Mercury

Bitcoin looks to be in a short term consolidation with a break and retest of a 1H support/resistance zone. Need to see a higher high and test and break of that 8800 level to get more confident of this move and ultimately a breakout of the pennant upper line is vital.

Oil is proving sluggish with some whipsaw price action at present but then it often is just before a fast breakout, which may very well happen over night. A break of the overhead resistance is key to reducing the chances of another leg down.

GBPUSD was much more definitive and offered much greater reward today with a breakout from the turn at the Fib 62% on PMD. The wave C was unusually short (or A was unusually long) but the Fib levels came to the rescue for me and I was able to trade the swift breakout move Long and early, now stop protected at BE. My risk was rewarded when price broke through the parallel channel line and closed above it. We may see a short retest of the breakout level but as this is a wave 3 I wouldn't count on it.

The daily trend line has held so far but on the 1H chart it looks like a break and retest. Tonight or tomorrow should clarify whether this will be a confirmed breakout or not.

I don't see too many forum users posting on FX, maybe it all got a little dubious over the past year or so, but there looks to be some relief for USD bears now with a decent turn on the weekly chart upper channel line followed up by a short term 1-2 retrace that was turned back on the Fib 62% and has just made a lower low (just). With EURUSD knocking on the door of a resistance trend line breakout and GBPUSD firmly breaking through its next resistance level the odds seem favourable that this time the USD bearish phase will become manifest.

Another good day for Coffee Bears. At some point we should see a relief rally or consolidation pause but impossible to say where. There is PMD on the 1H chart but that is not necessarily confirmed or relevant given the pace of the bearish move. I would be more of a mindset of waiting for relief rallied and selling into them that selling on a level break through at this point but that all depends on your tolerance for large draw downs. I will be very keen to see where any significant consolidation occurs and of this takes the form of a Flag or Pennant as this will be instructive as to how far this bearish phase could run. For now I am still targeting 8000 but there is a decent chance that this could go much deeper into the market bottom zone before the trend change.

Gold and Silver are very much still following my bearish road map after a bullish resurgence in stocks today. The retrace on both carried to the Fib 62% before plumeting today it a fashion that is suggesting of a wave C (or possible 3 but that would be a much more long term bearish scenario, we aren't there yet). The short term rally of PMD looks to be over with today's price action. I am Short of the wave 2 (light blue) turn. My targets of 1360 and 1500 for Gold and Silver respectively remain.

Kit Juckes, chief foreign exchange strategist at Societe Generale, in an interview with Real Vision said, "I will definitely be buying the Yen persistently... we will trade below $100 Yen over the course of the next 6 months, I'm sure of that... It will happen overnight... it will happen fast..." He is Bearish USD generally but, if I understand him correctly, only short to medium term as he stills sees the US as the ultimate safe haven when the long term cycle end full hits. USDJPY is currently in a short term rally phase, will need to see that play out and turn before getting back Short.

Looks like the AUDUSD is also turning up. The potential wave 1 (blue) occurred on strong PMD and at a daily chart supporting trend line (see Sept 14 post above). The rally and retrace went to the Fib 62% and then bounced away. There is an unclosed gap near the short term resistance, which I expect to be closed immanently and then we will see if a test of the resistance leads to a breakout. I am already Long off both recent turns and holding for the breakout.

DX posted a turn at the Fib 62% with an A-B-C retrace wave form and is now heading back down to test the short term support. A break here that coincides with a key trend line break on EURUSD would be a bearish indicator, taken in the context of the strong NMD at the wave 1 (blue) turn that was also at a long term and very strong weekly chart resistance trend line, that is part of a narrowing channel.

Potentially breakout out to the upside through a daily trend line. Need to see a close above on the day but the 1H chart set up is looking promising.

Nice breakout above the previous high (1 -blue - 4H chart) and strong rally towards the key 8800 resistance zone. A break of this brings up the upper line of the pennant and a break of that confirms another leg up for me, which, if this is a pennant, should carry to new ATHs at least to around the 22000 mark. The price action within the pennant is a classic EWT complex retrace (all the waves are in A-B-C form. The probably final wave C concluded with a rejection at the lower Pennant line with PMD and then we saw a pair of 1-2 retraces, the first of which also turned on PMD (see previous post 1H chart). What I was looking for was a strong and fast rally away through near term resistance, which is the classic price action for a wave 3, and that is what we appear to have seen. You can never rule out an A-B-C relief rally at this point (i.e. another leg down), which s why a break of the 8800 and upper pennant line are so important to confirm the long term rally. For now I am content to hold my Longs at the various turns stop protected at break even and see what happens next. I am looking forward with extra interest to see how my first crypto trades do.

Bitcoin looks to be staging a breakout to the upside after a short term 1-2 retrace, which in turn was after a break of a short term channel (also a 1-2 retrace) and a bounce of a potential pennant lower line. Need to see a break of the 8800 level and then a test of the upper pennant consolidation line after that.

Well it s a terrible business model so no surprise really. Maybe finally reality is catching up with the hype. Lst time that happened we had the dot.com bubble bursting...

Has the Russell 2000 signaled the turn back into rally mode? The US small caps are often a bit leading for the large caps, the Russell went green earlier than the others just now. If any bearish trend push back down is halted short of the low and ideally pushed back into the green there is a good chance the retrace is done and he rally can resume. Obviously need to break the 1510 resistance zone to be sure.

There are many forms of TA @cryptotrader, there is even a professional qualification, the CFA, that covers all or most of them. I use a number of techniques blended into a system of rules and indicators but almost always in the context of a fundamentals/macro backdrop. I use Elliot Wave Theory to get a big picture cyclical view and to confirm shorter term moves. I am a swing trader so my method is chiefly about identifying trend changes early and then once the trend is established and confirm I switch to trend following. Note, support/resistance, which I also use, is a form of TA. Regarding your specific observations: the candle you mention is less of a factor for me, I tend to only deploy candle price action on the daily+ time frame but it is a form of spinning top or doji candle, which can mean a trend reversal in context (i.e. not always). There was a decent IG video training session on candle patterns, probably still in the archive if you are interested. The gap is of interest because charting techniques (also a form of TA) hold that most gaps are filled quickly. The Supply/Demand proponents regard this as unfilled demand so usually the market reverses shorty after a genuine gap fill (i.e. one that is filled quickly). Gaps that take months to fill are not relevant in this context as they are really so-called breakaway gaps that were not filled during the phase in which they occurred. The market simply went into a trend change and the fill was a by product of this. Of more relevance to me was the fact that EWT suggested we ought to get a small counter trend retrace before a larger rally. Charting suggested that the support zone around the channel line - grey one - and/or breakout zone from the alternative channel line - blue one - would be a strong candidate for a counter trend turning point back into the main trend rally. Fibonacci retrace suggested the Fib 62% level, where it cut the channel line was a high likelihood turning point, which is where we got that doji candle on the 1H chart. However now of this is confirmed until we see a higher high, which is where good stop placement and money management comes into any system. So there are a few TA types there including: Elliot Wave Theory Support/Resistance Supply/Demand (which in my book is akin to, or causes support/resistance) Fibonacci retracement and Charting techniques I also use a few oscillators, especially momentum and I especially look for divergence on momentum (where price is higher (or lower) while momentum is the opposite. This occurred at the previous turn (3 Oct) and is dominant in my method unless or until that low (in this case) is broken or an opposite momentum divergence (a negative one) occurs later. That is all quite technical I know but hopefully you get the basic idea. If you google any of the individual elements you will get more info.

While Stocks and precious metal traders wait on tender hooks for a potential turn (or breakdown...) over int he Coffee market things seem more straightforward with a break of a key support zone. Onwards to test the next I reckon and if that breaks then next stop 8000.

Possible bounce off the channel line. Note also the small gap closure.

While waiting for what will probably a significant US opening today, in terms of the direction of both stocks and precious metals and maybe also oil, here is something interesting from a Real Vision interview aired this morning with Michael Kantrowitz, CFA, chief investment strategist at Cornerstone Macro. Bear in mind that these guys have a strategy that is essentially buy the dips, just in a longer term cyclical context, so they are not permabears. Their analytical system has thrown up the attached checklist of events that occur in every cycle since the 1950s. Judge for yourselves but my takeaway is that IF the ISM data deteriorates further AND jobs and GDP data begins to follow then that's the ball game. This is a specific statement made by Michael in the interview as a scenario that would change their view from buy the dips to more bullish. In any case they are overweight defensives as in their view this is the right play whether this is a correction or a recession.

Day trading gold, hmm... I agree with @Caseynotes that Gold remains in an inverted correlation with stocks. I think the Gold bugs have overdone it today, less so Silver, which may be relevant. I am expecting a stocks rally, maybe on US opening, and it looks like bad news (in the form of the PPI data) is still good news for stocks... The only justification for this is that the Fed put is still being played out by the permabulls. Of course it could be, as some suggest, that the turn has happened and we get sustained bearishness on stocks and it could be that the Gold/Silver retrace is over and was shallow but that is not yet clear. Currently Gold is stopped at the Fib 62% retrace level, although we could see another small leg up before this is over. My assessment is that the NMD at the 2 Oct turn is still in play but we do need to see a turn and bearish move (quite a fast one) soon for this to remain the case and that suggests a stocks rally at or soon after the US open. Let's see...

Gold staged a break of that short term support zone but has since been stopped at another short term support level. I am looking for a break of this secondary support to open the way for a strong bearish phase. Risk to this might be a bearish phase on stocks as these markets do seem quite correlated in an inverted fashion, however there is no reason why gold and silver can't beak down while stocks also go bearish for a time so I am not getting hung up in stocks in relation to gold.

Oil did break out of the second (alternative) channel line but got stopped by ST resistance and is looking like it will complete a short term 1-2 retrace before the rally gets going. The break of the Aug low (5580) remains a threat but a break of that short term resistance, whether from here or via another small leg down to retest the channel line, would be bullish for me.

Coffee is continuing on my road map with another decent red day and a lower low. There is now a risk of an A-B-C, as is often the case, which could propel the market into the alternative rally scenario but I think this is less likely now after 2 strongly bearish days. If and when it breaks past the 9200 level I think 8000 is assured at a minimum.

Oil may be about to stage a breakout, with stocks apparently set to continue their rally.

It is possible we may get a leg up to test the Fib 88% zone but I favour a turn already posted at 2(brown), which occurred on NMD, at theFib 76/78% zone and with an A-B-C form. A break of the near term support at circa 1495 is important to support this scenario and a break of the 1460 would clinch it for me. Silver is also responding likewise but only made the Fib 50%. I suspect that Gold offers the better potential for profit on a retrace scenario.