Mercury

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.

FX has been quietly getting on with business while Stocks volatility spiked. Interesting that USD didn't react much to the Fed rate cut but it did drop off from my upper channel (see my "what is the USD doing?" thread). In mirror of that EURUSD went of a decent rally and broke out of a short term channel in the process. After tracing a 1-5 up to a potential wave 1 (blue) price is retracing back down and may have put in an A-B and now heading down to complete the retrace. The most likely candidate for the end of the retrace is the Fib 62% area of the previous channel breakout, although a retest of the actual channel line a Fib 67/&8% cannot be ruled out. If this plays out then the rally will be strong as a wave 3 and there is some significant resistance over head to get through but once it does this rally should really take off.

Meant to add the 1H chart to the previous post showing a possible retrace back down in a 1-2 form to kick start that rally. This looks like it could be a mini version of the Christmas bottom and rally. A break through the 25,200 support zone, channel line and previous low brings up a whole other scenario...

Pretty much everyone is bullish gold right now and that may pose a problem for a breakout. Also if stocks are executing yet another V shaped rebound then this isn't the big one and gold may run out of steam. The techncials remain bearish, despite (or perhaps because of) the bullish trend of late. The set up is the same as before for me so i would reiterate it but on the 1 and 4H chart I have a potential ending channel, almost vertical rally. If this keels over at or before the overhead resistance an breakout out of the channel to the downside, while stocks and bonds rally then we could see a significant bearish retrace, despite what happens to the USD. Obviously a breakout through that resistance brings up a strong rally. Should resolve one way of the other soon.

Well that was an exciting few days if you are of a Bearish persuasion. A good hauls of points for the brave, and fortune, it is said, favours the brave, or is it bold, well same thing. At the start of the move I didn't know whether this was a Bull ending top or just another buy the dip. Looks like the latter at present for me, unless we get a sharp reversal back through support in the coming days. For now I am assuming another leg up but I do feel, if there is another leg up, that this bearish move has put us on notice of things to come and how quickly they will play out. For me it was a good dress rehearsal, and profitable as well, perfect. What happens next remains to be revealed but I would be looking for an unsettled period of whipsaw price action rather than a rocket. I have a strong parallel channel on the Dow and am targeting 28000 area for the top, subject to price action revisions of course. Regardless of that a break of the lower channel line will be a key indicator of a turn. I will be trying to catch it a bit earlier than that though. Let's see.

While managing my Stocks shorts over the past few hectic days I have not had my eye on the ball of other markets but I had a alert placed for Brent Crude, which triggered today as the market looked to breakout of a series of parallel channels and a large support zone. Such a set of channels is not that common and these have marked the wave breakouts almost perfectly. The most recent was a gap breakout to the downside, that closed quickly with a failed retest and dropped away. I went Short at this point and as the market looks to break lower, having closed that gap from Jan 2019, the 5000 support zone beckons. If the retrace between 12 June and 11 July is indeed a 1-2 (blue) then the bearish move could run and run. If it is an A-B then it should remain above the previous wave 1 (pink) low. I see no rally potential in the techncials at this point. A break past the 5000 level brings up white space for a long drop.

Gold has just arrived at a critical juncture for me. If it is in an ending channel with a bearish phase to come it should turn around the current level and breakout below the lower channel line, then carry on down to whatever end. If it is about to embark on that long term mega rally a lot of people are talking about (perhaps too many people right now) then it should break the upper channel line and associated resistance zone. It may drop here and retest of course. I am short/medium term bearish on gold for reasons previously laid out.

Not sure who you are addressing there @dmedin but if you have a question just ask, happy to answer. USD broke through @elle's resistance zone and then bounced back off my upper channel line, thereby creating a new, slightly higher resistance zone, which has some prior pedigree. I am looking at this as a bearish set up. Previous I flagged that another leg up was possible before a bearish move so rather than negating my bearish set up this recent move strengthens the case. Looking at the weekly chart you can see that adjusted resistance zone and a pin bar drop from the upper channel line touch that also coincides with a potential monthly chart upper Flag line. This line is not yet valid on its own but as a mirror of the lower line, which has many valid touches it can be relied on in the future. We have have strong NMD at the pin bar turn. I am looking for a breakout through the lower channel line to confirm my bearish set up. On the Daily chart you can see the pin bar in more detail. The daily bar that resulted in the touch on the upper channel line is in a spinning top form (with a small body) and today's price action so far has continued the bearish move. The EWT labeling is consistent with a top out and turn. However we do not have NMD on the Daily, which is a bit of a concern and therefore the possibility of another leg up remains. I will be watching price action on the 1H and 4H charts, especially on EURUSD, to give some clues as to whether we are more likely to get another leg up or a 1-2 retrace but I think it will be one of these scenarios. Obviously a breakout through the upper Flag line and the overhead resistance zone negates the bearish set up.

I am Short the FTSE100. Based on my analysis I think the FTSE, DAX, Nikkei and Russell 2000 have all topped out already starting with the FTSE all share in Jan 2018 (also the Hang Seng & China 50) and ending with the Nikkei in Oct 2018. Only the US large caps have posted new ATHs. So one of 2 things will now happen: US large caps go on a massive rampaging rally to infinity (or thereabouts) and other indices are lifted to post fresh ATHs, OR We have seen a progressive tipping point starting with smaller caps and China and progressing through the other indices over 2018 that is a harbinger of US large cap capitulation and when that happens the whole house of cards collapses. Big time! As a "registered" bear on stocks I don't need to tell you which one I think is the most likely. The perennial problem is spotting the final turn and getting in as early as possible to take advantage of a once in a lifetime opportunity. I get a lot of stick for my bearishness, which I ignore; you can't let people get into your head or they will impact your psychology, which is a killer. I understand that people don't want to believe the gravy train is nearly over but for those with a truly open mind the opportunity could be staggering. So why wouldn't a trader be conscious of this and be alive to the possibility? The answer lies in emotions of course, not being able to give up on the perma bull bias. Don't get me wrong, when the bull opportunity is there I take it, as I did in January on US stocks. Where I different vs the buy the dips acolytes is that, as a swing trader, I am looking for the turns ahead of time and alive to going both ways as the price action and indicators in my methodology suggest. The different between me and others is that as I have a Bearish bias long term my Longs are tactical where as my Shorts are strategic positions. With stocks at all time highs and also valuation levels (on various metrics); with economic indicators keeling over; with unprecedented central bank manipulation, which has not helped the average person, only the super rich (and now we still need more to support the house of cards..!), and with fundamentals that are indicating recession or worse on the way, the stock market maxim of buy low sell high is flashing in neon lights. Yet people aren't paying attention to the warnings, well not enough of them, although some very serious players are and these are people you can't really ignore. But this can turn on a dime, as the Americans say, and given the nature of this particular bull market they probably will. So each time I see a potential turn like that I am ready to get Short, stop protect at break even and wait and see. I have been at this for a long time now and each time I have been thwarted but if I don't lose much, or at all, then I live to fight another day and one day I will be right... Did that day come last week? The likelihood increases with each failure, rather than decreases. People you point to the many failures as evidence that the bull will continue are just evidencing their bias, their hope. All bullish trends look bullish until they breakdown. As @elle said in another thread, all trend lines are destined to be broken. All trends are destined to fail, all Bulls are slaughtered by the Bear in the end. In short: "The trend is your friend, until the bend in the end". At the point of a turn, such as last Oct 2018, the buy the dips boys will start to talk up a "healthy" correction. As if losing money can be healthy, utter nonsense. A 20% correct is good they say. What they really mean is it kills off some of the herd so they, the perma bulls, can get rich on their failure. But that is a topic for when we get there, for now I want to focus on whether we are at the turn yet or not. If we are we should see a strong move down but we will get a relief rally, that may well look like a "healthy correction", before the major wave 3 kicks in. So looking at the FTSE 100 I see the following. On the monthly you can see the previous 2 bull tops and the Central Bank induced bull that ran up to May 2018 on the FTSE100. Just as with the Russell 2000 (see previous post) there is an EWT argument for another leg up but the other indicators belie this scenario. Still it is possible so care is needed until confirmation of a turn into a Bear market. The interesting difference between the FTSE100 (and the Russell 2000 and possible the Dax and Nikkei) and the US large caps is that the 1-2 relief rally (purple) has already happened so the next move will be a strong wave 3 down. In reality all the stock indices have effectively gone sideways since 2017, just following different patterns (divergence, which you want to see at an end of trend) with US large caps slightly stronger than others. NMD is present at the major turns in the bull, including the ATH but until the channel line is broken the trend change cannot be declared. Looking at the weekly then, last weeks' candle is about as bearish as you can get on this market at a turn (i.e. the candle of the turn. Usually it bobs around a bit but this candle hit the Fib 88% and rebounded like the euphemistic falling knife (wanna catch that? No me neither). On the devils advocate side, if the A-B (pink) is a pennant then a rally would make one or both of the red lines above the previous ATH but that falling knife will have to be caught by a lot of buy the dips people to be stopped and reversed. There is strong NMD at the turn and a credible A-B-C wave form and RSI/Stochastic are overbought. No wonder we got a bearish move... The daily is interesting in that we have a 1-5 up to the wave A (pink) and A-B-C to the B (pink) and a 1-5 up to the Wave 2 (purple) that ended in that hugely bearish weekly candle, so that is a classic A-B-C form to the wave 2 (purple). On the daily chart that bearish move broke through the channel lower line with force (a likely ending channel), again with NMD at the turn and Oscillators over bought and the turn fell short of the Fib 88% (marginally) and didn't make it to a touch on the upper line of the channel, all bearish signals. On the 4 hour chart things get really interesting. So far this move is straight down and shaping up to be a fast 1-5 form. We aren't there yet and my wave 3 (brown) placement is provisional, it could show lower. Either way a 3-4-5 from here would mark a larger wave 1 (green) and at that point we can expect a relief rally. If this shows and then drops again below the wave 1 (green) the case for the Bear increases significantly. It is a process of constant evaluation, this is why there is never a bell ringing moment at a major trend change, In summary then, On the FTSE (and the Russell 2000) the case for a Bear market turn is strong and increasing but not yet confirmed. I think we will see some short term consolidation early next week, either a retest of ST resistance (7450; chance of 7500 but I think that will come later) and drop down for another leg OR a Flag consolidation before that further drop. Any shorts I might take would be tactical for now as I am anticipating a larger wave 2 (green) retrace rally and when/if that concludes with a turn back down that will be the time to consider longer term strategic Shorts, leveraging my early Shorts and entering a pyramiding strategy.

Are we there yet? Every time there is an all time high and a sudden drop that question pops up and no wonder. Buy low sell high right? But wait, this time it's different! Yeah right... The rate cut may have been somewhat insipid but it was still a cut, first in 11 years the MSM is saying, of course they have been at rock bottom for most of those 11 years (that goes into the "so what?" file). Most people seem to expect the Fed will have to cut more so what isn't it buy, buy, buy? Yeah Trump tweets and blah blah blah I get it... Still if the single most important factor for the Bulls is rate cut then... I entered stock indices Shorts at various points on the US large caps and FTSE100 last week and still hold them with stops at break even. Yesterday I cashed in my continuation trades, including a couple of nice ones on the Nikkei and Dax on the late rally (got to keep the account ticking over!). These markets are broadly in correlation but they appear to be at different stages now with FTSE, Dax and Nikkei having topped already (potentially...). At least it can be said that while US large caps have made ATHs the others have not (yet...). I have analytical cases that support this being the final top in US large caps but also contra scenarios whereby we see more ATHs before the end. Flip a coin? One immediate question to be answered is whether the bullishness we saw at the close on Friday was a precursor to an end of the move lower and a rally in the now classic (since algos took over the world anyway) spike reversal. However pretty much all the past spike reversals were fast spike down and rebound candles on the weekly charts. This weeks candle doesn't conform in my opinion. If you look at the FTSE, Dax and Nikkei their candles are even less bullish (well clearly bearish actually). Look also at the daily candles for Friday and again only the US large caps show any kind of spike and these are still bearish candles (red). So the late Friday rally, which may be a sign of an end to the bearish run, looks more like a relief rally to me. Rather than look at the US large caps through I wanted to post on the Russell 2000. If you don't know this market it is smaller cap stocks (AKA momentum stocks). I do not trade this market but do analyse it for early warning clues as smaller cap momentum will keel over before the blue chip and FANG brigade. As discussed previously, various sectors on the FTSE100 are already showing bearish signs (Retail and associated consumer goods, property etc and Banks have been bad since 2008 of course). While the FTSE100 may have peaked in May 2018 the all share looks to have peaked in Jan 2018 (i.e. earlier) with smaller caps seemingly weaker than the 100s, as I would expect. So what does the Russell show us? The monthly chart (data in IG only goes back to 2007 but that is ok as this move is a separate bull phase) shows a 1-5 (purple) bull phase. Alas the wave 5 end could be a wave 3 so we could have a 3-4-5 (red) to go. So it all depends on whether the small caps are leading or lagging the large caps. My premise is that they are leading and keel over first as the US large caps are the go to momentum indices globally (especially the FANGs). Note the red line on the momentum indicator, which is at long term lows. A break of this would be very bearish. Check out the attached RealVision video for a much more sophisticated and expert description of this concept, truly illuminating. https://www.realvision.com/tv/shows/the-expert-view/videos/a-sea-change-in-market-momentum The red line on the chart is the top of significant resistance on either side of the ATH peak (possible top). It has offered very strong resistance to all attempts to break out to the bullish side on this side of the peak (see daily chart). On the weekly chart I zoom in to the end game price action. You can see that the potential wave 5 (purple) ATH occurred on NMD and the rally up from pink 4 was also in a clean 1-5 pattern. Alas the bearish move down to Christmas Eve could be described as either an A-B-C (it was on large caps) or a 1-5. If the former then the Christmas turn was a wave 4 (red); if the latter it was a wave 1 (purple) - the beginning of the end. While the US large caps rallied to new ATHs the Russell has been doggedly reluctant to break that resistance zone (red line). The price action since Christmas looks very much like an A-B-C unless that A-B (pink) is really a 1-2 bullish retrace, in which case we are in for a massive rally that would last several more years... The rally topped out at the key resistance area (wave 2 (purple - provisional) on massive NMD and significantly the momentum of the first stage of this rally (to a wave A? - pink) was much greater than that seen in the rally to the ATH. In fact it was the highest weekly momentum on the chart and yet it did not break that resistance nor carry the market to a fresh ATH... The wave 2 (purple) may also be completing a perfectly proportional head & shoulders formation (alas the neckline is not horizontal but that can be attributed to the very bearish Christmas move as the stock markets showed the first real signal of skittishness (fear!). Price action since that RS shoulder looks like a smaller scale 1-2 (pink) - see daily chart- that topped last week but there are at least 3 plausible scenarios: We have seen the ATH and a 1-2 and now the market is on a long term bear footing that will break through all support on a fast journey south Wave 2 purple is actual a wave A and therefore we will see a higher wave 2 (purple), possible around the Fib 76/78% level, still in touching distance of that significant resistance, before the big one. This could coincide with another leg up to fresh ATHs on the large caps. The wave B (pink) might already be in or more likely is yet to come, lower still Wave 5 top is not yet in on this market and we see a strong rally, perhaps up to the resistance trend line to make a fresh ATH - Large caps go through the roof..? Moving on to the daily chart to see the the recent price action more clearly. Here the move down from wave 2 (purple) is in a 1-5 and the move back up to wave 2 (pink) is in a complex A-B-C. We had NMD at each of the 3 failed attempts to break that monthly chart resistance zone, which forms a smaller H&S formation (not that relevant for me but potentially adding to the Bearish sentiment (could be continuation either of course but with the NMD..?). RSI and Stochastic are not yet oversold (more to go yet?). If it is to be an A-B-C down to a lower wave B then price must carry to below the recent May low. If it is a 1-2 (pink) it will carry a lot lower. Finally the 4H chart, which also boasts NMD at the pink 2 turn, is showing a potential 1-5 down. The turn and rally yesterday could be either a wave 3 (brown) or the beginnings of a FLAG consolidation formation. The Fib 76/78% is a decent support zone candidate for a wave 1 (green) turn and the resistance level around 1550, the Fib 38% could provide a barrier to both the current rally move and any potential wave 2 (green) rally. If we do see price action sketching out according to this road map then a much stronger bearish move is on the cards, which would most likely go on to test the long term channel line. This may fit with the large caps testing their respective channel lines or even a breakout. So in summary then, the Russell 2000 is signalling a bearish phase, which, unless the price action early next week rallies strongly through 1550, is at least going to drop to make a lower wave B before any rally to a new wave 2 (purple) and may yet turn out to be signaling that the big one has arrived. I would not be surprised to see a small rally back to test the 1550 area in early price action but if this is repulsed and we see a new lower low on the bearish move I think that much stronger move lower is in the offing. Trading approach: I am holding my higher up Shorts one the US Large Caps and FTSE100 at BE to await price action signals and will look to add on any decent pullback and turn and/or a clear break lower. After that the 1450 support zone may offer some challenge before the long term channel line but I will worry about that later.

That's one reason I don't really pay too much attention to the MSM opinion pieces. If the Journos were any good at calling the markets they wouldn't be Journos. The people who really are good at calling it aren't gonna tell us for free. The MSM reports what has happened (i.e. the news that the market movements made, rather than the other way around). When the Brexit referendum result came out the MSM declared the markets didn't like the result because the FTSE100 was down. Actually the FTSE was up on all measures except the day-to-day around the result and then carried on up following the established bullish trend. But that doesn't make for a great headline and the job of the editors is to sell papers. That is why I focus on the price action and technical analysis to make sense of it (to try to divine what is going on in the group behaviour). However in this case, if you look at a 1H chart, you will see that the market on Oil did indeed plunge and rebound within a relatively short space of time. It is a bit like a mirror image of Gold actually, I wonder if that is relevant (i.e. the underlying drivers are pushing oppositely for these 2 commodities). The obvious scenario at play is that Oil is Bearish so get short, however I am not convinced on that one yet, need to see a lower low for that. I think we may have seen a wave B turn into a rally back to the higher resistance levels around 6900-7000 maybe. So Oil did plunge but the headline would make it seem like one should sell whereas the analytical suggest the opposite. Old saying, which is not a myth, "buy weakness, sell strength". Or buy low, sell high. Trust yourself and your method, don't trust to MSM articles.

Quite a set of price action moves on stock indices and Gold, not so much Silver, which is noteworthy I feel. Got a bit of action on Oil too but FX was largely quiet. US Bonds and Notes rallied, expecting lower interest rates (i.e. more Fed cuts) or just flight to safety? If it is a flight to safety and this is the big one on stocks then naturally Gold would rally right? And USD is signaling it may well turn and go bearish for a time at this juncture, good for Gold right? That is the received wisdom. The problem with received wisdom, and getting sucked into a sudden price move like we saw yesterday on Gold, is that the gut reaction is often wrong (well mine is anyway). This is one reason many retail traders and investors find the markets so frustrating, the markets tend not to do what at face value seems logical and rational. But that is because we can't know what is in the minds of the big market players. This is why I use technical analysis to attempt to make some wider sense out of price action, which taken alone can be catastrophically misleading. I don't rely purely on technicals but must also have a fundamentals backdrop. I am long term Bullish on Gold and Silver BUT yesterday's price action has not changed the technical set up and I don't see any significant fundamentals change either. The in-going thesis for the Fed rate decision was for Powell et al to disappoint. Unless they cut 50 min that was always going to happen. The suggestion in some circles is that they will circle the wagons and cut again quickly. We might see signs of that in forthcoming speeches. From a fundamentals perspective a disappointing Fed cut is bad for socks and bad for Gold (albeit it is still a cut...). Stocks have reacted and Gold dropped initially too but then caught a bid. Maybe the Trump tariff thing maybe something else, I don't know, no one does, except maybe the big market movers and they wont tell us. So much for all that, what about the technicals? The same situation as before still exists for me but my lower channel line is redrawn to accommodate yesterday's price action and now looks more like a parallel channel and cleaner. The move up could be an A-B after a smaller internal A-B-C on the wave A. The wave B (green), if correct touched the Fib88% and rebounded fast to end the candle yesterday. This points to a complex retrace that would end with a strong wave C down, breaking out of the lower channel line. We should see a small 1-2 on the 1H/15min chart and drop to confirm. The alternative scenario is that we get another touch on the upper channel line and then we see the drop from a repositioned wave 1 top. I think it is 50/50 on these 2 from a technicals perspective. Clearly a strong breakout to the upside negates the downside scenarios. What is it Kipling said? "If you can keep your head, while all around are loosing theirs..." and so on. Whether right or wrong on the assessment the key, for me, is to keep your head and not make snap decisions based on gut driven by a sharp move that you may not yet understand. Unless you are a 1min chart scalper I guess but I know nothing about that.

While Stocks, Gold and Oil were going crazy today FX was relatively calm. However the FX market was calmly going about its business and it looks as if my weekly chart resistance trend line held firm at a possible wave 1 turn. There may yet be another test but for now a Bearish move is looking like ti could be on.

Big time Yen rally today. What could it mean? USD weakness to come? Stocks bear not done yet - flight to safety? Another market for Bears to watch.

With the USD possibly turning bearish off a strong resistance trend line that could mean rallies in EUR and GBP and likely GBP would be stronger, given the negativity this currency has endured for no material economic reasons (pure sentiment driven). I had signaled a potential daily chart channel in play on EURGBP, which was hit exactly with a concurrence of the Fib 78% off the Oct 2016 highs and price then rebounded back down on NMD. There is also a clean 1-5 up to the potential wave 2/C (Blue) end with a small 1-2 retrace (1H chart) to allow a good low exposure entry Short. Good NMD on the 1H chart too and recent price action suggests a ST flag formation that, if broken to the downside, should bring up a wave 1 (brown). After that, assuming the price action still fits a wave 1, we should see a retrace to wave 2 (brown) followed by a more concerted bearish move that should break the lower daily channel line if a Bear market is on. All of this would be more probable if EUR and GBP were in rally mode. So overall the technicals (and fundamentals - See my "what is the USD doing?" thread) are still supporting a USD bearish retrace medium term unless or until there is a strong USD breakout to the upside soon.

So stock indices appear to be rallying as the buy-the-dip boys kick in again, but is that all the drop we are going to get this time? I doubt it, more likely for me it is a retrace (relief) rally to retest key support (now resistance) before another leg lower but that will probably not complete until the US markets open up. In the event that stocks do rally on through I would expect to see a divergence with Gold as the signals remain strong for further bearish moves on Gold. As I believe that stocks and PMs remain under the sway of the Fed policy short term I expect both to show further falls. Specifically on Gold though I do also see a short term rally in the offing. This is quite far behind stocks rallies so far but actually clearer from a technicals perspective. On my 1H chart (below) I have a clean 1-5 down on yesterdays drop from the wave B/2 (brown) turning point. There is a minor PMD at today's lows, which occurred at a decent zone of support (1400-05). I now expect a relief rally that could carried to one of several key resistance points. I have no way of knowing which will trigger and stocks price action on US open may inform this but the form of the price action on the rally will be a key factor (looking for an A-B-C form). This could take all day or more to develop. I would expect any Shorts above the channel line to be safe but personally I would cash of stop protect at BE anything below that line (which I do not have myself). The retrace turn obviously offers a chance to get Short and the further price rises the more likely the turn become. One to watch patiently I feel.

"Stablecoins"! Interesting that. It is often the case that the early adopters get killed and a new paradigm emerges from the wreckage. This happened in the first internet bubble when the self appointed disruptors declared they would end big business by making everything free on the internet, while becoming millionaires. They were not able to answer the obvious contradiction and most of them lost everything as big business took over. The likes of Google and Amazon are now big business. They run their operations as a normal listed company must. They obey the rules (except for paying taxes, which will be addressed in due course as governments catch up). They are mainstream now, that is the price of success and the payoff of course. The obvious flaw in the crypto devotees argument is the constant citing of crypto valuation possibilities in USD (i.e. FIAT currency). Yes in order to actually make money on this they have to sell and convert to the very thing they are claiming to be replacing. In order to ascribe value to their crypto holding they have to refer to USD, because that is how it works. The point I have been making consistently on this topic, that seems to drive the crypto devotees mental, is that I believe the crypto story will end the same way as the internet bubble. The technology is very interesting, no question. Governments and accountancy institutions (including my own) are studying it with a view to leveraging in into the mainstream (principally to address lack of visibility/accountability in accounting and to bring in paperless currency, FIAT currency - Stablecoin?). To this end government will legislate private crypto out of existence and mainstream tech players will step in o pick up the pieces (enter Facebook... I wonder when Google and Amazon will kick in...). The providers of technology will do well as they will start to work for the governments of the world (probably via these big tech giants); it has already started. The current crop of cryptos, as the article suggests, will become valueless. Doubtless there is still a trading ride for those brave enough to take it on and I see upside in the crypto mania to come before the end. For me the end of crypto will be a signal for the end of the wider bull frenzy but are we there yet? Maybe but probably not yet. I could see Bitcoin regaining its past highs, maybe making some ATH above or perhaps a double top before the players cash again and pull the rug out from under the frenzy buyers (again!). That is a purely technical analysis perspective; obviously my fundamentals perspective is the exact opposite (hence I call this a mania, and the hype is exactly the same as that I experienced in 2000 - buyer beware!)

It seems that everyone is down on the Fed; who would be a Fed Chair? It's an impossible task to please all of the people all of the time and eventually, as night follows day and cycle follows cycle, they will fail as the markets crash and reset and recession bites. You might as well try to control the weather... So much for that but despite all the negativity the Fed did cut rates by 25 BPs, which is what they were signalling, so ok then. Rate cuts against a currency normally lead to a drop in that currency but not this time... Of course there is nothing normal about this "new normal". USD - DX broke that fib 62% related resistance barrier, as @elle showed us but there is one more hurdle before USD sets off on a rampaging rally and that is an upper long term triangle (or narrowing channel) line. As you can see from my weekly chart, the upper line is very strong with many solid touches and a nice prior pivot touch as well (very strong). The lower line is weaker but that is to be expected given the move was/is bullish. I have a clear and clear 1-4 wave cycle done and now we look to be, possibly. in a final wave 5 up to the wave 1 (blue). If we see a rebound back of the channel line with other associated indicators then my retrace bear move to a wave 2 (blue) - rally in EUR/GBP et al, is on. If we get a breakout of this formation then I will give up on the retrace scenario. However, in my view, from a fundamentals perspective, in order to get a USD rally from here (and it would need to be a concerted and strong rally) we need to see the following: Signals from the Fed that there will be no more rate cuts, in fact hikes might be on the cards Associated to the above we would need to see ongoing positive data on the US economy (doubt we will get this) and strong earnings reports on US stocks Other currency CBs signaling lower rates and accommodating policy (USD relative attractiveness, especially in the bond market) and poor economic data Eventually a stock market top and crash - flight to safety - and an associated rally in PMs Eventually a recession/depression - flight to safety I would not be surprised to see the Fed committee talking up further cuts in the next set of speeches. They need to offset the bad PR effect of yesterday and fast of heads may roll. Even in my most bearish mindset I cannot see that we are there with the above criteria, but maybe, maybe. We will have to see how the current stock Bear move plays out. So if we are not there yet then USD should retrace, for at least a couple of months into the Autumn and then... If anyone has a justification for USD rallying without any of the above I would love to hear it.