Mercury

Yen breakout to the Bearish side in prog. Supports a period of either or both USD weakness and Stocks weakness. With Gold/Silver in a rally it is likely both.

Seems like a definitive turn has also (as well as coffee) taken place on stocks as well... The US large caps, especially the Dow, have not put in their customary reversal, although the buy the dip permabulls did their best with the Nasdaq and SP500. Markets are opening bearish after the hour off and USDJPY is making a breakout...

Seems like a definitive turn back bearish has indeed taken place...

Coffee has keeled over as I had suspected it might. Took a bit of consolidation time but after what looks like an A-B (light blue) retrace a Triangle consolidation price broke out to the downside and is now heading towards the price gap, around the Fib 62% area (10100 ish). As there is another price gap right down at the beginning of the rally (9400 area) I cannot rule out a much deeper bearish move that could prove motive (i.e. head for lower lows big picture).

So yesterday turned out to be a retrace down but I was covered so no sweat. Today another opportunity presented itself when the Dow dropped after a touch on a resistance channel line. With the other markets responding slower this offered an opportunity to get Short at key turning points, which I am on several stock indices. One such is the Dax which broke out of consolidation only to be hammered back down in what looks to be a classic exhaustion rally and has now dropped back into the consolidation zone. I anticipate an drop through and out the other side (bearish direction). As I mentioned the Dow put in a touch and drop away and the SP500 put in an overshoot and reversal and the Nasdaq looks to be responding to a Megaphone channel occurring at the end of a medium term narrowing channel. All of these events are happening at a credible 1-5 EWT count and and large NMD. Got to be aware of a reversal as we have seen before and likely we will see a small scale 1-2 relief rally before the next major wave lower but if we see lower channel lines getting broken the bearish phase will be on. Once that is confirmed the next question will be is this it or will we see a Santa rally and if we do will that deliver fresh ATHs or a lower high. All to be assessed as price action continues but first up is that channel breakout.

Dax, Nikkei and FTSE100 remain below recent (past 2 weeks) turning points and we have seen an interesting recent bearish candle in play on US large caps, a potential spike and retrace back down, which could signal rally exhaustion. In the case of the Dow and Nasdaq this occurred with an overshoot of the 4H chart rally channel and in the case of the Nasdaq also the Daily and Monthly long term resistance trend lines (overshoot and quick retrace being a particular signal of an exhaustion phase). In the case of the SP500 this has occurred with a hit right on the Daily resistance trend line and rejection, so far at least. As I have mentioned before: with volume relatively weak and seemingly in a down trend; and with COT net long positions weak and weakening (not what one would expect of a breakout rally); and with Gold/Silver rallying; and with NMD at the turn points on all markets and as USDJPY has also taken a similar bearish hit; the odds of a bearish phase are good and the risk reward is decent. I am already Short Dax and FTSE100 off the previous turns but money where my mouth is this time on SP500, as the exposure is tiny, I am Short off the hit and turn on the daily trend line with tight stops just above.

The case for a Yen rally (USDJPY bear) is strengthening despite large cap USD stock indices advances, or perhaps because of them as the gas behind these stocks rallies seems rather watered down: low and declining volumes; Vix at very low (some argue complacency) levels; COT data is weak and the net positions declined (more towards the bearish side) last week; non US large caps divergent from the large caps; HK, China 50, FTSE100, Nikkei and Russell 2000 all put in bearish weekly candles last week with DAX showing a doji. Gold and Silver rallying and the Yen rallying. All in all I remain on the lookout for a bearish trigger on stocks, which we have not yet got, except perhaps on the FTSE100. But on the Yen the breakout is on and currently the channel is being retested. If the USD continues its current bearish direction and we get any stumbling in stocks then this pair will hammer down. My lead scenario is for this pair to make it past parity and probably a good deal lower than that.

EURUSD turned right on the Fib 62% off the 21 Oct high, my wave 1 (brown), which was also a retest of the daily chart resistance trend line breakout I had earmarked as a likely turning point previously. The move down at the point of the recent turn was in an A-B-C form (retrace counter trend move) and there is significant PMD on the 4H and 1H charts. In addition key oscillators were oversold on all relevant time frame charts. On the 4H and 1H charts there looks to be a small retrace post turn, which could be a short term 1-2 (grey). If this is the case I would not expect to see much of a further retrace at this stage, and not into that small 1-2 zone. On the 1H chart I also have a channel breakout and that short term 1-2 falls beyond the breakout, which suggests a rally from here. I am keen to see a 1-5 up to an initial wave 1 (light blue), thereafter a reasonable retrace to set up a big push rally. A reversal back into the 1-2 zone on the 1H chart would give be cause for concern but at this point I am Long below that point and stop protected at BE so will be looking for buy the dips type opportunities once the breakout is established beyond doubt.

Crikey I though you were Tyler...

FTSE100 makes lower lows off the turning point. Dax set to follow and if it does then the whole pack of cards may collapse, at least until the mysterious buy the dips boys goose it again...

So Eurozone CPI numbers come in below last time and below consensus and a whisker above contraction. Dax and FTSE100 didn't like it and no wonder. After all the QE, NIRP and tedious press conferences stating that the ECB "stands ready to do whatever is necessary...bah, bah, bah!" the key objective of driving inflation (like that is really a good thing for consumers...) is actually going into reverse. Unprecedented global stimulus produced anemic real economy results but goosed the stock and bonds markets. The system ought to have crashed in 2007/08 and triggered the much needed reset but that didn't suit the elites so here we are again, except this time it is much, much worse... And some people want it to continue ad infinitum but eventually there has to be a reckoning and the longer it goes on the more painful it will be, and I don't just mean financially!

So Eurozone CPI numbers come in below last time and below consensus and a whisker above contraction. Dax and FTSE100 didn't like it and no wonder. After all the QE, NIRP and tedious press conferences stating that the ECB "stands ready to do whatever is necessary...bah, bah, bah!" the key objective of driving inflation (like that is really a good thing for consumers...) is actually going into reverse. Unprecedented global stimulus produced anemic real economy results but goosed the stock and bonds markets. The system ought to have crashed in 2007/08 and triggered the much needed reset but that didn't suit the elites so here we are again, except this time it is much, much worse... And some people want it to continue ad infinitum but eventually there has to be a reckoning and the longer it goes on the more painful it will be, and I don't just mean financially!

Potential breakout to the upside on Bitcoin after a Fib 50% hit and previous rally gap close. Need to see a break of the short term resistance at 8800-900 (again!) to get confident.

Could be there now on the Dax and FTSE. Well the top was some time ago but the recent top out, current in the case of the Dax, looks like it could be a big picture wave 2 (purple) turn. As such this would suggest a short term 1-2 drop and rally to lower high (this appears to have occurred on the FTSE already with the current turn) and then the full wave 3 Bear moves would get going. US large caps are at ATHs as we all know and may yet even put in another via a Santa rally perhaps, or could fail with this attempt and put in a lower high. All to play out in due course. Looking at the Dax and FTSE though a bearish phase seems to be crystalising as we progressed through the week. Despite US large caps putting in higher highs no other index is following and indeed, in the case of the FTSE in particular, have been stubbornly putting in lower lows. Looks like the markets are not doing what the Perma bulls want them to do... But even some with more bullish bias longer term are seeing at least another bearish retrace before any major breakout. I see it as an ending pattern but in this we are aligned and that a bearish retrace does appear to be on. On the technicals side, in addition to the big picture previous post supporting my wave 2 (purple) turn scenario on the Dax, I have a short term A-B-C (1-2) retrace that has broken down at key resistance this morning and put in a fast downward move, typical of a break into a wave 3 down. We have had a lot of whipsaw of late, which is indicative of a key bull/bear struggle so some care is required until we get new lower lows but for those that went short at the turns and are now stop protected will ultra low exposure the outlook is bright for a a sustained bearish move. Similar picture on the FTSE100 but this time it is a channel breakout set up and the 1-2 has already been posted. Overnight we saw a smaller 1-2 retrace rally with little conviction that also turned and dropped this morning with a lower high. SP500 and Nasdaq are in potential ending channels with an A-E pattern traced out. SP500 is turning at the top, with a small overshoot from the overnight out of hours trading and Nasdaq is a little short of its top. IF the US large caps do not follow the European indices down in out of hours trading then we could see a small rally to new highs to trigger their drops but there is no technical reason they cannot follow. However given the buoyancy of US stocks I would imagine the European bearish move would have to be very strong to drag the US into capitulation before the open. US retail data may be important as a short term driver today and we also have Eurozone CPIs at 10.00. Could be an interesting end to the week...

Breakout! Hmm, USD driven or in advance of stocks I wonder...

Breakout? Wonder if we will see turns across the board...

middle of the channel is the place you do not trade. This could easily be a consolidation phase, probably is, and until it breakout out decisively both bullish and bearish scenarios are in play.

Tell you what though, we could use a bit of Iron Lady action in the UK these days. The current lot have to be the most ineffectual collection of space wasters to ever warm the benches of Westminister. MT would have the UK out already with a deal that was lopsided to the UK. Like her or hate her you can't deny, she got **** done.

So Germany avoids recession (well under the short hand 2 successive quarters of GDP decline measure, which is antiquated) but they put in a massive 0.1% positive GDP last quarter, not exactly the stuff of mega bull markets, unless they are fueled by widespread financial engineering (AKA a ponzi scheme). The UK put in some not so hot retail numbers, has anyone notices any of the bad news around retail... 🎅 Amazingly the analyst consensus on retail sales growth was 3.7% after 3.1 previously. I am surprised it even came in at 3.1% this time but where the hell did the 3.7% come from? They just aren't paying attention but then they don't have the inside track into retail organisations... Upshot is the FTSE is making another leg lower, it really isn't looking strong. So long as price stays below the lower channel lines this is a bearish set up for me.

Potential channel breakout to the upside on EURUSD. If this holds then can GBPUSD be far behind? GBP has been stronger of late but I expect a reversal of that for a period, probably consistent with a strong EUR rally. Watch out for a short term 1-2 rally and retrace before any rally really gets going.

Gold/Silver still rallying, still signaling a potential stocks drop. Dax is the most interesting this morning. Germany managed to stave off recession (We saved!) by putting in a 0.1% GDP growth figure (ah! maybe not!). Dax is falling after a potential wave 2 turn and followed up a short term 1-2 (light blue on my chart). A break of short term resistance could cement the obvious 4H channel breakout, which occurred on NMD around the Fib 88% off the ATH. Russell 2000 and Nikkei have broken short term support levels and are now hovering around these and US large caps are currently in potential ending channel formation with the Dow putting in a new ATH overnight to join the other two, was kinda expecting/needing that to happen to get more confidence we were done with this rally phase. It is early yet and I wonder whether the Dax and FTSE will lead everything down now or **** about waiting for the US open...

Russell 2000 mid caps showing the way for US large caps today?

Another glorious set of UK data, NOT! US data later on today will be interesting, given the slightly improved US data of late we might have thought the US stock market would be putting in a stronger performance but apparently the Bulls are a bit skittish... German GDP tomorrow will be very interesting I expect. The FTSE continues to respond negatively to bad news, which is a blessed relief to those of us fed up with a market tuned to central banks and political comments about nonsense. The chart shows a lower high again and a breakout of the current channel (adjusted since the fakeout from the other day). A lower low vs that fakeout will be bearish. Currently the set up from my previous posts on this thread remain in play. Only a reversal to a higher high would cause me to adjust, although a break back into the channel would give pause for thought...

EURUSD (and therefore likely USD generally) looks lie it may have achieved a turning point. Possible small leg down to come to hit the Fib 62% but equally possible this pair trigger a channel breakout. Strong PMD on 1H and 4H charts and the turn is at the previous channel breakout zone.

As usual, the Yen is strengthening as stocks (Nikkei) keel over. USDJPY has been in a consolidation pattern for some time but trending downwards so my view has been that this pair will eventually drop much further come what may. This could also be driven by USD weakness, a subject of much debate in recent times. A dual tailwind of stocks falling and USD falling would send this pair further than others, which is what my analysis was suggesting could happen. As for now, the pair have seemingly recently topped out and may now approach a key channel breakout point as stocks decline.