Mercury

Nice reasoning and logic to that @ChrisN, I have no argument with any of what you suggest and agree the options. I do wonder though if scenario 3 is likely to actually become manifest. That is clearly what the powers that be are trying to get to. Scenario 2 is impossible in a world where populations are slowly decreasing as birth rates tip over and begin to drop (maybe there is hope for the planet after all!) although either of the Malthusian economic constraints may yet come into play so a catastrophic collapse is still very much possible, be it via an actual war as in your extrapolation (hope not) or "just" a financial meltdown. Given the choice I'd rather the latter financial Armageddon rather then the physical kind... If Japan is the dress rehearsal that does not bode well as nothing Japan tried got them out of the stagnation they have been in for decades. I think that they have been saved from a total meltdown only because the rest of the world, their customers, did not follow suit (yet!). What happens when they do? Surely Japan then does meltdown? So net I think all the efforts of all the central banks and their political masters has not achieved the desired effect. Eventually the other shoe drops and so I think scenario 1 or a version of it is the inevitable, logical conclusion. I don't think it will be a default like Argentina/Zimbabwe because they were isolated cases. I think it is much more likely that governments effectively nationalise the economy by effecting bail ins (a la Cyprus); currency access restrictions (a la Greece and Cyprus); and debt write offs (i.e. debt holders take a massive hair cut). In fact under these circumstances bond holders and cash holders will all get hit. The only area that then works is the aged old store of value, precious metals (and land I guess but I suspect that land owners will be at the beck and call of the government as well to ensure food production). Note this has happened before. In the US during the Great Depression the US government actually went to the extreme of making it illegal to privately own gold, it only became legal again in the 1970s. That is one reason that holding gold overseas is something that US investors actively seek. Holding some actual physical gold, or better yet silver as it is more usable in a crisis, is clearly a way to go under such a scenario. Hopefully the extreme scenarios do not come to pass but I feel that some version of this is required to reset the system and prepare for the next evolution, which will be all about technology. In any scenario I see Gold/Silver as being the asset of choice. Holding paper versions may not be so smart in the worst cases. Forget about bitcoin and their ilk, they will get wiped out and will not realise their true potential until the next evolution. They will still be controlled by governments, unless anyone thinks there will be no governments... Talk about science fiction!

Going back to my FTSE analysis I see things as follows: 2 scenarios present themselves, other than fresh ATHs that is: 1) the move down to the turn on Thursday was a wave 1 (blue) off a larger scale wave 2 (purple) that should retrace, maybe in a complex fashion with a lot of whip saw price action maybe not, let's see; 2) the recent rally and drop to a new low was a 1-2 (red), which indicates a much stronger leg down is immanent. The #2 scenario would only be valid if price holds below the previous high (circa 7300). I favour the #1 scenario. There was PMD on the 4H chart at wave 1 (blue), which suggests this is a turning point. Also the 4H chart shows a 1-5 wave down to the 1 blue, which would be motive and suggests a trend change to the bearish side. There was strong NMD at wave 2 (Purple) which is consistent with a large scale retrace move. Just as with the US large caps, after the stop and turn up there was a sharp retrace drop to the Fib 76/78% zone before the current rally. As the FTSE was in out of hours at the end of the week this market has not rallied as hard as the US markets. Also we may yet see fresh ATHs on US large caps while the FTSE100 only puts in a counter trend rally. If we do see fresh ATHs on US large caps and only a retrace on FTSE and probably Dax and Nikkei as well then comparing these markets will be instructive for calling that top on US large caps. We may, alternatively, see only a retrace on US large caps too if the top of the market in already in. Conclusion: we can anticipate a bullish period on all major indices BUT should guard against a quick reversal on FTSE 100 that would set up scenario #2. Either way this market looks to have topped out so the coming months though to the Autumn will be critical to deciding things on all indices, and likely quite a few other markets. I am Long the FTSE 100, coincident with my Dow Longs and will swing this up for now but my bearish bias for the long term will keep we watchful for a break down of this rally and I will not be pyramiding this one, far too risky until things are resolved.

So it looks like my crazy set of channels on the Daily chart is still holding well. The breakout of the last channel line, which coincides with a nice zone of lateral S/R was retested but failed as I noted in my previous post. I got Short off an initial rejection from this zone and Resistance line with a tight stop but price never came back so nicely in on a couple of Short positions and stop protected at BE. Price moved back through the monthly lower channel line (purple) and put in a quick daily candle failed retest and dropped away. It is possible we could see another retest of this resistance zone before any further move but a break below the 5760 level would be indicative that the Bear has resumed and obviously a break of the previous low around the $56 mark would once again bring $50 into focus.

Agree @elle FX in general is quite while everything else seems to be frenetic. FX is the biggest financial market in the world so one would imagine that if things were really kicking off in macro term USD would be moving. The fact that it is currently in consolidation or more likely the beginnings of a turn, suggests to me that we are not there yet for recession/depression/inflation/Armageddon. Therefore I predict a period of USD weakness but only as a counter-trend move to the long term motive bull market that will kick in when all hell does eventually break loose. Currently I see a top in the DX (blue 1) followed by a 1-5 down to brown 1 ad now we are in a brown wave 2 retrace that looks like it may have topped out on Friday. This would fit with my thesis that stocks are back on the climb and precious metals may be cooling off for a while.

The overshoot and return inside the channel proved to be an exhaustion spike as EURUSD dropped to its potential retrace turning point and GBPUSD put a bit of a breakout rally on. I now expect both to rally, although short term GBP may continue a bearish retrace before accelerating past EUR. This is the scenario I have been waiting patiently and probing for many months. Fortunately I was sticking with my game plan and was able to take advantage of the EURGBP breakdown as price reentered the daily channel and broke through a short term channel. Price put in a couple of failed rests and then dropped sharply away over the balance of last week. I expect this move to continue to at least the lower channel line and then we will see if there is a breakout here or not. That is phase 2 for me, phase 1 was catching the breakdown, job done. My plan is to sit on my Shorts, stop protected at break even, and look to pyramid sell the rallies once I see a conclusive breakdown here and elsewhere (i.e. very strong GBP rally or very strong EUR collapse). I favour the former as I do not think we are quite at the Armageddon point, as discussed on my Gold/Silver thread, but after some more FX war engagements I think we will see this and I firmly believe the Eurozone is intrinsically weaker than GBP, due mainly to the EUs structural issues rather than the UKs strength. Note, while the UK was never in the Eurozone it was obliged to chip in to help out with economic issues so now that the UK is out it will not have to help bail out the chronically weak Eurozone banks and a failing currency. I wonder whether the remoaners will thank the leavers for this in the end, I doubt it but surely historians will chronicle the debacle faithfully in due course. History is written by the winners after all...

That is a good additional point about rates @ChrisN, I have also mentioned the need for an uncertain rates backdrop to fuel PMs rally, we certainly have that with the Fed flipflops of late. More broadly we have seen currency wars but these have not really captured the imagination of the MSM yet, doesn't make for great headlines I guess... I think, as some credible commentators have said of late, that we will see currency wars ramp up in the coming months as Lagarde takes over from Draghi and Powell feels the pressure. Japan will continue on with Abenomics, they don't know what else to do. This is a bit new for China but they are showing all the signs of the same kind of interventions have have massive consumer bubbles domestically. They are all desperate for inflation but it isn't coming so one of 2 things will surely happen next: either we suddenly get a super massive set of central bank policies that drop rates to zero or negative everywhere and a corresponding inflation explosion (yeah it aint gonna managed!) OR deflation. It all feels like a coiled spring to me. Under either scenario Gold is, well, golden... No wonder it is surging. Although I actually prefer the correlated Silver trade as it has more potential. One additional point I forgot to include on my previous post, Gold non commercial COT data dropped off last week leaving the previous weeks reading as the all time high. This is not conclusive alone but taken together with everything else is is something that I like to see at major turning points. Early next week could tell the tale. We can also look at SIlver for correlation. Personally I would be very nervous about my thesis if I saw a divergence here. Fortunately I don't, in fact if anything the case for a turn and retrace down on Silver is even greater. The fundamentals are the same as for Gold. On the Technicals front I see the following: Very similar set up to Gold on the Monthly/Quarterly but in this case the drop was much greater, down to the Fib 78/78% zone on the very long term move, and there was a double bottom rather than a head & shoulders. Currently price has just touched the overhead Triangle resistance trend line and rebounded off it this week with a sharp move down. Interesting that both Gold and Silver did this and Stocks rebounded the other way. US 2, 5 and 10 year notes also dropped sharply on the same day. That's quite a few markets to manipulate at the same time... Maybe it is something else? Maybe it is sentiment turning? There was very strong PMD at the wave C turn in 2016, which is nowhere near exhausted in my view (i.e. a lot more rally to come. the breakout of the over head trend line is vital to this rally. On the weekly chart you can see that price is currently in an historically strong congestion zone. It would not be unreasonable to expect this to cause at least 1 retrace back to the bottom of that range. For price to cut up swiftly through this congestion zone we would, I feel, need a lot stronger fundamentals case for chaos right now and it doesn't feel to me like we are there yet so I think a bearish retrace to gather momentum and wait for that case is on the cards. Let's see the Fed blink and bring out the big guns and some further bad economic data, particularly from the US and China eh? Also worth watching the bond market, Black Monday began in the Bond market, it is a much large market than stocks yet everyone is obsessed with stocks. From an EWT perspective is is likely that we have a couple of 1-2 moves in the frame rather than a single rally phase. This is important as the retrace would be deeper if this were 1 rally phase up. This also suggests that Gold is similar. Looking at the Daily chart you can see a near perfect A-B-C form for the 1-2 (blue) and a near perfect 1-5 (brown) up to the potential wave 1 (green) top and turn. There was a clear 1-5 up to the wave 1 (blue) also (not shown but check previous posts if interested). This means that so far the move is motive (1-5 is in the long term trend direction = motive; A-B-Cs are counter trend moves). Unlike Gold we have a possible NMD at the top last week and similar on both RSI and Stochastic. Not conclusive alone but taken together with everything else it fits a pattern. Because the wave 2 (blue) dropped all the way to the Fib 76/78% the different between the Fib placement here and at the larger wave 2 (Purple) is minimal, again unlike Gold, which was more buoyant on the wave 2 (blue) and therefore less conclusive. So drawing the Fib retracement indicator from blue 2 is a decent shout. If the spike down and retrace rally is an A-B (brown), which it is large enough to be, then I would be targeting the Fib 50% for the wave 2 (green) retrace turn initially (circa 1600). However if we get a strong move and Gold goes all the way to, say, 1360 (its neckline support zone) then 1500 (Fib 76/78% again) could easily be on the cards here. Nice little swing trade if you can take it, but watch out for sudden reversals! Finally, on the 1H chart you can see the current top, spike down and relief rally. Just as with Gold this move broke out of a short term expanding channel initially and retraced back up to the Fib 88%. Unlike Gold, Silver gave us a nice channel encompassing the relief rally and we saw a breakout and failed retest of the breakout zone before price dropped away. Both the green 1 and brown B/2 were on NMD on the 1H. Alas price did not hammer down at the end of the week, which would have been ideal, but did nudge down in the final few hours of trading, which can be indicative at key turning points. Stocks hit a consolidation phase at the end of the week too so early next week I would need to see stock resume a strong rally, possible after a brief bearish move, possible not (could even see a gap up open on Sunday). If we get this then Gold/Silver could see a mirror image fast drop and it will be crucial to see a lower low to reverse the medium term up trend. Once this happens the retrace is on and it remains only to target the turn back up.

Gold and Silver remain in lock step (funny that...) and looks to be in a rocket to the stars but took a wobble this week and whatever the reasons perhaps it was a precursor of a potential retrace bearish move, which is surely overdue. With stocks apparently rising again maybe now is the time for professionals to take some profits, which would have the dual effect of dropping the market and offering lower reentry. Who wouldn't want to do that if they could..? If they knew every other professional would... Whatever the whys and wherefores we can all agree that markets move in waves or zig-zags and we are due a zag on Gold and Silver. When it is over I think we will see the enormous wave rally that some notables have been calling for. Even trend followers would agree that in a massive trend you buy the dips (i am a trend follower too but only in wave 3s). Are we at a dip now? Unlike stocks, we are only at the start of this trend, especially in Silver, unless you believe Silver will detach from Gold and follow Copper instead, not much evidence for a Silver/Copper correlation though so I wouldn't bet the house on it... It is my contention that Gold and Silver are gaining favour because of global political and economic uncertainty and no wonder, stocks are at impossible highs, the air is thin and the whole house of cards is being propped up by central bank largess, build on theories. We are in uncharted territory and the only certainty is that markets do not go up up up for ever, could be time to pay the piper soon. In this backdrop it is not surprising that traditional safe havens are popular, at least as a hedge. But I don't think the rocket can really take off until all hell breaks loose and we are not yet there. Maybe in a few months, hence I see a retrace down in precious metals first. From a technicals perspective the long term turn and rally I have been talking about is surely now confirmed. Even the trend followers who were negatively disposed to my thesis back then are now talking up the bullish trend... The monthly chart shows that long term trend line support and the U shaped bottom that describes a head & shoulders pattern. On shorter time frame charts I have a neckline for this H&S that could provide a zone for any potential retrace as such a pattern is quite common. There is an alternative EWT labeling such that the blue 1-2 could be a pennant and the green 1-2 could retrace much further to hit that neckline. On the 4H chart that sudden down move broke through a small expanding channel and then retested. Overall the rally has achieved the Fib 88% but there was significant NMD on the top out after a clean 1-5 up. Barring another higher high this currently looks like a strong retrace rally that could either be a 1-2 or an A-B, the former suggest a much longer retrace. On the 1H chart there is NMD at the Fib 88% turn as well so there is a good chance that this move will break down into a medium term retrace move. For swing traders are point on offer for Shorts but longer term spotting the turn will be important to add to long term Longs.

First let me apologise @AxelP, on rereading my post I can see that it may have come across as condescending and targeted on your example, which was not my intention. I was talking ingeneralisatins and in fac personal experience (i.e. I was talking about myself and not you). In fact I thought it reminiscent of another poster, which made me shudder, I will have to watch how I phrase things better, or maybe simply not post... Regarding your comments: I think you misunderstood my point, perhaps if you had read my Gold thread you would have seen where I was coming from. The sudden move down was not the retracement, just the beginning salvo, maybe. The retracement will go down much further and I do use Fibs to assess likely end points but thanks for assuming I don't pointing that out. Again if you had read my thread you would see that I deploy an overarching fundamentals premise to my technical analysis. The two have to be in sync for me to take action. Sentiment reading are used by professional traders. Sentiment drives the markets. The explanation you are seeking is what drives sentiment. I have a view on that, which I shared. You think it is manipulation and I think it is a natural sentiment shift, albeit temporary. I thought you wanted other opinions, guess not. My contention is that manipulation doesn't matter to me so I don't obsess about it. This has been going on since the dawn of time and not just in financial markets either, ever heard of a cartel? It is human nature. As such many technical analytical methods seek to map the natural rhythms of the market driven by human nature on a long period of time. Manipulation is contained within the historic price action, whether this is through legitimate means or illegal collusion or indeed through government (via central bank) policy. The only manipulation I fret about is a flash crash but that is where guaranteed stops come in. If I cannot decipher whether a move is manipulation, and anyway what would I do differently, then I just ignore it and spend my mental energies elsewhere. What is a non genuine seller? A seller is a seller. That is right. You are guessing. Why bother is my point. Write down the time and place you said that... As I said I apologise if my comments came across so, it was not intended. I was actually talking about myself regarding fuzzy logic not you. Ironic that you chose not to follow your own advice though. My response was originally a response to your post, which asked for opinions. I see now that I misunderstood. It was a rhetorical post., you didn't want opinions. I will take you advice and keep any further opinions to myself. Thanks for yet another lesson in why posting on the forum is not more active. I imagine most users do not want to expose themselves to such diatribes. As you say you are familiar with what Market Makers do, you have a firm grip on things and will be a very successful trader, or are one already. Good luck with that.

Time is a problem @dmedin, no question. It seems there are people on the forum who devote 100% of their working time to trading but most of us must juggle it with other things. Frankly I am not one of those who even wants to be sitting in front of the charts all day, it would drive me nuts and it is only really necessary is you are trading very short time frame charts. I did try it at first, mostly because I had no trust in a system, or the market for that matter. Mostly I had no trust in myself and for good reason, I had not put in the work and taken the time to gain the experience. And I lost and lost. Where else would you see people diving into something they have no training and experience of and risking their hard earned capital. "Down the dog" maybe... But then I stopped and decided to take a different approach. Everything I read led me to a simple conclusion. Professional or retail it doesn't matter, if you are competing against the high frequency algo traders and prop traders you need to take a different approach. It seemed to me that most, if not all, of the people who had been on this journey and successfully broke through the early days of losses and stumbling about and frustration and negativity did a few things in common as follows: Got a grip on themselves and the emotional part of their brain that was driving them to jump in at wrong times without a clear premise. This is chiefly about controlling the fear of missing out syndrome and dreaming of another life. Took the time to study and develop a methodology for analysing, trading and managing their account in a professional business like manner. Changed the way they traded to few bigger better at longer time frames. I am sure there are people on this forum who will disagree and tell you that you can make money on day-trading and scalping but if it doesn't suit you then don't do it. It didn't suit me, I couldn't see the woods for the trees down at 5mins etc. So I tried something else and it works much better for me. When asked about his rules for investing Warren Buffett replied, "don't lose money". It was a bit of a joke but there was a serious message there, the key is to limit losses and ride winners so as to max your profits. In this way you don't need to worry about hit rates and pushing the 50/50 coin toss to 55/45 in your favour. You just need to win big and lose small. I will typically lose 8 out of 10 times but I scratch quickly if price action does not go according to my thesis and move stops to break even as soon as possible. If on the 9th or 10th try I hit it then I am a net winner. Trading is a long term activity. The key to success is to be net ahead over a year not a day or a week. You cannot think in terms of getting a regular income, it just doesn't work like that. Also you have to take some profits when offered to keep your account ticking over or you risk running out of runway. Regarding your point on wave recognition, it is a problem but it is the same for everyone, professional and retail alike. It is called price discovery, the market participants watch the evolution of price and take into account other factors (like fundamentals) and create a premise. Then they test this premise by placing a trade. This is simply how it works. In terms of my specific comment, I really don't care at this point whether US large caps have just made a wave B or a wave 2 as the next wave in either case (C and 3 respectively) will be in the same direction, which is up. I will assess the price action as the move develops and make decisions about when to cash and when to reverse later based on my analysis. Deciding when to cash is where you want to be, not that it is much easier than anything else in trading... EWT note: an A-B-C can look very similar to a 1-2-3 (or 5) so context is critical.

Well we got the wave B I was looking for, or it is a wave 2 setting up for a massive rally to come, time will tell. And it was a deep one on the Dow, stretching to the Fib 88% and getting stopped by the daily chart lower channel line, which now looks like an excellent line of support with many solid failed tests and turns. The nature of the move was such that I favour this for a wave B but can't rule out the perma-bulls scenario based on technicals alone, for that I turn to Fundamentals, which have been aired many times before and more recently there have been a spate of serious players coming out to call for a recession and/or uncertainty that would spike Gold. For me Gold can't do its thing until stock keel over so I don't buy the scenario that Gold and Stocks will fly together again. There is almost always quite a lot of volatility on a wave B, and we certainly had that in fact the whole move from the 6 Aug bottom, that halted that big slide right on the lower channel line, was full of whipsaw price action. The rally up formed what looks like an A-B-C to me and ended at a level where the Wave C was equal in length to the Wave A, a classic EWT marker for an A-B-C form move. After this we got a fast 1-5 down in wave B and a sharp 1-2 retrace ending last night. The interesting thing about this 1-2 retrace is that right after the wave B was stopped at the Fib 88% and lower channel line the wave 2 (brown) was stopped at the Fib 76/78% level. If we look at the 15min chart we see this turning point more clearly. The 3-4 on the way down was in an A-B-C form and the 1-2 on the way up was similarly so. Not only did the wave 2 (brown) hit the Fib 76/78% on the 1H chart off the Wave A (green) but also it hit the Fib 76/78% off the wave 1 (brown). This kind of double Fib hit is very strong if price bounces away sharply, which it did and I chose to take a Long off this bounce with close stops for a low exposure trade. When price rallied away hard I move my stops to B/E and hold it now for the medium term. Interestingly on the FTSE 100 and Dax we saw a new lower low, which is very bearish for me and confirms my view that the move down was a wave 1 off a larger wave 2 top (end of the Bull is in on these markets I am almost 100% sure). What I will want to see on these markets now is an A-B-C retrace to a smaller wave 2 and turn (regardless of whether US large caps put in a fresh ATH or not) and then a break of the recent lows and that will seal the argument for me. A break of the lower channel line on US large caps will also be highly significant but I think that is a few months off yet. For now my projection is for stocks to rally away from the current area and I will be watching for retrace move signs to assess for a turn back into that big bear move I have been tracking for a couple of years now. In the short term I am content to take advantage of the rally in swing trade fashion.

Patience was the name of the game on FX of late, in fact for the past year for me as I sought the retrace rally I have been expecting. Each time I tried for it the market reversed and either stopped me out for zero or little loss or I took some profits to keep things ticking over. My latest attempt was at the beginning of August (I posted on this previously), where I took a preemptive Long on a bounce off a lower channel line with decent PMD on the 1H chart, with stops very close so small exposure. When the market moved away sharply I was able to add on the next small 1- 2 retrace and then I sat back and waited with positions protected at break even. I expected the market to rally and then come back down to retest support levels. Initially I was focused on the Fib 62% level at the channel breakout level and price held up there for a short while but I was not satisfied with the wave C EWT count so I thought it might be a small 3-4, which it seems like it was. Also there was no PMD at the turn so all-in-all insufficient signals for me to even take a flyer. Given the past price action record on this pair a further retrace to the Fib 76/78% or even lower was likely. And that is what we got. Price moved smartly down to that support level today and then rallied out of the zone hard, where I took some additive Longs on PMD. If this set up holds then I would expect a small 1-2 retrace back down before a much harder rally. With GBP and AUD also looking more perky and US large caps apparently rediscovering their pep this could be the beginning of a decent anti USD move.

@MrsCowling, don't worry about whether the markets are rigged or not, for sure some nefarious activity occurs but in the main the market floats freely operating purely on sentiment, what traders feel is right. The advice offered above is right, figure out how a market works and spend a long , long time getting educated before getting your feet wet with live trading.

@AxelP, 2 thoughts to offer: First I believe, from the tenor of your post, that you had Longs that were stopped out (either for a loss or you are feeling the loss of all that lovely upside potential). I am guessing you bought into the idea that Gold was going up, up, up. But markets don't move in straight lines. I do think the long term trend is up but these markets are overdue a retrace bearish move, a zag to the zig if you will. See my Gold/Silver thread for more details on this idea if interested, I will not attempts to repeat it here. So basically that is a reason for the current move, which I believe is the beginning of a period of retrace bearish price action until the next zig kicks off and it is this one that will be the one that runs and runs, timing is all. This may or may not be related to what is going on in stocks but more likely there are underlying drivers effecting sentiment and Gold was already hot so traders are minded to worry about such reversals and act accordingly. Up/down, down/up, this is how the markets operate. When something goes against us and apparently against logic (even though the logic may be fuzzy) we tend to seek nefarious reasons, which by and large do not exist. When too many are heading in one direction the market is too lob-sided and we get a zag. Nothing nefarious about it, been going on since the dawn of time in every market, not just financial ones. Second, even if someone or someones are trying to drop the market so they can buy back in, which would be your thesis I guess, they are doing this by selling their holdings. There is nothing illegal about that. Collusion is illegal but the reported cases of this are few and far between, it is not the mainstream and should not be fixated upon, it is unhealthy for your trading psychology. The key point here is you have to trade the market, the price action, and not worry too much about the whys and wherefores. There were signals enough of an potential reversal, which I posted on and also some serious professionals opined on. If you were taken out at break even no problem reassess and carry on. If you got hit for a loss, why were you not at break even stops? These are rhetorical questions for you to ask yourself and learn from it. My suggestion to you is to reassess your views on where Gold is going next and long term and set up a trading plan accordingly. If you lost some money on the current move, learn from that and move on, do not fixate on it and above all don't try for a revenge trade. This is all about psychology for you now.

Just a little further insight into trade entry and management for you @dmedin with live market price action. On the chart below I show where I first reentered Oil Shorts, from previous posts you will see it was also where there was a gap down, close and fall again on the Daily chart. Price broke through an important support zone (red lines) that is now resistance (left side of the chart). It then rebounded back and put in a retrace and fell through support again, this happens a lot. I went short on the second break through with stops above the previous short term high. After that there was a small retest of support that failed and the market carried on down, then I moves stops to break even when I judged the market wasn't going to retrace suddenly, take me out and then carry on down again. So far so good but as the market hit the next level it rebounded. My question at the time was whether this was just a small rejection prior to another swift retest or something else. It was something else but then it looked like the price action may have completed a retrace. I was wary though because rather than drop away it went into consolidation. The breakout of consolidation would be important for short term direction. A break lower and I could consider adding to my Shorts. A break higher and I may have to reconsider the whole move. The market broke higher so it was time to close out, small profit and wait. Note prior to this I had move my stops to break even so, barring a flash move I was safe (no loss). At the end of day yesterday the market hit back into that same S/R zone and slowed and turned. Based on my methodology this was a good place to take a low exposure Short (stops just above the resistance zone). This is a preemptive trade as I did not wait for a small 1-2 move so it could get stopped out by another leg up. The market moved down and now I have stops just above the previous high for a very low exposure because if price comes back up to this level it is likely to do that additional leg up so no point in risking a larger draw down, just cut and seek a reentry later. In this whole situation I made a small profit on the first positions taken and was at break even with stops anyway and now I try again as my thesis is still that Oil goes down long term. I will only look at my other scenarios if Oil materially breaks back through the near term over head resistance. It may take me a few attempts to get Short again but I don't mind this, in fact it is common. No one catches all the moves perfectly all the time, the trick is to ensure you are still there ready to catch the final one without taking too much pain. To do this you need a method to assess the market direction (long and short term), likely trigger points for a trading opportunity, stop protection that makes sense both in terms of the price action, S/R levels and your account size and good in flight management once you are in a position. That takes time, study and practice to achieve. If you don't have this how can anyone decide when where to trade?

@dmedin, Regarding the rally in Oil, it was always a scenario possibility that Oil would react to the spike through support and rally back up to test previous support/resistance. Many traders like to trade between these S/R levels on short term horizons. I trade longer term so take a position and use stop protection to minimise or eliminate exposure to such reversals and then, if stopped out, look to go again on signals, unless price action calls into question my long term direction assessment. This is exactly what happened in the case of oil. So I didn't lose much and live to fight another day, you can't win them all. Incidentally there is a very interesting interview with Mark Richie, one of the old traders featured in the Market Wizards book, first edition, don't think he is in the more recent updated version, on Real Vision. It is a bit rambling but there are some gems of insight in there and the key one is to learn how to lose. He cite the example of a trader who loses 9 times out of 10 but wins big on the 10th. The secret is to lose small and win big but stay in until your thesis triggers. Most of the big time traders will say that they make most of the profit from only 5% of their trades. As it happens, while my Oil Shorts were getting stopped out I was able to get Long Stocks and Short Gold/Silver. I am also short USDCAD and waiting in the wings for USD to top and turn Bearish, no exposure yet. All of my positions are now stop protected at Break Even. All of this was achieved through my technical analytical method with no regard for news or tweets so my answer to the points you raise are as follows: Technical analysis (of various forms, not just mine) does provide experienced traders with the means to enter and exit trades profitably. However you can't get it right all the time and it may take several attempts to catch a move. What you consider volatility on Oil or stocks recently I do not consider out of the ordinary. The drop at the end of July on stocks was but I was able to take advantage of that big time using my method. Professional traders typically bemoan a lack of volatility as it is volatility that allows them to make money. Naturally you can also lose big time if you are going the wrong way or not practicing good money and risk management. So the questions becomes, how do you ensure you are going the right way and how to do recognise the triggers to take a trade? I would say, personally for me, that there is no point in trading short term. I tried it at the beginning like a lot of newbies, because I didn't know how to trade, didn't have a timeframe and method sorted and hadn't sufficiently practices the craft and therefore didn't have trust and conviction in my trades. So I was glued to the screen and made bad choices with big time psychological impact factors. Also I couldn't see the wood for the trees trading at the short time frames. Now I tend to only trade long/medium term swings and rarely day trade and don't spend the day glued to the screens. Markets are not easy to predict, I might say impossible, which is why I don't try to do it. Professional money managers often make calls about where a particular market or stock will end the year because the punters demand it but this is a pointless exercise. Who cares about the end of the year? What I do is generate scenarios and map these as road maps (people on this forum misrepresent this as fortune telling but it isn't). When I see a market conforming to one of the scenarios I have a high degree of confidence in it and my associated trades. When I see price action that dose not conform or that breaks the scenario I re-assess. I am always stop protected. Is it worth the effort to study, create and practice a trading methodology? I don't understand why anyone would try to trade without doing this. I know how it happens, I did it myself at the beginning and lost a lot of money learning the hard way. After many years I arrive at a point where i have something that works and practice and refine it continuously, ignoring the naysayers. Anyone trying to trade without this is gambling in my opinion, not that any of it is not gambling, in terms of risk taking that is. You seem to assume that EWT is the only thing I use. EWT is only one element of my methodology and it does not form part of my trade triggering method but is merely an analytical tool to get an understanding of where a market is in the inexorable and irrefutable cycle of up/down; down/up. As it happens the basics of EWT are incredibly simple, not complicated at all.

USDCAD executed a near perfect retrace off the recent bearish move and then fell hard in what is almost certainly a wave 3 of the previous wave B turn. This is overall, I believe a medium term A-B-C retrace before a strong USD rally but that will take some time. The current bearish move is likely to be the wave C (last move of the retrace, which could run and run). The small scale retrace rally hit the Fib 62% and then rebounded back. I am Short off the wave B turn (that was a speculative with low exposure) and now Short off the Fib 62% turn and will pyramid this one in a sell the rallies strategy.

Good summary of the Real Vision findings from their recession watch series @elle, As most stock market crashes start of really kick in during the Autumn months the timing projection is makes sense. Price action over Aug/Sept may help unpick this for technical traders.

@dmedin, you misunderstood me. I was suggesting that people who peddle the hype behind things like bitcoin taking over from Fiat and the never ending stocks bull or indeed those who recognise a fall is coming but position it as a "healthy" correction and anyway it wont come for another 2 years or so have a vested interest in keeping investors invested. Money managers don't get paid if investors are not invested. Worse even is the risk of a collapse of their funds a la Neil Woodford. In short the turkeys don't vote for Christmas, which is why you rarely hear financial services firms, or even IFAs, telling you to get out.

Here is another view from a different Dr Doom... https://www.youtube.com/watch?v=rfWVqrPEXEo

There is a lot of talking up of the current bull market in stocks and bonds with concepts like the the "new normal" of ultra low interest rates (ZIRP/NIRP) and never-ending QE. At the same time there is a lot of talking up of precious metals and the fantasy that Bitcoin will be the new asset du jour to take down Fiat currency because people no longer trust the policy makers around Fiat currency. Seems like these two concepts are at odds. The one thing that shatters all these narratives, chiefly, in my opinion, being peddled by those with vested interests in what they are saying being true, or perhaps more like they want the general public to believe it, is a significant recession or worse. Recently Real Vision ran a few weeks of very interesting interviews under the banner of "recession watch" if you haven't check it you your should, some of the material may be on their free access area. https://www.realvision.com/free I've posted on retail problems before, there are more out there, the retail situations just gets worse and worse. Retail falls if consumers are concerned. Manufacturing comes next and then services in a cascade. The headline data is also late on this. You have to look at the various factors rather than the headline. I'd be interested in any content or forum users views on whether we re heading into, or perhaps are already in a recession just not yet declared (note recessions are declared after the fact not in advance). Here is a video interview with Roubini, nicknamed Dr Doom for his dire warnings about the US house price boom from 2005, for which he was vindicated in 2007 of course where he is talking about an impending recession and indeed declares that the US is already in a manufacturing recession. Doesn't have much good to say about Bitcoin either...

Will USD rally or drop? That seems to be the battle ground right now on FX. The trend is with USD but if the trend is turning then we need to see signals of this across multiple pairs with the USD. The Chinese devalued the Yuan vs USD recently, allegedly as a trade war ploy but maybe there is a deeper need for the Chinese economy (still chiefly an export of manufactured good led economy despite some commentators trying to tell us it has turned internal consumer led, like Western economies) to keep its currency low vs its main customers. Could the trade war/negotiations be merely a vehicle for the Chinese to get air cover for their manipulations? Maybe this action had a knock on effect on USd pairs as USD got a boost but if that is over now then we should be seeing reversal signals. Perhaps this is the bigger macro event and not relatively tiny issues like Brexit..? On AUDUSD I think we may have one of those signals but first let's look at the macro backdrop. On the weekly chart we can see that this pair broke a long term consolidation channel, possible a Pennant (have to look at the Monthly or Quarterly to see it) and we got a bearish phase since then but of later we may have seen a pin bar reversal on strong PMD with oscillators over sold. The long term trend is bearish but before things really meltdown we are likely to see a bullish counter trend rally. That pin bar is clearer on the daily chart and currently we are seeing a small scale reversal that may be a 1-2 retrace down before a larger rally. If we look at the 1H chart we can see that 1-2 more closely and the whole move looks like a V shaped reversal pattern, which, if we get a rally back and price breakout out of the resistance at the top of the V, we may well see a strong rally away. Currently price is tracing an A-B-C and has been stopped at the Fib 50%. Could make it down to the 62% yet but in any case we are looking for a break of the overhead resistance. Ideally I would like to see other USD pairs moving the same way.

Looks like EURUSD may be making a move to resolve short term consolidation, to the downside, although as I write price is poking back inside the zone so maybe a fakeout. GBP has caught a bid after a sharp sell off; notably the non commercial COT data for last week reflected a net bearish position on triple digits for only the second time since 2007. The only other time was in March 2017 just as GBPUSD went on a 2000+ points rally. With the market too heavily weighted to one side the odds favour a reversal (or a total collapse). To see a total collapse we would really need to see a massive USD rally for me and I don't think we are there yet. The GBPUSD charts don't show much of use yet but I will be watching for a reversal signal here and ideally want to see EURUSD and other related pairs trending up against the USD as well. Another clue could be the EURGBP pair, although both EUR and GBP could go down against USD with GBP going less dramatically and thereby producing a bearish move in EURGBP. However my thesis is for the initial stage of such a bearish move to be driven by a retrace rally in both EUR and GBP vs USD. I would happily take either scenario though... As I have said previously my feeling is that GBP is oversold vs EUR and MSM articles promoting doom and gloom on GBP vs EUR are at extreme levels also, a contrarians signal to get ready for a reversal. So COT and MSM are signalling reversal from oversold levels and oscillators are all in oversold territory from weekly time frames down. A long on GBP would be speculative right now so I am waiting for a 1-5 up and A-B-C down and rally to signal a reversal of trend. So looking at the technical set up on EURGBP, I have adjusted my long term to eliminate the consolidation triangle and now have a complex 1-2 (pink) retrace on my weekly chart. Price has reached the Fib 88% off the Oct 2016 highs that was repulsed with a massive pin bar and has slightly surpassed the Aug 2017 high, making this a possible A-B-C in complex form (lots of internal A-B-Cs). The price action since before Oct 2017 is contained within a range (see Red and Green lines) and the upper range is quite close so any Shorts would have a fairly low exposure. However I would not suggest a trade until there is a breakout signal on shorter term time frames. On the daily chart I have an up-sloping channel that was broken to the upside but price has now returned back inside in a possible fake-out (need a daily candle close back inside the channel to confirm). On the 1H chart there is an additional channel (light blue lines) that conforms to an ending channel configuration and in this case the fake-out does have a close back inside on the 1H chart (less convincing than a Daily close but still indicative and worth watching). I am looking for a breakout of the 1H channel with a motive (1-5) wave down and possible a retest of the channel breakout zone with an A-B-C form. If this happens and then price is rejected back down swiftly from the retest to create a failed retest then the Bear is on and maybe GBP rally is also on.

Regarding the comment on Silver, I have heard this one before, may be a good topic for the market myths debate. Here is a chart of 100 year historic silver prices, not adjusted for inflation. What I see is Silver largely ignoring recessions in a a series of speculative spikes each one higher then the last after a U shaped bottom. You can see the same thing on Gold, there are closely related and highly correlated. I see no reason for a divergence now. Silver is a market in and of itself that performs according to its own internal dynamics and is driven by sentiment just like any other market. To trade it one must be open to its own internal eccentricities and price action. In a world of buy low sell high what makes most sense on Silver right now? https://www.macrotrends.net/1470/historical-silver-prices-100-year-chart'>Silver

Well this is not a general trading strategy thread so if you want to discuss the whys and wherefores of EWT open a thread there and see if anyone is interested. Or you could just research it like everyone else, no one is going to hand it to you on a plate. Anyway in order to learn you have to put the effort in, no other way. So back to Gold and Silver. The week produced another rally phase and more price action data to work with (oh yes, technical analysis is based on past price action - stop press..!). So is fundamentals analysis as it happens. Silver in particular is at a critical juncture right now as it tests a long term down sloping trend line. Whether it breaks this soon or falls away will be an important signal. This is not hindsight, this is contemporaneous with price action. Non Commercial Commitment of Traders (COT) data dropped back on Silver, which may indicate a weakening of conviction as we approach this critical juncture. Gold COT however advanced this week to equal the most bullish readings since 2007 (which was July 2016 when both Long and net long). In 2016 Gold was at a critical juncture too and the gold bugs were talking up a big rally, sound familiar? Check out what happen after July 2016. Not saying that will happen again but it is eminently possible and therefore it is a scenario that cannot be discounted yet, unless you are so convinced you cannot see anything else, which I consider a dangerous psychology when I notice it in myself, sort of hubris in the making... On Silver the daily chart is showing bearish signals (negative divergence on several oscillators) over and above the COT data contrarian view. These will be false if this is in a mega rally but if not then a significant retrace may be seen before that rally. Overall both markets look like they are full bullish and long term I am bullish but there is a doubt as to whether we will get a significant retrace to "prime the pump" for a big rally. Silver looks weaker than gold, unsurprisingly as gold gets all the coverage. When Silver breaks it will break faster and this is the reason I am more interested in trading Silver than Gold. Could Gold go into consolidation while Silver retraces down harder? Sure. In a long term trend, bullish for both these markets (how many times have you seen Silver and Gold trends diverge?), buy the dips is the best strategy. Would it make sense to go Long now then? Not for me. I will only add Longs when I see a decent pull back and break through the key resistance area on Silver. For me this is no longer about spotting the turn, I did that successfully months and months ago and went Long at the time while others were trying to tell me the trend hadn't changed (yeeeah!). Now people are trying to tell me a bearish retrace is not possible (yeeeah!). Bottom line here is that a trader must trust their own system and judgement and block out naysayers, especially those that do not understand their method and how it is used.

Oil makes a retrace retest of the breakout zone but ends the week with a bearish candle, that is the weekly candle is bearish and so are the final 2 4H candles. While the daily for Friday is in the green there is a strong rejection pin bar on the candle, not quite a conclusive bearish pin bar, would need to have a red body, or no body, for that. So another leg up on Monday to retest cannot be ruled out but overall the long term bearish outlook is intact. I would take the view that any further rally legs offers an opportunity to get Short, as will a break below recent lows. I think this will inexorably test 5000 and then we will see what happens, although for me, if Oil would rally strongly it would do so prior to the 5000 level, a test of 5000 will almost certainly lead to a break, given the price action we have been seeing since the last major top and turn in Oct 2018. This view is based on Elloit Wave Theory applied to the price action and supported by other indicators, not some gut feeling (i.e. it is data based, as all technical traders are). At the time of the Oct top, having missed this top, I was posting on an expected 1-2 retrace and got some stick for this. Now that the 1-2 I was forecasting based on EWT did materialise (I note those tha gave me stick did not acknowledge this...) I took advantage and went Short. In fact on my daily chart I annotate all my trading, leveraging EWT. You can't catch every move and I missed the wave 2 (green) turn too as I was focused elsewhere and had too much fear of a rally up (that's psychology in action for you). However I am now again Short and given where I took profits I am not much out vs Short and hold. If anyone wants to see how EWT works just study my posts on Brent Crude since the Oct 2018 turn (on this and other threads), it is self evident. For those who think it is all about hindsight, I was posting contemporaneously not in hindsight. For those who can't be bothered to study the post, and study the masses of material out there, well you are not really interested so fine stop talking about it. I will add to Shorts on further weakness and guard against sudden reversals on the basis that there is always another opportunity down the track.