Mercury

Currently PMs and Stock indices appear to be in rough correlation (Fed/CB policy driven? But for how long? Not important right now). Long term this wont last in my opinion but short/medium term the technical set ups (as posed previously) are pointing to a bearish phase on both. On Gold we have had a clean break out of the ending channel (very similar to US large cap stocks - except of course that US stocks are at ATHs and Gold clear isn't). We may see a brief retrace rally, maybe even a retest of the lower channel or breakout zone, before the next bearish move OR just a continuation down. On my 4H chart you can see the ending channel and breakout. The rally within the channel hit the Fib 50% before the drop began yesterday (before the Fed release - don't have to wait for data release if you are using technical analysis and this is where I went Short). This rally could be either 1-2 or A-B but in either case a wave 3/C is next and that should a strong move down. The first target is 1380 but this is shallow so I am expecting a test of the 1360 area in short order. Note we could see a lower wave A at one of these levels so the form of the move down will be important in deciding the route being taken. The crucial point here is that a break of the 1360 zone will indicate a likely test of the daily chart fib 50%, 1300 area, (that would be a retrace of the whole move up since Aug 2018). Will also need to track stock indices as I think the correlation will probably hold for another round trip down up (unless this is the big one in which case at some point they will diverge as stocks plummet and PMs rally). Time and price action will tell the tale.

US large caps took a tumble through their respective 1H/4H chart ending channels and appear set of a period of bearishness. I would imagine the daily 200MA is a reasonable first target, which would be around about the lower daily chart channel line on the Dow. A hold or breakout to the down side at this juncture will be critical to assessing whether this will be a "buy-the-dips" play or something else. The speed at which the market moves down to test this zone may also be a factor (fast is bad for bulls). On the European side, we have seen some bullish dip buying on FTSE100 and Dax especially this morning, which is fairly common in the first hour or so even in a bear market. That is coming off now in the second hour given an opportunity to sell the rally for the Bears. Interestingly the Dax put that rally in on a bounce of a medium term daily chart lower channel line. A break or hold of this zone is important for stocks I feel. FTSE isn't quite at its daily channel line.

methinks the lady doth protest too much. QED.

It's the tweets that I find the most illuminating rather than the article, the talk, the guy himself (I mean who cares right?). The tweets are indicative of a a kind of cultism seemingly common among devotes of the high priest Bitcoin and the many other lesser priests and priestesses. Rain down fire and brimstone on all ye who decry the great crypto revolution. In fact the tweeter described crypto as a "insurgent or subversive movement", not exactly the kind of talk you'd expect from something seeking to be a credible replacement for my grans cash. Claiming the FT are trolls is laughable, regardless of your opinion of MSM. It all smacks of a deep-seated sense of insecurity that is consistent among the frat house of crypto devotees, all dreaming of becoming true billionaires (in USD notably...). This is consistent with the first internet bubble, which took over 10 years to mature before it all fell apart. Then another almost 20 years of the current tech bubble (will it end the same way...?). Most of the people who were dreaming of becoming internet millionaires (billionaires weren't yet really a thing then, that's inflation for you - and the widening gulf between super rich and everyone else) wound up with nothing. The few who did sold out before the end. I am betting it will be the same again because human nature is always human nature and while history may not actually repeat, the human behaviours do.

"Tulip Trust"! Interesting choice...

While waiting for the Fed to do its thing I note Brent has gone above that 6500 level I was referring to. It is edging back a little now but with no real conviction. So far the retrace looks on but need it to rally again away from this 6500 zone to confirm. The attached Real Vision links (part of their free content section) are very interesting with respect to what is going on in the Oil market. The first one is mainly about why the SP500 is a Short opportunity but towards the end they segue into a discussion about Oil, makes for interesting fundamentals backdrop and basically saying the price is artificially high given the level of supply and intimates that fracking is making it much easier to get at the oil in the US (i.e. lower costs!). The second clip is a summary of a much longer piece, if you can find the longer version it is well worth a watch. Basically this is about energy revolutions. The thesis is energy companies will be a big buy for the long term with things like green energy, electric cars and fracking playing their part. This too refers to the hidden benefits of fracking for oil supply (as in there is a huge untapped resource available - chimes with the supply point made in the previous clip). All amounts to long term Oil price pressure, not withstanding artificial price support. https://www.realvision.com/tv/shows/trade-ideas/videos/playing-the-fed https://www.realvision.com/tv/shows/tech-trends/videos/the-energy-industrys-five-major-transitions

Used in isolation yes. The idea is to use them in conjunction with a number of other devices to create scenarios and so long as price action conforms to the expectations of your scenarios you go with it. As soon as price does something unexpected you reassess, maybe exit maybe not. If you draw the lines wrong, prematurely, or within the wrong fundamentals premise then sure they will be unreliable. If you get them right they are very good trade entry indicators, especially, as others have said already, when the channel/trend line is broken. In the end, as also said before, the trend is always doomed to failure. This is why trend following outside the wave 3 is fraught with danger. This is also why swing traders seek signals of a trend change much earlier than a major trend break.

I never liked the Dax, very sharp moves. I have always preferred US large Caps, and occasionally FTSE100. With a 2.25% drop on the day I hope you are Short the Dax... Regarding getting in on Trends, I think precious metals will be one of the biggest trends over the next few years but we should be getting a bearish retrace first. Potential here far outstrips Oil for me.

Updated 1H chart with 3 failed retests of the ST retrace channel line. NMD at the latest one, which is an A-B-C. If this holds and the price drops away a retest of the lower daily ending channel is on. If the general market mood is one of Fed disappointment on Wednesday then precious metals may follow stock indices south, for a while at least.

A plausible scenario @Foxy, we could see a retrace down to 6200 before a stronger rally up to my medium term targets. Obviously a break below the 6110 low negates this for now at least. A rally above the recent high (6460) would be indicative for that stronger rally and a break through 6500 highly supportive. Note I am not trading this right now and would not until I see those highs as there is too much of interest going on on stocks and FX (and maybe Gold soon) right now.

Back to the start. Looks lie FTSE may have keeled over with a small 1-2 move followed by a drop. If this is set for a move down to join the other indices, and why wouldn't it? (Just Eat? 🤣), then the next leg is likely to be a decent duration. I am Short FTSE100 now to join my US large Caps with close stops just above the high.

Dax has approached the daily channel line (lower) rapidly, crashing straight through all the ST support levels. This channel line test will be important and the oscillators are suggesting there is more to go in this bearish move before we get a sniff of over sold levels.

The DAX traders are really not liking something today... This market performed bearishly yesterday compared to the FTSEs ebullience and while the FTSE has not quite given up surely it will in the face of so much current bearishness elsewhere? We are seemingly getting a little bullishness short term right now but your would expect that.

@dmedin, it is not surprising to me that some, maybe many, professional traders and/or analysts don't like or use trend lines. There are many techniques out there, which is why the idea of the self fulfilling prophesy doesn't hold water and also the reason said techniques can work, because if everyone was using the same techniques and using them in the same way then everyone would see the same things and the market would be perfect (i.e. always at the "right" price), which it patently is not. In terms of trend lines themselves, they are merely a way for chartists to visualise the price action. They do need to be evolved with price action, as has been mentioned above, and the do need multiple (min 3) touches and bounces away to be valid (chartist rule). However they are often not reliable for trading decision as the final move in a wave may not reach the line or may penetrate and recover within the line in a more volatile market. The time frame is also important, especially for that latter situation as, for example, on a weekly chart price could spend the while week below or above a trend line but it it returns back to the other side of the line within the week the line will still be valid. This is even more problematic when you consider there is often not much difference between a weekly chart and monthly chart trend line... For this reason some analysts, including me, will use other techniques such as Ichimoku or Bollinger bands overlaid on trend lines. In addition some use moving averages of various sorts to do the same thing. This all works only when the scenario suits (i.e. some of the above are only useful for trend following and not for swing turn identification. For me it is about gaining experience using the techniques in concert and with other techniques and fundamentals and picking the ones that suit you best.

Apologies @Foxy for not responding to your comment, I have been busy elsewhere and focused on other markets while Oil remained in the doldrums and undecided on next moves. Regarding your comment on support at $63 I think the support zone is actually much wider than that, running between circa 5860, where there is an unclosed gap, and 6460 perhaps. Wherever you draw your boundaries it seems like a large zone to me and one easily transited by price as we have seen. In terms of the price action, it looks like an A-B (green) is done and now we may be into a wave C with the first 1-2 (brown) done. I would like to see a break higher above 6500 to confirm this. If confirmed and if we do get a clear 1-5 wave C then the unclosed gap above (around 6800) should be closed. This is concurrent with the longer term Fib 50% and therefor presents a reasonable wave 2 ending point. However the Fib 62% off the more recent highs is not far above this and at the top of my resistance zone is where wave C would equal wave A in length, a classic EWT relationship. First gotta see a strong break higher through before we think about where it might turn.

Quite possible, and that would keep us in depression for 30 some years... Gold/Silver would seem like a better option than buy and hold stock in such a scenario would it not..?

So far it looks like my weekly chart Triangle consolidation zone has been broken to the upside, contrary to my contrarian bias. However the Week isn't over yet and I have another set up that plays to a potential GBPUSD turn (see my GBPUSD and EURUSD threads). It all hinges on USD weakness with GBP rebounding more strongly than EUR, although long term I am more bearish EUR than GBP but we need to get past nonsense issues like Brexit first and get a relief rally out of the way so the Bear (Bull on USD) can resume. Of course this may occur now with breakouts of key support resistance either, notwithstanding the chance of a small leg up on USD before a bearish move (see my USD thread for that scenario). Looking at the third leg of the Triad then I have a parallel line channel up with a clear touch and rebound back off today. There is NMD at this potential turn on the Daily and 1H charts (not shown) and similarly to GBPUSD, on the Weekly chart price ha spiked out of the Bollinger band but again in the past, when this has happened it has closed back within. If GBP does then my bet is so will EURGBP. On the daily chart there is a good A-B-C to wave 2 (blue and a 1-5 on a very long wave C. It is all about GBP really.

Well it would be in a long term Bull market but the point is it wont be in a deflationary cycle, in fact it would be catastrophic for anyone over, say 30.

This is the chart set for GBPUSD as related to the EURUSD ones posted separately. There is a striking similarity between them on the Weekly Chart, despite recent GBP relative weakness. Perhaps this is unsurprising given a period of relative GBP strength prior this. As with EUR and USD-DX this pair is at an important Support/Resistance level. While another leg down to the next level resistance cannot be ruled out this market appears to be at a more extreme edge that EUR. If you add the Bollinger band on the weekly chart you will see that the previous 2 times the market spiked down through the lower band line to touch the channel line but closed on or inside the band. The market has currently done that again, will it close back within the band again? If it does a rally is likely to be on. There is not PMD on the Weekly here but crucially there is on the Daily and Hourly. This one is a more extreme trade but I have gone long off the touch and rejection of the Weekly line with close stops below.

As posted on my "what is the USD doing?" thread, USD - DX and EURUSD (and GBPUSD) are all at key support/resistance zones, potentially waiting for the Fed rate decision, although traders may get positioned early so the next few days trading could see a breakout OR sideways movement until the fateful Fed announcement on Wednesday evening UK time. For me it is impossible to judge what the Fed will do and equally impossible to assess what traders have priced in or not nor ow the markets will react. I keep in mind that there is likely to be algo led volatility around the Fed decision and associated press release but otherwise I ignore it and focus on what the technicals are telling me. I have been tracking a relief rally on EUR. and other, crosses with USD for some time now and am as yet undeterred. As mentioned a number of key markets are at important levels right now and doubtless the Fed decision will be key to the next leg. On the Weekly chart you can see that area of resistance but of course there are other resistance levels not far below and a lower trend line that is forming a Triangle channel that could be tested before any rally (or broken through for a more Bearish scenario). The final turn inside a Triangle (or consolidation patter) does not have to hit the lower line. If you were to add a Bollinger band indicator you would see that price is currently at the bottom of the channel and potentially poised for a rally therefore (or a breakout to the downside). Importantly, there is very strong PMD on the Weekly chart (in fact on all time frames) and a 1-5 EWT count down to a potential wave 1 (blue). Given the market place biases I remain convinced a relief rally is coming. On the 1H chart I have that potential wave 1 (blue) followed up by a a series of EWT 1-2s, not unlike what I am seeing on stocks actually... There is a very strong set of channel lines (many touches) and PMD at both the wave 1 (blue) and wave 2 (brown). There is also a small break and failed retest of the upper channel line, which is indicative if not conclusive. What we need to see is a rally beyond near term resistance and on up to test the resistance level around 11280-300. I am Long off the bounce with low exposure stops set.

Lastly the big one. The SP500. This was the last one to turn and has so far only put in 2 EWT 1-2 moves (not 3) on the 1H chart and is only just breaking out of its 1H channel, which is also an expanding channel. Looking back at the daily chart it is uncannily similar to the NASDAQ with a potential ending channel (a-e form) and strong NMD at the ATH and that 1-2 falling just short of the Fib 88% area. We are looking for a confirmed break of the 1H expanding channel and then a break of the daily chart ending channel and then a test of the daily char parallel channel (green lines).

The Nasdaq is looking particularly interesting, not just because this whole bull rally has been momentum stock led and the Techs are the kings of momentum (which is investment speak for not making much or any profit, yet...). On the Daily chart you can see a near perfect ending channel form with a classic a-e structure. A breakout of the lower line will be an important moment (will it hammer down through this area or put in a quick retest?). There is strong NMD at the ATH, which is in the 8000 zone that I have had as a key top out target for some time (years) and an unclosed gap below. Again, I don't know if this is the top top but there is a good chance so worth taking for me. A test of the daily chart support trend line with be a key moment. On the 1H chart we can see an uncanny resemblance to the Dow but crucially the Dow was ahead of the Nasdaq so this is not a case of exact correlation but to markets separately describing a turn scenario set up on different timings. The 1-2 (brown) hit the Fib 88% resistance zone in both cases with NMD and then put in a series of 1-2s (provision at this stage). Where the 2 markets are different is that the Dow has already broken its up sloping channel where as Nasdaq has not yet and the 1H channel up on the Nasdaq was expanding (like I mentioned on the FTSE post). All in all this is a bearish set up but it could, of course, be a short term retrace. Time will tell. For now I am Short and will monitor events in the run up and aftermath of the Fed rate decision.

On the Dow I have the following. That Daily chart channel I posted earlier looks to have a confirmed breakout with a failed retest and drop away this morning after a near mini double top turn in the resistance zone. Other large caps following suit. There is NMD at the ATH turn and a nice 1-4 count to the top. Is it THE top or just another retrace before yet another ATH? Don't know yet but I am still Short and adding on the current move.

Yesterday's FTSE 100 performance seems like a classic case of M&A over exuberance to me with some defensive stock price action thrown in. The FTSE was completely out of sync with all other indices and while US large caps did make a show of rallying it was a rather thin affair. Early morning price action on US large caps is suggesting a more bearish stance, bear in mind these markets aren't even live yet. Price action on the Nikkei and Hong Kong has been bearish of later too. FTSE looks to have completed (possible another small leg up) a large scale wave 2 at or near the Fib 88% on the Just Eat push. The price action so far is consistent with an A-B-C form but the current rally is in an expanding triangle form, suggestive of that over exuberance I mentioned and of a move end. similar set ups are visible on SP500 and Nasdaq in recent days. There is a triple top NMD in addition to EWT set ups and an unclosed gap below.

That's probably right @elle, your Bar is on the Fib 62% long term chart. Could get a turn around current price to form a wave B top OR another leg up to test the Triangle upper trend line before a drop. All bets are off is the Fed disappoints on Wednesday. With both EUR and GBP at key support areas these two alone could move DX. Other pairs in the basket are in no mans land but if stocks do drop off then the Yen could get a boost against USD. A couple of days to watch and wait.