Mercury

The US large caps did indeed drop off on the US open as I had suspected but then rallied back hard (at least on very short term chart time frames. This is exactly the kind of Whipsaw price action I was talking about expecting to see in a final phase of the Bull. On US large caps I am minded to favour one more final ATH but I think it will be a rally full of more whipsaw price action, very hard to trade unless you are riding the micro waves as a day trader scalper. I will be staying on the sidelines and waiting to see how price action develops, plenty of other markets to make a buck on in the meantime... I think it could be much easier to track some of the other markets that have (probably...) already made there bull market tops. I charted the FTSE last weekend (see above) so will continue with that but I could just as easily use the Dax, Nikkei or Russell 2000. IF the ATH back in May 2018 was the top of the market and the drop down to Christmas 2018 was a wave 1 (1-5 form so likely) then the rally and turn at the end of July was a wave 2 (purple) concluding at the Fib 88% (a lower high). This rally was in a clear A-B-C form so supporting of a retrace rather than motive wave. Price turned and dropped dramatically in an almost vertical drop, very bearish and what one would expect of a turn in to a major wave 3 down. The move down to the recent low was a definite 1-5 which is aligned to a wave 1 down (outside chance it could be a larger scale B that would bring up a slightly higher wave 2 (purple), maybe a double top but the price action does not support fresh ATHs for me. FTSE100 has been consistent less bullish that the US large caps, well everything has been. I think it is only now a matter of time before US large caps give it up too. So if the recent low was a wave 1 then we should now see a retrace counter trend rally in an A-B-C format. If, as I suspect, we either see fresh ATHs on US large caps or a very strong retrace (think Fib 88% or double tops) and if this is an ending move for US large caps with a lot of whipsaw price action then other markets are likely to also see whipsaw price action but in a narrower range. Therefore I will be looking to see if we get a complex retrace on FTSE, DAX, Nikkei, Russell 2000 etc. If I see this emerging in the coming month these markets could offer credible top out insights into US large caps, which are the markets I want to trade Short in due course. Retrace turns are easier to spot that ATHs or ATLs because we have support/resistance zones to work with. I have mapped out a roadmap on the FTSE 100 as an example of the kind of thing I am looking for. I have no way of knowing in advance how this will play out, which is why I will probably not trade it until we get to the end game. This is a way to monitor the stock indices to spot the next major turn. If you were of a scalping persuasion though, such a route map might help support whether you favoured longs or shorts in the short term swings. This is not my thing so I will let it play out and ensure I arrive at the critical moment in a good frame of mind and with my account balance in good shape to take advantage of the big one. Are we there yet? No but maybe in a few months...

Well one of you is wrong... The thing about trading is that different traders see different things. If they didn't, if they all saw the same thing, the market wouldn't work, it would be in perfect equilibrium all the time and simple gap jump to the next perfect valuation. This, by the way, is why value methods don't work in my opinion. It is easy to be a value investor in a raging bull market... The markets are voting machine, not a weighing machine (not my quote). It is principally speculation and therefore it is all about sentiment. Must I keep reiterating the same things over and over again? The trend is your friend, until the bend in the end. As a swing trader I am all about seeking that bend and understanding where in the inexorable up/down; down/up cycle. It is not surprising, in fact it is expected, for trend followers to disagree with my analysis at key turning points, indeed if they did not I would be worried. Trend followers, in general, including some of the well know hedge funds, follow the trend over the edge and then have to madly scramble to cover. Sure some have trailing stop mechanisms but by then it is all over. I don't have a problem with this it just isn't what I do. When having a discussion with someone it is vital to know where they are coming from and we can all be right from our own perspectives, at least for a while... I think my past post have been pretty clear on where I stand on both Gold and Silver and why. I think the trend down from the 2011 highs is over, check out my many technical analysis posts on this thread for why. I think both are in the process of, or have already, broken key resistance (more Gold than Silver in this case) but I feel like there is a strong case for a significant pull back before the uber rally really gets going, I have also posted on that previously. All clear? @dmedin, I have a lot of sympathy with your views, I too would not go Short until I see reversal signals. We are flirting with that now but nothing conclusive yet. However, as with the recent scenario on the US large caps, and other stock indices, and therefore most of the individual stocks (as I know you like to look at these), to be successful one must be open minded to these trend change breakouts. This is how I caught the Bearish fast drop at the end of last week and how I cashed for profit before the rally eroded my profits. I will remind us of that @elle wisely said a little while ago, "every trend is destined o be broken" (or words to that effect. It is the breakout a swing trader seeks. It is the breakout that cements a trend change BUT in some cases we don't have to wait for that, if we identify a credible bottom, which I believe I have on Gold and Silver and traded it accordingly, which I also posted on previously. Not sure how much more clarity I can offer. Disagree if you like no problem.

There are a number of so-called safe haven assets or markets that are frequently mentioned in trading and investing circles such as utilities, gold, USD and so on. The Yen falls into this category mostly because, I think, in the past 30 years or so the Yen has a track record of appreciating against all currencies, including the USD. This has a lot to do with the stagnation in the Japanese economy that spawned "Abenomics" in a probably futile attempt to trigger growth. This is basically the same central bank policy as most other democracies. In the case of Japan however the central bank has wound up effectively buying up stocks as well as loans. Recipe for disaster. In the short to medium term I don't see the Yen changing it role, although long term I think something big could happen. If we start to see some fear grip the markets; if the recent drop is from the top of the bull on stocks; if interest rates start to tick up; if recession or worse starts to emerge as not just talk then a flight to safety is an obvious thing to track and get in on. However if longer term this thing goes into a full on deflationary depression then USD will be the go to currency and the Japanese may get the thing they have long desired, through no action on their part, and that is a weaker Yen. So much for the fundamentals, let's look at a couple of long term charts for the technicals. On the Quarterly chart I see the following key points: Massive rally in the Yen since before the 1970s, which is at the heart of their economic issues as an exported of finished goods, well that and the commodity bull, as an importer of raw materials. I am sure there are more qualified economist who would have a better handle on this than me. My main point here is that this move went in a 1-5 down to the 2012 lows. Potential Head & Shoulders formation in progress but maybe that right shoulder is not yet in? If this is a H&S then the neckline is formed by an excellent long term down-sloping trend-line with 3 great touches and a prior pivot touch as well. A breakout through this will be a massive buy signal but that is far off in the future. We got a 1-5 rally off the all time low to wave 1 or A and over bought oscillators on all charts at the turn. On the Weekly: There was a smaller scale Head & Shoulders at the wave 1 (or A -Purple) top and a nice neckline breakout to signal the bearish move. This move down could be either a 1-5 or an A-B-C so mostly likely the wave is an A (Pink). Then the bear move channel was swiftly broken and a relief rally ensued that rose up to make a failed retest of the neckline. This move is in an A-B-C, which is a retrace form and therefore I label this a wave B (pink) overall. If this is correct then we should next see a bearish wave C move lower than the wave A (pink). I was thinking we would get a swift wave C but the market has gone into a protracted sideways consolidation that for a long time I couldn't unpick. With more price action I now think that this is a complex retrace. We have had the first 2 main waves in A-B-C form so wave C is doing the same. This first part (Blue A-B) is encompassed within a consolidation triangle (very large one). Each leg is also in A-B-C form, lots of whipsaw price action consistent with both a consolidation phase and a complex retrace. Since wave B (blue) we have had more whipsaw that looks to be a couple of 1-2s (or A-Bs) and now price has arrived at the lower line of the consolidation channel. So a breakout to the downside brings up a test of the previous lows (wave A pink - 9900 area) and a break of this support means we are indeed in a wave C which has a number of potential end points, the most bearish of which would be a right hand shoulder to complete the H&S formation. If that occurs then a long lasting bull market on this pair would ensue. I will seek to short this market on a sustained breakout that, in the main, would occur either on sustained USD weakness (which we are probably due) and/or stocks reverting to a bearish stance (which is eminently possible). Once we see a retrace turn (which could be months away) AND if this is consistent with a long term recession and stock market bearish move I would look to catch the bull market in the USD via this pair as a preference vs any other pair. Edit: Also forgot to mention that for me Yen strength is sometimes a leading bearish indicator for stocks. The Yen has been appreciating vs USD since 24 April. I have mentioned this before on my stock indices thread. It was one of the macro factors that was prepping me to go Short stocks on a good set up, which we got on 1 August.

That is a hell of a weekly pin bar candle on this week on the SP500 and other US large caps. The week isn't over though and my question is whether or not this is sustainable? If I look at the 1H chart the SP500 has hit the Fib 62%, a classic retrace level, which is also on a zone of wave C, wave A equivalence, another typical feature for a move turn. The market dropped sharply after the close last night and I went in on a Spec Short. The overnight price action didn't resolve anything but this morning the European markets are looking a little bearish early on. Based on the Weekly candle I think the market should end the week a bit lower at a minimum. Based on technicals we could either be seeing a larger A-B-C with a higher test next week or a smaller, although not small, A-B-C completed to bring up another bearish phase and break through recent lows. In addition to the above technicals I also have a valid A-B-C (red labels) and NMD at the turn and possibly a small 1-2 done with a larger wave 3 down in the offing.

This pair did indeed bounce back off resistance and now my Short positions are covered at BE. The move looks like a turn at this point and is supporting a wider general USD Bearish move to continue in due course. I might expect the current 1H chart phase to continue down a but further but before any major bearish move I would ideally like to see a pull back relief rally, which would offer a good opportunity to get Short again.

GBP has been idling for some time, not joining other pairs on respective short term moves. With a slew of UK data coming out at 09.30 maybe this will trigger a breakout. This market is fairy straight forward right now in that it either breaks through support into a new bearish phase (re-evaluation time for me) or rally hard out of this support zone. I am leaning to the latter, especially if EUR also rallies out of its consolidation phase.

I would have expected EURUSD to have retraced lower by now but price has remained stuck in a consolidation zone that is tracing a narrowing triangle. As these types of formation, albeit only short term, are usually a continuation pattern the odds seem on the side of a rally breakout. Either way the breakout is what I am looking for. I would not Short the breakout to the downside as I will wait for a potential turn lower for a Long but I would go Long a strong breakout in advance of a test of the weekly chart upper channel line.

Something similar happening on Gold with a potential resistance and channel overshoot and return back. A small 1-2 bullish retrace followed by a small drop and channel lower line breakout. Not as strong a set up not as definitive on price action but the saying, "as goes Silver, so goes Gold" springs to mind. Or is it the other way around, certainly was for a few months there.

So has Silver peaked? Sure looks so. On the Weekly chart it looks like a failed test of a long term resistance trend line and associated resistance zone. As the week is not yet over this is inclusive so lets look at the daily. Here we see that rejection on strong NMD and a 1-5 EWT count. If this holds below today then the bearish retrace is looking on. On the 4H chart you can see the move on ore detail with a small 1-2 bullish retrace o set up the fast move down. The price action on the 1H will be important to distinguish whether this is a medium term trend change or just a blip (note the LT trend remains bullish).

Took another leg up as EUR dithers about but as it no looks like going bearish EURGBP finally seems to be moving down after a series of 1-2s and an effective mini double top. To be confident I will want to see a break of the ST support and a 1-5 down followed by an A-B-C retrace and then a further larger drop through the daily chart lower channel line.

EURUSD is taking a little longer than I first thought with the market tracing out a more complex retrace but looks to be settling into a down draft now that should be a wave C to complete the retrace and set up a large rally.

Looks like Brent has put in a failed retest of the recently broken support zone (now resistance). The rally occurred off another support zone associated with the underside of the Fib 23% taken on the weekly chart between the all time high and the Jan 2016 low. On the weekly chart there is also a support level between 5800-5400 that the bears will have to push through to continue the move. If this failed retest is proven correct this could provide the bearish stimulus to push through. Now that a potential 1-2 (pink and blue) are a wave 3 (or C perhaps) should ensue, which should show some strong bearish price action in the days to come.

While I await developments on all my markets I am posting on USDCAD, which I have been quiet on for a while as things developed. When I left it I was anticipating a bullish retrace phase and that is what we got. Initially I thought it might be very short term but then realised we were looking at a potential complex retrace (lots of A-B-C whipsaw price action) so I cashed my Shorts and waited for the retrace. Yesterday we may have seen the wave B (brown) top out with a pin bar, I took a spec Short at this point. We could easily see another round trip (down/up) to test the weekly chart trend line (purple) and the Fib 62% as I still expect a final USD rally phase to set up a larger Bear move so consider this for stop placement.

Daily chart tells the tale. After the drop through the first channel line and failed retest that sealed the wave 2 (pink) retrace top the market put in a smaller 1-2 (blue), which initially I thought was a wave A that would retrace higher to close the higher up gap. That gap turned out to be a breakaway gap (one not closed in the move) and a series of 1-2s ensued. The initial channel turned out to provide a series of parallel channels that almost perfectly signal each subsequent breakout right down to the most recent one that gaped and retested as it closed the gap and then fell away fast through the long term support. Plenty of signals to get Short (I didn't catch them all alas and chickened out of one), despite people saying don't short Oil, I say short any market that is screaming short. One of the best shorts of all time was Oil (actually 2 of them now in recent times). If Oil is going to head much lower, as the set up suggests, it should test the 5000 area, and possible quite quickly now. If we get a lower low vs the previous bear moves low (pink 1) there is no telling how low this could go, it could be a long one. If it does not break the 5000 level then this could be an A-B-C that rockets back up to make new highs. As the set up is significantly bearish now I will hold my Shorts at BE and seek to add on pull backs until the 5000 zone and then reassess. This is the essence of swing trading.

Gold exhaustion spike in the making if US large cap stocks rally is sustained beyond previous highs.

Looks decidedly like a 1-2 retrace move and now rallying away. If correct price should carry beyond the previous high in short order as this would be a wave 3. If this happens then that exhaustion spike I was referring to in my Gold/Silver thread could come off.

If the market turns bearish at this juncture I expect it will drop a lot further than 1450 @dmedin. Going Long there could be catching the falling knife. All depends on a) a turn and b) the price action nature of the move down. If the market turns at 1500 then with the level of NMD against it I would anticipate a significant bearish move until that negativity is eroded. A breakout of the resistance area (or your wedge if it would be valid) would be a bullish signal to buy the breakout.

I don't agree the daily chart wedge @dmedin but never mind that. Agree being Long but at what point would you cash longs? What evidence would you wish to see to reverse your bias? Updated charts attached.

Bearish breakout in progress?

@dmedin, what I am referring to is the following: Markets move in waves or phases: up/down; up/down and so on. Sometimes these up/downs are overall rising and sometimes the opposite, which is how we get Bull and Bear markets - ok you know that! Before a market turns down it typically rises in a trend (short/medium/long term). There trend is your friend, until the bend in the end. A market will typically look very bullish in trend terms at the top. Contrarians view an all in zeitgeist either was as a warning that things are about to go into reverse. This especially true at key turning points. I went Long Gold down around 1200 when trend followers were telling me it was Bearish, this was one reason I went Long. The analogy is that if everyone is on one side of the boat it will capsize unless some people run to the other side. If there is no one who wants to sell Gold right now then how can bulls buy? So either the price jumps in large gaps, unusual in a highly liquid market like gold, until we reach a price people are willing to sell at or the market collapses back as people take fright, hence the options i posted. The simplest trading and investing maxim is buy low, sell high. For trading that can be translated into take Longs at the bottom of a range and go short at the top of the range. The trick is to identify the range and the likelihoods of the various scenarios in play, for that I use a variety of technical analysis, which I have shared in previous posts. The exposure at these range extremes is low as if I am wrong I get stopped out quickly but the rewards potential is high. At this point I do not know which will win out but I am prepared to take advantage of either when my criteria are met to trigger a trade. For Gold I want to see a spike up and rebound back down through my ST up-sloping channel t trigger a Short and/or a small 1-2 down/up and drop. If that doesn't occur and there is a breakout then the answer is go Long, but watch out for a fakeout. We may well get a retrace drop in Stock indices that produces a panic buy in PMs and then a reversal that causes an exhaustion spike in the price, typically on low volume. On Silver I would be expecting to see such a spike as Silver is more volatile than Gold but a spike and return back within the current price levels would be a bearish signal.

Updated 1H chart with the LT support zone included. A break out of the bottom of this zone is a trigger for a longer bearish phase.

VanEck Vectors Gold miners EFT unavailable to buy, "closing positions only" on IG. May means they can't offset clients buys with their own buys in the real market place. Means there is no one on the other side of the trade. One of 2 things happens now: Price rockets until there are sellers Buyer exhaustion leads to price plummeting Everyone is focused on stocks but PMs are gonna be wild!

Gold is making every effort to breakout of key resistance but so far hasn't quite mustered the juice. Could the rally strength be waning? Momentum certainly suggests it may be with NMD on daily, 4H and 1H charts. On the 4H there are 3 pin bar candles (third one in prog). If this one fails to breakout... Nice 1-5 up to the current level, which has just poked through my LT red line resistance (this isn't enough, it needs to close above - on the weekly/monthly chart!). Strong moves often poke above/below resistance/support before reversing in my experience but quite often this is a sign of a breakout at the next test (a few months away in this case). If there is a failure here then I expect a strong bearish move to recharge the market for another assault but the wider fundamentals backdrop would have to be perfect and it isn't yet for me, unless stocks drop massively again. Looking also at Silver I see some similarities. Silver too is seeking to breakout through long term resistance but has been trading in a range of late. Doesn't look like a classic sideways consolidation to me, yet, although it may yet morph into that. Rather it looks like a wave 1 top, again a classic 1-5 with a flag consolidation in the middle (bit further down than the middle showing the strong bullishness on this move but maybe that is a good reason to doubt the longevity this time? Very strong NMD now on Daily and 1H, which was missing until recently. Ideally I would be looking for another leg up to test resistance, maybe an overshoot, to complete a 1-5 and then if we see a strong rejection that could be that.

As with my EURUSD prognosis I see DX as in a relief or retrace rally that should test the resistance zone around the Fib 50% area. The move down was a textbook 1-5 so now looking for a classic A-B-C back up to a turn and drop into a longer wave 3.

While stocks were going near vertically down and EUR was rallying GBP remained curiously docile, stuck in a consolidation zone, very much in the doldrums. That wont last of course and when it breaks out it could be fast and furious. IF EURUSD retraces and breaks to the upside then I expect GBP will follow suit but faster. With EUR now falling and GBP standing still and if this continues then EURGBP will fall. If EUR then reverses but GBP breaks out faster then EURGBP will accelerate its fall. This is consistent with my contrarian argument that the MSM has been overstuffed with doom mongering on GBP over the Brexit debacle with many notables offering their opinions (unbiased of course - yeaaah!) and plucking at the heart strings of the people via the mechanism of holiday exchange rates (shameful!). On the technicals front, it looks like EURGBP has hit the top of the daily chart channel and rebounded back down on strong 1H and 4H NMD. A small 1-2 relief rally may have just ended and now that drop could begin. The run up on the Daily looks like and A-B-C with a very strong wave C in perfect 1-5 form.