Mercury

If you have the patience and don't feel the need to be "in the market" constantly @dmedin then trading the breakout is the way to go in my book. This is why I focus on longer term swing trading, although I like to spot the trend change early and get set up earlier than the breakout to create a base from which to pyramid a breakout move. If this is the move I have been chasing all this time then I will be in good shape. As to whether this is a counter trend trading opportunity or not, my view is yes it is but it is a significant one, a major retrace potential. That said there is a view out there that EUR in particular is due a big move. I still think USD will go bearish for a while but will rally hard as a safe haven in due course. How to decide when this might be is what the recession watch stuff is all about. Quite apart from it being an obsession, as some have suggested, it is, to me, a sensible thing to keep a weather eye on. In fact I would say to ignore it and trust to the never ending bull is obsessive, but that's just me...

Not that I am an expert on Gold @dmedin, I am not, but I have been calling this rally since before the above post. This was when to go Long. Now there is a tricky choice between buy the dips and wait for a significant pull back (this is more than a dip). I am in the latter camp.

That is a reasonable strategy right now @dmedin but if it is right for stocks indices then generally it is also right for individual stocks... The uncertainty that abounds right now should at least warrant caution, in all assets frankly. Until things resolve more generally there are no one way bets.

GBP looks to be leading the way against USD. The daily channel resistance trend line was reached and rejected initially but now price is making a second attempt. A breakout here will be significant I feel if it is with some strength. Ideally would like to see EUR and possibly also JPY do something similar.

Time to reprise the USD outlook. The Fed (minor) rate cut and Jackson Hole is now behind us and serious market players seem to be holding fast to further Fed rate cuts this year (maybe soon) and/or other policy actions, which they believe will trigger a response from other CBs (although many seem to hold that this will happen regardless of what the Fed does). The general zeitgeist seems to have it that USD will rally as wider economic issues persist and deteriorate and/or the US economy and currency is the least worst. Also in a currency war situation the same people think the USD will be the go to currency but on the other hand the Fed has more room to play with. Some people are holding fast to the Donald factor in an inane view that his tweets are the key driving force in the market, good luck with that one, and/or that we will have a China/US trade deal soon, good luck with that one too... You can tie yourself in knots over all the whys and wherefores, which is why I don't worry too much about it. So long as price action is making sense to me in terms of the technical road maps, and in terms of the fundamentals, I don't much care what triggers a move, just need to watch out for volatility around key calendar dates. I guess the Fed and US NFP remain the key 2, as they have been for a long time now. Will bad news remain good for stocks? Don't care at this point. What I am seeking is confirmation that the USD has turned into a long awaited bearish phase. Let's look at the charts because the only thing we really have to work with here is price action and maybe other things like momentum and volume if you are so inclined, have the data and the skills to read it. For most of us it remains price action. On the weekly chart it is clear that USD (or at least the DX basket) has been moving up steadily but not in a definitive manner since early 2018 off a floor created at the beginning of 2008 (the credit crunch). There is strong NMD at the recent turn, which occurred at the top of the channel (or triangle) and in close proximity to a down sloping trend line, that may be a large scale Flag (i.e. a way station on the route to much higher highs). The junctions of such trend lines are often strong areas of Support/Resistance and so it appears to be in this case with a weekly pin bar and daily chart spinning top type ending candle. However price does need to break through the lower channel line to confirm a bearish move in the medium term. On the daily chart you can see that price dropped fast from the spinning top turn to put in a wave 1 (brown). On shorter time frames you can see that this bearish drop was in a classic 1-5 wave from. After that we saw an A-B-C retrace to wave 2 (brown) just short of the Fib 76% zone. On the 1H chart we can see this wave 2 (brown) in close up, the turn occurred with NMD then broke down through a short term channel before rallying hard to put in an effective short term double top (second one was slightly lower) and then dropped again through short term support. Price has since rallied to test and fail at that short term support (now resistance). So now it just remains to be seen whether price drops away from here or retests and resumes it bullish journey (or puts in some further consolidation indecision ahead of the next Fed and US NFP). For me the outlook looks bearish from here, just need the price action signals to confirm.

I think you are right @elle, just not now, later when USD really kicks off and it wont just test that area it will cut through like a knife through butter. Aligned to you recent Yen comment, I don't see Yen strength without USD weakness, unless, I guess, we get a bout of serious stocks bearishness. In that case though I would also expect USD strength. We will know soon I expect...

Agree @elle, that is what I am seeing too.

Gold and Silver looked to be running away with themselves in a bullish surge yesterday but as stocks picked up momentum the other way and the USD also did the same the precious metals suddenly got an attach of the jitters and couldn't manage a breakout. This seems important to me and if next week does reveal a stocks rally perhaps we have seen Gold/Silver top out for now with another failed assault on key resistance. Late price action was bearish on Friday. Remains to be seen and of course no once can rule out a breakout next week, which would be a Long trading event in my opinion but I am minded to expect a pull back from these levels and a significant retrace to prime the pump for a later surge and breakout. On Gold the obvious retrace end would be a failed test of the long term neckline (circa 1360), a recognised important level in the past by professional traders and money managers. So what I am looking for and trading next week is as follows: Continued USD bearishness, probably after a bit of a relief rally but I wouldn't expect much - I am long currency pairs against the USD Stock indices bullishness to complete a wave B and turn into a strong wave C but watch that whip saw price action medium term Gold and Silver to go bearish for a time Let's see, could be an exciting and profitable week/month if my USD turn has finally arrived. Have a great long weekend those of you who are on it.

So stocks did indeed drop, despite a great bullish effort to stage a fight back yesterday. A while ago I suggested I was looking for a lot of whip saw action as a telltale signature of a Bull ending phase. We are certainly getting that at present but there is a ways to go yet I think. If the move down yesterday is to be a Wave B it must turn soon and whether we see fresh ATHs on US large Caps or a retrace turn remains to be seen but the more of this whip saw price action we get the more I will be thinking about the latter rather than the former. And almost certainly this is true for non US large caps. So I see 2 lead scenarios, other that either a rocket to the moon or an express elevator to hell when we open up again next week, as follows: A rally up to a wave 3 and then strong bearish drop to wave 4 that goes lower than the wave 1 high (that would be the mid Aug high (1rA green). An ending channel in EWT can have an overlapping wave 1 wave 4, usually this is not valid but is is a signal of an ending phase. A continuation of a series of A-B-C moves that ends with a lower high top and turn - resulting in the mid July highs (later for SP 500 and Nasdaq) being the final top of the Bull So either way we are set for a lot more whip saw, in fact this is important to see if you are seeking evidence of the end of the Bull. The road map in my chart is simplified, showing the prevailing direction only and not all the twists and turns. It will be hard to trade is my guess and will take much longer than my chart is showing to resolve, maybe well into the Autumn. Personally I see better and safer trading opportunities elsewhere. I might take a cheeky Long to stay interested.

Didn't see you post until just now @dmedin, don't see the Yen as any more manipulated than any other government backed currency and don't get me started on crypto manipulations (think Ponzi!). As I mentioned somewhere else regarding manipulation, except for artificial pegging (e.g. Swiss Franc to Euro), I ignore reports of manipulation as this is endemic in all markets, financial and otherwise. This is about human nature; I use technical analysis to assess the impact of this human nature on price action and trade triggers according to my methodology. In recent times USDJPY seems to have been inversely correlated to stocks, which is not unusual if the Yen is acting as a safe haven, and with stocks taking a tumble it is not surprising to see associated Yen strength. However what would happen in a period where stocks rise while the USD falls? Would USDJPY fall or rise? It seems clear to me that USD has broken lower i a long awaited correction bear move. This needs to be confirmed with some lower lows but for now price action is heading this way. Based on the technicals and price action I see USDJPY as in a bearish phase. A break lower past recent lows would be needed to keep this scenario live and there is some longer term support to get through but once it does there is nothing much to stop this pair hitting 10000 and if this doesn't hold then the right had should scenario I outlined in the previous post would surely be on. I don't see this pair rising again until the USD bearish phase is done and there is a flood back into USD in a flight to safety that overwhelms markets. But that is some way off. It is most likely that this flood will not happen on the first stocks (and not just stocks) top put and drop but rather on the major drop which would come after a relief rally. Even if stocks do keel over this Autumn, as some are predicting, it may take 9 months to a year for the drop and relief rally to play out. That puts us in Autumn 2020, which is about when a recession may get officially called and hey presto, mega crash (wave 3).

Like I said before, it's all about the dollar, bout the dollar, bout the dollar. At present, assuming this is a sustained USD turn, who knows these days really, all key USD pairs are retracing hard. I expect that to continue for the rest of the Summer and into Autumn. Cue excessive central banker currency wars and related whip lash on stocks etc. FX would seem to be a safer directional bet now.

With the breakout of GBPUSD (would like to see a daily close above support there and ideally a breakout through the daily channel line) and EURUSD making up its mind about whether to breakout or not I look at the third pair in the Triad for clues. My thesis is that when both of these markets rally it will be on USD weakness rather than intrinsic strength in either one BUT as GBP has been more depressed of later and with so much negativity around about GBP vs EUR the spring back relief rally will be stronger on GBP. If right we should see EURGBP turn and drop fast and hard and continue to do so for at least as long as the primary pairs rally lasts. And that is what we have seen so far with what looks like an exhaustion overshoot of my daily chart channel line and drop back inside. A drop away from this area is confirmatory of an exhaustion spike, and that is what we got. There followed a small 1-2 retrace, relief rally, which retested the channel line but failed to break back though, and another small 1-2 before a short term channel (1H chart) break and failed retest and then we were off to the races. Recently there has been a consolidation in what could be a small pennant of another 1-2, probably the latter and then a fast break down from this formation to where we are now, testing the lower daily chart channel. If I am right about a period of USD weakness then I would expect EUR to join the party soon and so we may see a relief rally off the daily channel lower line before a confirmed break. Worth watching the Triad to see how things progress over the coming days and during the Jackson hole panto.

Not this time so far, I am in any case Short off the breaks and stop protected at break even so no sweat of it blows back. I expect US indices to drop harder while FTSE and Nikkei go slower now, they are both out of session. Looks like we could be getting that 1-2 retrace turn about now, let's see...

Looks like you were right about another leg up there @Badtrader234, well except for the Nasdaq and the FTSE of course, which is well bearish vs the others. Right now I see the US large caps as having broken an uptrend and hit a short term support zone and in a temporary relief rally. When resolved I expect these markets to break back down below that support level. The NMD held for the markets that did another leg up and the channel breakout was swift and, in the case of the Nasdaq, strong. The fact that the tech market did not follow the Dow up gave me confidence to get short both those markets. Now I see 3 possible scenarios in play, other than a fast break back up through overhead resistance, after the relief rally concludes, as follows: Simple A-B (brown) contained within the larger A-B (green) to set up a wave C conclusion to the rally Wave B (green) was not correct, merely a wave A (red on Nasdaq 4H chart), recent top was a B and now we get a strong and fast wave C to complete wave B (Green) before a strong wave C rally The wave A (Green) was actually a wave 2 and the market hammers through previous lows and my lower channel line and the great bear is on I favour scenario 2 at present but let's see how the price action does... Note also the unclosed gap on both SP500 and Nasdaq. This suggests that both of these levels should be closed before any rally.

What seriously? You mean technical analysis doesn't always go to plan? Crikey I'll have to try something else, let's see, where is the number of my psychic?

Brent just went lower than the early morning low after a nice sell in rally. Looking good to eat the bear this time... Trick is to not get mauled too badly when it is your turn so you are still alive to profit from the next one...

This time?

Its all about the USD. Technicals showed the way, no need for news...

Seems like only 1 in 3 think we will have a recession next year. The consensus is for 2021/2. I agree economists are usually wrong, mostly because the economists surveyed are in he employ of the financial companies and the last thing they want is a flight of capital out of their funds. To call the end of the bull or a recession or worse is a one way trip to your own personal recession, which is why they don't do it. You have to look for the lone voice in the wilderness, the Dr. Doom types. Maybe they are all wrong and we will indeed slip into recession this year! Who knows, that is the point of the thread really, to keep it in mind and be watchful, not to trust to economist surveys.

Or maybe not @TheGuru12, On Silver price is knocking on the door of a breakout of a daily channel, could yet bounce of this but why wait until it has resolved before posting? I am bearish biased as I expect to see a retrace before a big Gold move and the situation does not seem to be set for that yet from a fundamentals perspective. We either need a meltdown or massive CB stimulus and FX wars. Technicals are the same as before but added to this is a 1H chart 1-2 retrace to the Fib 62% on NMD. Similar, perhaos even better, set up on Gold.

That's right @elle, that is why economists are saying it isn't here yet, so do I. We aren't there yet.

UK CBI Distributive Trades Survey data is interesting this time, not for a short term trade, not what I do, but more because the data was so negative (-49% vs consensus of -11%). Traditional "wisdom" is that this is bad for GBP so sell right? Well maybe, maybe but I think GBPUSD is more about USD than GBP these days. Why is it interesting to me? Well it is a strong signal that all is not well in Retail, which chimes with the general zeitgeist out there for me. Is this a Brexit thing? No one really knows but the reality is that retail has been under pressure for ages and not just in the UK. For me it is additive to the general picture overhanging the world economy in terms of the chances of a recession. There was an interesting piece on Real Vision this morning that touches on where we are in terms of recession etc. Interesting take on alternative signals of consumer pressure (US based) and views on the inverted yield curve. Most interesting piece is the relationship between Oil price spikes and recession triggers, not the first time I have heard this. Short term he is saying we aren't there yet but he is not saying don't worry, just worry later. Very interesting hedge idea, heard this in another context as a potential long term buy. https://www.realvision.com/tv/shows/trade-ideas/videos/oil-vs-the-yield-curve

Maybe a bit heretical given the rally yesterday, I'm sure Bulls are gearing up for a Green day BUT looks to me like we could be seeing a wave A (or 1) conclusion. I have a solid supporting trend line on most main indices, which if broken would be indicative of a bearish move. At present I am labeling this an A-B but lets see. I also have a 1-5 up and NMD at the potential turning points. With the high so close this represents a decent risk reward equation with low exposure for a tactical Short. Thoughts anyone?

A break of ST support looks immanent after a Fib 62% failed retest of the previous channel breakout zone. A break hear is indicative of a larger retrace rally end and then comes the long awaited bearish phase on USD.

Central banks keep options open - stop the presses..! Could it be they don't know what's going on? And haven't a clue what to do about it anyway...