Mercury
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Posts posted by Mercury
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The perma bull market was/is principally driven by Tech momentum stocks so it would follow that a dip buying relief rally of final wave to a bull ending point would be similarly led. The Nasdaq currently lies at a critical juncture for me as it has hit and bounced back up off a very long term channel support zone (8200 =/-). If we now see a bounce here then the relief rally could be on but if we see this zone broken (close below at the end of the month (i.e. today!) then who knows where this ends...
FWIW, at at this point it isn't worth much, I think we will see a relief rally...
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Err, buy the dips! 🤣 Sell Gold!
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If we do see a relief rally, or especially yet another buy the dips rally to an new ATH on US large caps then Gold and Silver may fall heavily. Already there is a case for a technical top out and turn, especially on Silver, which remains within a consolidation Triangle. Gold looks like it may be turning after a relief rally to Fib 50% and key horizontal resistance. Could be an interesting afternoon...
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1 minute ago, dmedin said:
Must be keeping your best trading ideas to yourself
No it's all there in my posts. It all depends on how you select entry and exit, the rules you follow and money management. The key is to NOT lose too much and then stick a winner hard. Don't need many big winners this way.
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On 23/02/2020 at 09:17, dmedin said:
Sugar is still looking sweet
Hmm, still sweet?
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7 hours ago, dmedin said:
Well @Mercury hope you've made some money at last
You for got to add "begrudgingly"... And I am thanks, but then I generally do regardless of the trend. That is the beauty of swing trading. Speaking of which, get ready for a swing!
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GBPUSD is heading back towards the bottom of the Triangle consolidation and support zone, after an A-B-C and fast drop, where I entered Short, while EURGBP is taking off on a rally again.
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As mentioned in my USDCAD post, I am Long Oil off the Fib 76/78% hit and pin bar bounce. There is obviously still a chance that price will come back and close the daily chart gap and maybe hit the Fib 88% however I feel that either way this market is setting up for a strong rally phase. If we do see a top out and turn on USD that would serve as additional impetus to an oil rally but isn't necessary. However if that USD move I am tracking does materialise then the Oil rally could be fast and furious. Equally USDCAD could be amplified in that eventuality too.
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Second test of my long term resistance trend line at the top of a Triangle consolidation has failed. Given Oil has rallied off support (still a possible final leg down but it was a decent time to chance a Long, which I did) this may be a good point to consider Short USDCAD.
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If we look at the Dax it is a different picture in that this index has put in a new ATH recently. IF that new ATH was the top then it is a double top, this is a credible trend change signal, if confirmed by a sharp fall away. If we look at the weekly chart there is a strong narrowing channel with a potential 1-5 form to the rally. If the deep bearish retrace is a Pennant then the rally end is around where price has already turned and with strong NMD on the weekly. On the 1H chart there is what could be an ending channel to the ATH that was broken and then retested. That retest failed, producing a 1-2 bearish wave after which price fell away. There have been several buy the dip spasms that have all failed to ignite so far. The bear move has not been the spectacular drop and spike on a buy the dip recovery that we have got used to but I do expect a relief rally after a further bearish move to kick off next week. If we then see an A-B-C form relief rally and turn at resistance a much bigger bearish move in a wave 3 or C can be anticipated. Quite a way to go yet before we can start calling the top and hear the Greta Bear roar and curiously, if I look at the US large caps I think we may even see another fresh ATH before the end (see the SP500 charts below).
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Things are getting interesting for those of a more bearish persuasion. If we look at the Russell 2000 monthly chart we can see that there remain two scenarios as follows:
- A wave 5 (purple) top out in late 2018. A wave 1 bearish move followed by a large A-B-C retrace that turned at the Fib 88% and would now head lower in a massive wave 3 or C.
- The wave 5 (purple) is actual a wave 3 and we would then expect a fresh ATH wave 5 (red). In this scenario the 3-4 (purple) is actually a Flag which marks the eventually end of the bull market around 1870.
If we look at the daily chart, assuming the Jan top was a wave 2 (purple) with NMD and turn at the Fib 88% off the ATH:
- There is a decent shout for the fast bear move off the wave 2 (purple) turn to be a wave 1 (pink) (1-5 form)
- The following rally looks very much like an A-B-C at this point and turned recently at the Fib 88% at a possible wave 2 (pink), also with NMD on the 4H chart.
- This has been followed up with another potential 1-2 (green) bearish move.
Taking all the indices together my reading is for a further bearish phase before a relief rally that could precipitate a much larger bearish move. If this plays out then I would expect the Russell to cement the market top out and trend change with a strong bearish phase as compared to other US indices.
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So a strong bounce off the lower channel line but then an equally strong bounce off the 4H chart trend line and then a break of the daily channel line to the downside in some style. I would expect this to resume a strong bear phase maybe even to retest the neckline.
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Not sure whether NY sugar has turned yet or not we could see another higher high test on the key resistance zone before any retrace but if price turns lower before then the retrace to at least the 1380 level is on. The more interesting opportunity here is getting Long after any bearish dip.
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The breakout materialised and I managed to get Long. While price remains below the previous top a reversal into a continuation of a bear move is always possible but the strength of the move and the various indicators suggest this rally has more to go. In terms of how much more beyond the wave A (brown) top it is essentially impossible to say because there are at least 2 strong scenarios:
- A relatively short retrace to the Fib 38% area (11,600ish) before a resumption of the bear move
- A much higher A-B-C (blue) format to at least the Fib 62% and then a large move down to new lows
The reason everything is possible is that the long term charts show that price is in a narrowing channel that may well be tracing a classic A-E pattern. Within such a pattern the waves can be very hard to call however for now I am seeing scenario 2 as a slight favourite, which could be wishful thinking... How price action progresses in the approach to the 11,600 resistance area will be important to watch.
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Part 1 of the bearish retrace perhaps done. If so a bit of a rally before a stronger bearish phase to complete the A-B-C retrace. I am tipping a Gap close retest of the previous channel breakout zone, which is around the Fib76/78%.
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For me USD is still in a rally phase, although we are currently seeing a bearish retrace, which looks like it should be an EWT 3-4 of the bullish phase that, when concluded, ought to usher in a significant period of bearishness for USD. I am expecting that Trump will get his way (a lower USD) as the Fed are forced to bring in more and more dovish policy to combat the extreme policies of Japan and the EU and the more recent accomodative reaction of the Chinese to the conora-virus difficulties, although I expect they would have done this anyway. I am expecting the US economic data to falter again after the end of year throwing of the kitchen sink by C-Suites to bump up the final numbers causes a Q1 rain shadow and an eventual slip into recession.
From a technical perspective (and this can be seen mirrored on EURUSD in particular):
- Price is contained within a weekly/monthly chart rising Triangle, the upper line of which is very strong.
- The EWT count looks like a 1-5 (blue) so the current phase could be the final wave 5. If so we can expect a 1-5 profile with the Fib 76/78% resistance zone around 100.
- There is very strong NMD on the weekly but not yet on the Daily, which suggests another leg up on lower momentum to trigger a daily NMD at the turn.
Overall I am expecting a USD capitulation to have a massive impact across capital markets, as much because of the drivers of such a trend change as the impact of a lower USD. I do expect the current rallies in GBPUSD and EURUSD to be short lived but both USDCAD and USDJPY are at important pivotal points from a technical perspective and could turn earlier than the others.
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Possible turn at wave B on the Fib 62%. Would need to see a channel breakout to the upside to confirm. If it does break into a wave C it should run quite fast and then I would be targeting the Fib 38% off the prior rally top for a wav 4 (green) end and turn back bearish.
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This pair would need to get back below the LT trend line or a bullish breakout is on the cards. Would require a stocks capitulation, hmm...
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Yet another Asia session fall overnight. That is the third in recent days. Surely this is a worrying sign for the bulls?
Dax looks like it may have completed a final 5. A break down from here is on the cards, assuming the never-ending buy the dips boys don't press the fat finger on the buy button again...
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Also should say that while USD is so strong a short term bearish impact on commodities may result.
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21 minutes ago, dmedin said:
Wave three back down about to commence whoop whoop?
I have it as a wave C but OK. There is certainty a chance but price needs to get below 1500 pretty sharpish.
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49 minutes ago, dmedin said:
If we get a bounce off here the next stop is down there
Doubt we will see a complete capitulation at this stage, possible of course but there is a lot of support to bust through. My lead scenario is for a 3-4 retrace about now followed by a final wave 5 to a major turning point, this is in line with my USD DX analysis too.
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43 minutes ago, dmedin said:
maybe we should short the pound
My target remains as before, the 12,300 area but GBPUSD can be capricious so I preferred EURGBP, which is going well and at the beginning of a wave C. I am anticipating a bearish retrace (1-2) on the wave C in due course, which would offer a good entry into the long wave 3 of C.
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10,000 area remains my target for conclusion and turn. Will probably get a false bear move in advance of the final top. You can see this readily on EURUSD where a wave 3-4 is indicated before the final bottom out.
Stock market turning points - are we there yet?
in Indices and Macro Events
Posted
Very similar set up for the Nikkei and that market has already closed live trading...
FTSE100's goose is cooked though, as is the Russell 2000 and other markets: SP500, Dow and Dax are more likely to have now topped out, from a technical perspective but still a day of the month to go so let's see...