Mercury

Aligned to the EURUSD post I see a potential bearish move on GBP, which should retest the prior breakout zone at a minimum and may well retest the previously broken trend line. Similar to EURUSD the price action is more in keeping with an A-B-C (complex version) retrace rather than a strong rally at present so we may have to wait for this to complete before any potential major rally. At best, given the uncertainly, I am cautiously MT bearish but remain LT bullish.

I have not been comfortable with the price action on EURUSD, well all USD pairs and DX itself, in terms of the case for a USD bear market. It started well but has recently broken down and now looks like a contender for another leg up (on DX, down on EURUSD). Long term I still see EURUSD rallying but short to medium term I see some bearishness with 2 scenarios: A bearish retrace in A-B-C form to retest the first weekly channel line (grey) that was broken back in early Dec 2019. Another leg down on this slow grinding bear phase to close a gap left from the previous breakout and rally (back in April 2017). Short term the market ha just posted a hit and rebound back down off the Fib 50%. The wave B (brown) could manifest a bit higher yet and a breakout of the upper weekly line no.2 and the next horizontal resistance (higher high than 31 Dec 2019) would negate these scenarios and throw the long term rally back into sharp relief. Net I am tactically Short and waiting to see how price action develops. I see this playing out across many USD pairs.

Hmm, possible @cheviot. I mean another leg up is the perennial challenge when labeling EWT real time and I see USDJPY heading up to 11100 to close a gap and hit a key Fib level but what is the Jan 3-8 retrace if not a 3-4? If it is a 4-3 then we are already in the 5.

Let's see if we get a break lower and back into that blue channel after a possible overshoot and bearish 1-2.

May be seeing a short term retest and rally at the breakout zone on NY Sugar. If we do get a higher high then the next target resistance would seem to be around the 1540 area and a break out through this puts the market into clear air for a long term rally IMO. Short term retrace bearish moves still a concern until the breakout but the signs are good and the chances grow with each resistance broken, given the bullish set up outlined in the opening post.

A buy the dip moment has passed on Bitcoin and with a break to a higher high in prog we may now see a test of the critical 10,000 resistance level.

Here's something interesting concerning the Feds Repo operations, or as some are calling it QE4. Seems to me like things are getting a bit desperate. Perhaps the Fed does actually get it! Perhaps they fully understand that if the stock market craters then confidence will evaporate, a recession will kick in (to the extent it hasn't already...) and jobs will be lost. Given their mandate maybe they can justify their extraordinary actions as fulfilling that mandate rather than being bullied by Trump? Who knows? https://northmantrader.com/2020/01/14/repo-lightening/ The only conclusions I can draw from all this are that the markets are not going up as a result of any fundamentals, just following the Fed financial engineering and when it end it will be very very bad. As no one can call the top and the perma bulls have no idea what level the markets should reach, because the fundamentals do not support this market, it would not be wise to stay invested. There are, thankfully, lots of other markets to work on while this nonsense is resolved. For now the US large caps have failed to make a higher high on the 1H charts with short term 1H double tops on S&P500 and the Dow. Other markets remain resolutely below their ATHs. DJTA remains below its ATH (for you Dow theory types) and Apple is showing some signs of keeling over... Doesn't mean anything yet, not until we see a drop but progress on stocks is not the stuff of a big rocket to the moon just yet, until it is I remain prepared for a Bearish move. Even if Stocks do breakout I prefer other markets such as soft commodities for Long trading on the simple principle of buy low sell high!

Another market getting interesting now is Bitcoin. We didn't get a second test of the weekly channel and neckline as price turned up and posted a new short term high. There are a couple of important resistance levels to clear (my red lines at circa 8,600 & 10,000) by which time the rally should be well on its way after that classic breakout and failed retest set up. If we get all that then I would expect a break of the previous high at 14,000 at a minimum and after that who knows...

Price has poked into the previous high (pink 1) resistance zone, which could spell a big breakout. Risk is a pull back before that but for me the chances of a retest of the ice line (see previous post) are reduced as a result of the break above 1380. Sugar is getting interesting now...

Not sure what your point is? Are you suggesting that traders have a moral imperative to support the never ending bull market to stave off a recession that will cost people their jobs?

The bad news coming think and fast and this despite the Christmas busy period... Given my personal experience of excessive pre Christmas sales I wait with baited breath for the Christmas period retail figures... https://www.bbc.co.uk/news/business-51089118 https://www.bbc.co.uk/news/business-51090008 This last one is quite illustrative of the structural issues connecting local government, property owners and tenant businesses. This is a perfect storm or overvaluation of property leading to excessive rates and rents and in an environment where the consumer is both shopping more online and reducing their spending... https://www.bbc.co.uk/news/business-51089167

Bitcoin might well be looking to retest that neckline and/or the weekly chart channel line. Fib 62% (7470) looks favourite to a bullish turn if we do get a bearish move on this.

Dax may be leading the way just now with a nice 1-2 move and drop away. Looking for a lower low here. FTSE100 buy the dips boys came in, possibly on the mistaken view that the FTSE always moves inversely to GBPUSD (clearly this is not the case), and are now getting whipsawed and the Dow futures are also turning after a small scale 1-5 down and A-B-C back up, which is what I was tracking. Not confirmed yet, we need a lower low, bu a good sign for those of a Bearish persuasion right now. Plenty of other indices also showing similar like the Russell and Nikkei if you prefer...

That potential 1H chart breakout Long scenario reversed and price is once again testing the Fib 50% on a lower low. If this support level is broken, and I expect now it will be, then the next 2 levels are: The Fib 62% around the weekly channel breakout zone (11175) The retest if the weekly channel line and wave C = wave AX1.618 (Golden ratios) and circa Fib 76% Hurry up and wait...

Not about smart or stupid. It is about having a methodology you have honed over years and are comfortable with and within that rock solid rules for entering a trade and placement of stops. It is also about NOT listening to naysayers who hate anything that upsets their world view, such is their insecurity, and not following other people but rather following your own method. If your method is not working it can be because it is flawed or because the market needs to turn in your favour (i.e. timing is not yet right). Patience and discipline are the two most important aspects of financial markets trading in my opinion. Also NOT trading too many instruments at one time. You have to have focus. I may track FX and take occasional positions when the signs are good but the majority of my trading is not in FX at present because the move has not yet manifested. As regards FX, it has been in a slow declining (vs the USD) trend for the past year or more so not the best place to be either long or short, which is why I have been mostly elsewhere. What I am looking for in FX is a turn and breakout of this phase, which is looking increasingly like a contrarian reversal against USD. If this happens then there will be a bucket load of points to collect, just have to spot the breakout and get in on the trend. We are not there yet but maybe on the cusp. That's trading in a nutshell. You have to wait and wait and try things without losing much until you catch that move. Most of the big time traders say they make most of their gains on 5% of their trades! My strategy is win big lose small, the hit rate is irrelevant. BTW: when I say contrarian it is opposite to the broad market expectation and bias. Arguments for a contrarian continuation of the trend are bogus as that isn't, by definition, contrarian.

There is no chance of that. The man is 78, has had a heart attack recently while campaigning and by American standards is a communist! Warren is more of a threat although the Dems will be hoping for Biden as he has the best chance against Trump. I don't think it will matter who is President in November...

I concur, obvs. It is a truism of markets that you get maximum hype, blind greed and complacency at the end of a bull run. We certainly have that in spades now, except for the COT data, which bugs me... Would like to see your analysis on a chart or too if you have time.

I take it you were not around for the dot.com bubble. Nice to see that the hype is at the same magnitude as back then even if the oversold indicators aren't (not that that is at all relevant!), takes me back to my nostalgic years and is a nice additional contrarian indicator...

My current thinking on stocks (as per my post above) is that a bearish phase is more likely than not but the technicals are not clear on support for this being THE TOP. On his apple thread @cheviot suggested an unconventional wave 4, I have seen this proposition elsewhere in EWT circles for the US large caps as well. Personally I avoid using these more esoteric set ups because they are rare and only truly visible after the fact. Using them in advance can mask a more simple solution in the opposite direction (i.e. against the bias of the unconventional set up). It is important to be aware of your bias and guard against it clouding trading judgement. However the unconventional set up may yet be proven correct, we just don't know yet. So that got me thinking about what we do know (or can at least have some confidence of). If I look first at the Nasdaq long term chart, something I do from time to time to stay out of the weeds, I see some interesting "facts" as follows: The first dot.com bubble produced a crash of over 80% and the current bull market had almost doubled that peak! While the Tech is much better now I think a lot of the new entrants are in a similar position to the first dot.com hype companies in that they are over-funded by speculators, loss making and with an unproven business model. The traits of the first bubble were listing to exit, sound familiar? The pre credit crunch rally did not push the Tech stocks like it did conventional stocks, probably due to the Dot.com bubble hangover. However the crash again produced a more than 80% drop but in the case of the Nasdaq this was just a wave 2 retrace prior to a massive rally. To me there is a clear wave 3-4 as well, which means, according to EWT, that the market is now in a final wave 5. However EWT cannot tell you when the wave will end... We can say that all oscillators are over bought and the RSI is in divergence with price and as with all the indices at present, there is NMD on the daily chart. If history repeats (or rhymes as some people like to say...) and another 80% plus drop occurs, well...! Looking at the Dow weekly and daily charts I am seeing the following: I retain the conventional wave 3-4 (purple) labeling on the weekly and the rally price action is not conventions so far but then again the rally from wave 4 (pink) to wave 3 (purple) is also unconventional. I have a provisional supporting trend line (grey) and the horizontal support at the wave 3 (purple) is also going to be important I feel. That very long term resistance trend line, which is the top of a long term channel, is providing resistance at the turn yesterday. For Wychoff Theory fans, this could be setting up as a so-called "Spring" which if it breaks below significant support would then be followed by Distribution and Throwback phases. This is aligned to a wave 1-2 in EWT after a trend change. I think the wave 3 (purple) level could be important for Wychoff theory. Things get interesting and more complex on the daily chart and produces 2 bearish scenarios as follows: The unconventional wave 4 set up would suggest that the current rally is a wave 5 of larger scale wave 5. The EWT labeling is supporting of an end of bull turn, which is also supported by that LT channel top line. Oscillators and NMD also support a bearish move. I would need to see a break of both the wave 3 (purple) horizontal support and the daily chart channel line (Dark blue) to be more comfortable with this set up. Note that currently this potential Wychoff support zone is coincident with the MA200 and the MA50 is coincident with a shorter term supporting trend line (light blue). The more conventional scenario (from an EWT perspective) is set out in the pink labeling such that the current top would be a wave 3 (pink). If this proves correct then another leg up is indicated as the market puts in another 3-4 retrace correction. In this scenario the final wave 5 (purple) could still be contained within the LT channel, just occurring a little later. One additional aspect that is a bit murky is the COT data. Currently both the commercial and non commercials are in a balanced position with the non commercials marginally more bullish. This is not what would be expected at a major top but it does show that many traders are unconvinced by the never-ending bull story. In summary then I am minded to prefer the #2 scenario above where by we will see a shape correction, similar to those we have seen over the past year and a half or so and then a final rally, that may draw in the hold outs and push the COT data to a more contrarian level. This would then be in keeping with the end of 2019 wild forecast projections for more of the same in 2020. However I will keep an eye on the #1 scenario and those key support levels as I am close to 50/50 probability on these two. One thing I am convinced of is that either way a period of bearishness is indicated. I am Short off the top and turn on the Dow, Dax and Nikkei and stop protected with small exposure. I am looking for a short term 1-5 down followed by an A-B-C relief rally and then a strong bearish move next.

Not sure what you are projecting here. Are you saying the top out should be around 311, which it has exceeded mildly? If so are you saying that this is the top? Regarding the unconventional retrace, personally I avoid these set ups as they are too often in error (visible only in hindsight). I prefer to stick to the conventional EWT and if that fails I have charting and price action triggers and other indicators that will catch a turn even if the EWT is unclear.

Break higher occurred right on cue. Certainly looks bullish on the weekly chart but need to guard against a potential reversal at the next resistance point, which could produce a retrace (counter trend) back to that ice line (1290). A firm break higher would be a strong support for a long term rally from here.

Decent chance of a Bearish phase on stock indices after a red candle day on Friday post US NFP. With ISD manufacturing also turning more negative only ISM non manufacturing is hold this market up it seems, that and betting the farm on the consumer, not a bet I would be comfortable with... At this point it is impossible to tell if this is the top of the market or a possible wave 3-4 retrace or yet another buy the dip in the never ending bull. For now it is sufficient to watch for a confirmation of a bearish phase and get Short if the opportunity presents. I am already Short off the top as the turn at the long term Dow upper channel line (similar on S&P 500) was sufficient for a speculative Short as all my signals has triggered. Looking at the Charts: As mentioned, the Dow has turned yesterday right on its long term channel upper line and with a small overshoot on the daily chart nearer term channel line (now back within both). This also occurred with strong NMD and a credible EWT count to a wave end (could be end of the 5 could be end of 3 (pink), which would suggest 1 more leg up). On the Dow 1H there is a nice bearish move that is currently shaping up as a small 1-5 down. If this completes with an A-B-C and a lower high then we at least have a wave C down to come and possible much more As I have suggested before, it is hard to spot turns in white space but only US large caps are in ATH territory. Much easier to spot counter trend moves. On the Dax, Russell 2000 and Nikkei we have seen strong retraces to possible wave 2 (purple) counter trend rallies to the Fib 88% area with strong NMD at the turns. The Nikkei and Russell seem to have broken daily channels and put in multiple failed retests before yesterdays move down. The Dax may be describing an ending channel with A-E count. All-in-all the signals are strong for at least a bearish phase, if not a bull end (assessment on that will have to wait for more price action). Markets tend to turn down with a recession but the point the perma-bulls tend to omit in talking up the market is that recessions are always called many months after they have occurred and have little or nothing to do with GDP. So just as we cannot tell if this is a top from price action and technicals we cannot tell if this is a recession yet. Hindsight is a wonderful thing, if you want to catch the top then technical analysis is the only mechanism IMO, although many fundamentals traders like Soros and Druckenmiller are bearish too. You don't have to catch the top of course as there will be a relief rally or two that will offer later opportunities.

So Gold made new higher highs but interestingly Silver did not. It is my contention (and more pertinently that of recognised Gold experts) that Silver would exceed Gold in any major long term bull market move so the fact that Silver is hanging back gives pause for thought. Many markets are correlated in one way or another and although they do not always do so consistently the Gold/Silver ratio relationship has generally been sound. The very bearish candle on both weekly and daily charts on both is also a reason to consider than maybe this is not yet the time for a major Gold/Silver shift to a long term bull market. I have been, and remain, of the opinion that to get a long term bull market stocks will need to crash and/or we will need to see runaway inflation (currently expressed as the "reflation trade" by market commentators). We are not there yet! For Gold/Silver to break away into a long term bull market new higher highs will be needed to reverse last weeks bearish candle. The alternative scenario is one I have previously written on in this thread, which is a retest of Gold's H&S neckline (around the Fib 50% at 1350). For Silver it is looking like this market may still be in a consolidation Triangle with a lower low retest of the LT supporting trend line a possibility as Silver runs lower than Gold.

USD DX (and associated FX pairs) have not been moving as I would have expected for a clear simple breakout in terms of price action and EWT labeling. I tend to avoid the more esoteric versions of EWT as I feel this is about trying to fit EWT to price action by bending the rules. The exception to this is the range of complex retraces, which I do buy into. Anyway the main issue I have is that the wave labeling for the rally and subsequent drop back on many FX pairs is not clean. Similarly the DX is a bit murky. That said I maintain my bias that USD is heading down, it just may take a bit of a tortuous route in the short term. Looking at the daily chart all of the previous assessment (see above) holds and it is possible that we have seen a final turn down on Friday at a zone of significant resistance with now 3 failed attempts to break back up through it. This is the zone where the weekly chart lower channel line (and possible head & shoulders neckline) was broken in early December. However it is equally possible that we may see a drop down and turn with a higher low and a higher retest of the weekly channel line around the Fib 62%. I see similar set ups across many of the USD pairs. Until this is resolved I am not confident of any existing Shorts so am keeping close stops until a break of lower support. If the turn down is the correct call then I am in and can add in a sell the rallies strategy. If the alternative higher high bearish turn is correct I will get stopped out for little or no loss (or maybe a profit on reversal signals) and seek a new higher Short entry. I have no Long USD scenario at this time. I have included EUR and AUD for perspective. Also note I am biased to GBPUSD bearish phase to continue even if EURUSD rallies, at least for a time.

Agreed, that is the first EWT hurdle but of course not conclusive of anything, could just be a larger correction even if it breaks 306. Still so far Apple blinked right where it was going to if the melt up is over...