish side (more potential points in that scenario for me). Looking at the Daily chart I see a Flag formation (blue lines) that has been broken and now the market is seeking to retest that Flag resistance. It is possible that this has happened already on Friday 21 Sept (my Brown A label) but I believe we will see another rally to the Fib 76/78% area where it intersects with the lower Flag trend-line to complete an A-B-C retrace. If we see a rebound back off this area of resistance then a Bearish move could be on. This could coincide with a rally in both EUR and GBP vs USD (as I have indicated in other posts is my assessment) OR a full on Bearish move in both cases with EUR getting hammered faster and harder (trade wars anyone?). Looking at the Hourly chart I see a potential A-B retrace completion with a breakout of the upper tram-line. If you like to trade short term there could be 100-150 points on offer here. I prefer to keep my power dry for the Short side of this market, unless the breakout from the Weekly Triangle is bullish of course but in that case I would seek better market opportunities elsewhere. Anyone have any thoughts to offer on this market? I'm really very keen to hear challenges especially.
  20. Mercury

    GBPUSD retrace trade

    GBP rally continues and now with EUR following suit we may anticipate a period of USD weakness. Just as with EUR I an expecting a retrace (or perhaps more likely a consolidation phase) on GBP before the next leg up and consequently the Wave A turn could be up around the 13,600 area, but as always the market will tell the tale in due course, we just have to be open to the signs and ready to take advantage of the swings as they unfold.
  21. Mercury

    GBPUSD retrace trade

    I see a similar pattern in GBPUSD as in EURUSD so overall it looks like GBP, like EUR, is set for a retrace rally, which, if correct, is already underway. When this concludes the Bear should get it's claws in again as USD rallies strongly across the board. Looking at the GBPUSD Monthly chart we can see that GBP has been in decline for a long time, in fact a steady decline since the early 1900s but we don't have that much data here. In more recent times GBP crashed down to almost parity in 1984, something I expect to see revisited in the relatively near future and perhaps a breakthrough to below parity this time? One thing of note is that GBP was falling significantly well before Brexit and therefore I do not subscribe to the notion that Brexit is a major driver because macro global factors are much stronger. Not that it really matters much to me what is driving a move, so long as I recognise a move and get in... We can see on the Monthly chart that recent price action has been in consolidation in a Flag formation, hard to trade due to whiplash effects. However there has been a significant breakout to the Bear side now and I believe this market to be in a short term retrace (or relief) rally that will set up a strong motive wave Bearish move soon. The Daily chart shows the Flag break and current retrace more clearly. This appears to be moving in a classic A-B-C form and is mirrored in EUR and AUD (probably more too but note CAD and JPY are on different paths). By my reckoning the Wave A is done and now the markets are moving back down to complete the Wave B before rallying hard to complete the overall relief rally. I am looking for such a rally to come into the resistance zones around about the point at which the Flag was first broken through (probably beyond that for AUD as it happens). This would be in the 13800 area for GBP/USD. Actual turn point can only be pinpointed by price action of course, so this is only a guide. Hard to pinpoint a Wave B termination, they are unpredictable in nature as the market forces slung it out between Bear and Bull sentiment. Sometimes they run fast to closure and sometimes there is a lot of whiplash. Of note it looks to me that GBP will drop more heavily than EUR in the coming week or so. If price breaks the 15 Aug low then the retrace is already done but I think the likelihood of this is lower (at this point). Trading: I was long from the tram-line breaks off the Wave 1 turn (mid Aug) but cashed near the Wave A top I am short from the wave A turning point and holding stop protected at break even until I see a Wave B turn (otherwise can hold if this is already the Bear continuation) Upon seeing price action moves into a rally phase I will seek to cash shorts and go long up to the previously identified retrace terminus zones Then it is about beginning a long term (several years) Shorting campaign (Long USD) Any one see it differently? Let me know your reasoning if you do.
  22. Mercury

    EURUSD Retrace rally then big drop

    Well, well, a strong rally off the support zone and my low risk Longs are now stop protected at break even. We haven't seen the 1-2 retrace yet so I am waiting and watching price action on this but as soon as I see it I will look to buy the dips as I anticipate this rally going for a bit. I am not sure at this stage whether it will be a long one to the end and turn back down or a clearer A-B-C but from these ow point holding for the medium term will be my approach.
  23. End of 2018 and time to take stock (Short HaHa!). I have been waiting for a big stocks Short opportunity for several years and finally it looks like it is arriving. It could be the biggest Shorting opportunity any of us have ever seen. Some have pointed to Bitcoin but that was not a credible opportunity in my opinion, unless you are a pure gambler. Patience is certainly a virtue with this trading game if you are seeking to catch a big move and it has been on FX too. Having missed the first bearish wave down from April 2018, I have been watching for the probable retrace to get Short for the big wave 3 down. I am also interested in swing trading the retrace and have been attempting to do this for the last few months of this year but each time a possible rally presented itself it broke down to set another lower low. It is very hard to catch a wave 1 termination but another possible turning point is currently presenting itself. Will this be the one? And what might happen next? I regularly relook at my entire assessment to see if anything has changed materially and now seems like a good time to relook at FX. The monthly chart shows the long term perspective and the potential for a long Bearish move, once the retrace rally is out of the way. The Euro had been on a charge vs USD since its inception in 2002 (well the paper currency launch) but peaked in 2008 during the Credit Crunch and since then, as with most currencies, has been steadily losing value against USD. This also comes during a period of increasing turmoil in the EU (in particular for the Euro zone), which has been well covered in other threads but in short the Euro zone has some insurmountable (in my opinion) structural problems including a disparity between the various country economies (the likes of Greece and Portugal urgently need to devalue and Italy and Spain have major issues), inability to operate a true central bank and a wide range of individual country credit rating (resulting in a lack of uniform debt cost). Add to that political turmoil that is unlikely to be resolved any time soon (not least the migrant issue) and the Euro could not only fall heavily but could actually unravel just as the previous iteration, the ERM, did. So from both a fundamentals and technical perspective I see the Bearish trend continuing in 2019. I fully expect the inception levels of sub $0.90 to be reached and quite possibly the theoretical all time lows of $0.63, if not oblivion. But what about that pesky retrace? Not much point in placing a short now unless you are willing to take a huge stop loss exposure, which I'm not. Looking at the Weekly chart you will notice a nice head & shoulders formation in 2017 that broke out through the neckline with a large gap, that crucially remains unclosed. I expect this to be closed in due course. The whole of the 2017 rally is enclosed by a consolidation Triangle formation, a likely Pennant/Flag that was broken to the downside in April. The move down since then is also enclosed in a Triangle that is now on the verge of a breakout into a rally. I also have a credible EWT 1-5 form for the wave 1 (blue) down and I expect the rally to be an A-B-C retrace, which would confirm the overall trend is still Bearish. I also have Positive Momentum Divergence (PMD) at the Nov wave 1 (blue) turn, which can also be seen clearly on the Daily chart. The wave 1 (blue) also turned on a strong weekly chart pin bar, which was coincidental with the Fib 50% off the 2008 high (see Monthly chart). Looking at the Daily chart then I can see that PMD at wave 1 (blue), which is looking strong. The move down to the turn is enclosed in a possible ending triangle that was broken and retested (support held) and then that support zone was tested again and again held and then put in a sharp rally followed by another retrace down, which put in a higher low. This kind of price action is typical of a consolidation phase prior to a strong wave 3 rally and now the market is poised over New Year at the crucial Weekly Chart Triangle upper line. A breakout through this line (which is a must to confirm the retrace) that is fast and long (signature of a wave 3), maybe even with a gap through the resistance, would tee up a run to a wave A of an A-B-C that could ultimately terminate with a retest of the breakout zone of the Pennant (circa 12,300) and the Fib 76/78% but we will have to see how the move progresses to assess the likely turning point back into the Bear. While the retrace may be lucrative it is always risky trading counter trend, especially if you do not deploy swing trading techniques, as trend trading often does not work, unless you get an early A-B and a long C trend. The bigger opportunity is clearly tracking this potential road map to spot the next Bearish phase. However as a swing trader I am more than happy to trade this and related FX pairs and am already Long from previous lows. My trading strategy is to hold those further down Longs for the termination of the A-B-C move and to add on key breakouts for a shorter term trade to the Wave A turn. I will not trade the Wave B but wait to see if I can spot the turn back into the final wave C move and pyramid this to the end of the whole retrace before reversing into the Bear move.
  24. Mercury

    EURUSD Retrace rally then big drop

    Slight adjustment to the weekly Triangle line needed for the emergence of another leg down. Price has been stopped by the short term Fib 78%, coincident with my revised weekly Triangle retest. PMD is still intact on 1 and 4 hour charts. This is a good point to take a flyer on a Long with a close stop. Alternatively wait for a small 1-2 rally and retrace. Currently the price action is consistent with a break through the Weekly Consolidation Triangle on EURGBP while GBP remains relatively strong and the rally is intact there, while GBPUSD rally remains in play my bias will be for EUR to respond likewise in due course, maybe now.
  25. Mercury

    EUR/GBP/USD Triad

    My Short trades are doing well on this pair after the wave 2 (blue) turn and 1-2 retrace offered a number of trading opportunities. A fast move back down to the lower triangle line was what I was looking for and got. This is where the market currently resides but will it plough on through of bounce off in a relief rally? Given GBP strength and my separate projections on the other 2 pairs in the Triad my lead scenarios are for a period of consolidation or a relief retrace rally before a more powerful bearish move through the lower Triangle support. Alternatively we could see a break out of the Triangle and retest rally, time will tell...
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