Mercury

Possible wave B concluded with a hit and rejection on the Fib 62% retest of the previous channel breakout zone on NMD. A break of the smaller Triangle encompassing the current rally would confirm but the strength of the rejection is encouraging for another bearish leg to a wave 2 conclusion.

EURGBP cross is at an interesting juncture. The big picture assessment is unchanged but now the 4H and 1H charts are showing a potential bearish turn in action. A break below near term support is indicative and a break below the lower key support would be confirmatory for me. The best scenario to support this is for a smaller drop on GBP to maybe that double bottom I mentioned in my GBP thread, while EUR continues down to find its key support. I would then expect a stronger rally on GBP as my analysis on the respective pairs indicates.

So that poke through was a wave end and promptly rebounded, although not with conviction in my opinion. There is PMD on the turn and several scenarios present, including a complete reversal but I will not cover that just now as it is more dependent on what USD overall does. Assuming USD does stop and go Bearish again (if not all bets are off, literally) then for this pair it is a matter of when a related turn back bearish occurs. There are several candidate turning zones to watch as well as watching USD overall.

GBP looks similar to EUR but there is one critical difference, which is that GBP price is very close to the previous low (labeled wave 1 blue on my charts). If that low is exceeded then alternative scenarios present, including: the wave 1 will be just a little lower or we have had the 1-2 retrace and now we get the final leg of the big bear. But before all that we need to see whether the market turns just short of the wave 1 to complete a wave B (green) or not. If it does and EUR continues to go down further to meet its likely support then EURGBP would complete the Bearish turn it is teasing me with currently. The charts remain unchanged in terms of the long term set up in that all my indicators still point to a larger retrace rally but I do expect another leg lower on the 1 & 4H charts and maybe a double bottom before that strong rally. A break below the wave 1 (blue) low and an accompanying break of key support on EURUSD would negate the retrace rally scenario; at that point I would switch to a Bearish stance but we are not there yet.

Similar story as seen on Silver with a firm break lower on Friday after US NFP seemingly gave pause to the Fed rate cut thesis, although that is by no means certain in today's crazy central bank and politics influenced market place (perhaps it was also thus). Decent break lower after US NFP, although not as bearish as Silver. This means that Gold may execute a catch up on Silver if the bearish sentiment takes hold and therefore there is potentially more profit opportunity here. Or may lag and turn earlier... I will be keeping a close eye on correlated price action. My scenarios remain unchanged vs my recent posts; my positions are stop protected at break even so all that remains is to watch and manage in flight Shorts and see a reversal into Longs. I will not be thinking of a pyramid strategy here as the risk of sudden reversal is too great, better to wait for the big Long trade for that. This is the essence of medium/long term swing trading and use of EWT. You only want to switch to trend following mode when you hit the long wave 3. Until then you have to be mindful of whipsaw price action and 1-2 retraces, which is what I believe we will see on Gold (and Silver). The question remains, how far with it retrace before the turn into the big one and how can I ensure I catch the initial Long opportunity to set up a firm foundation for a long term pyramiding strategy on the wave 3 (or possibly C)? Time will tell, we probably have a few weeks to sweat this one out. Price action, EWT, S/R zones and oscillators will all play a part for me in doing this. Stochastic and RSI may be of particular note as one would expect these to touch down into oversold before any major rally. All to play for and if we do see that big one on precious metals can a stocks top be far behind that..? Or will it presage it? Bit longer to go yet but not until 2020/21 as may pundits have said on TV I feel...

4th of July was indeed soporific but US NFP triggered a significant rally in USD that brings up an alternative scenario (as posted in my DX thread yesterday). Looking at this from the more tradable EURUSD, I see some additional technical set ups from this move that are consistent with an overall A-B in motion that, if correct, should culminate in a strong wave C rally. Technicals: As before, that weekly chart Triangle remains in play with a breakout and 1 failed retest so far. Another retest is possible, which would conclude the wave B and could occur around the Fib 88% off the wave 1 (blue) - see Daily chart. Alternatively a turn on the Fib 76/78% zone, coincident with the Flag line, could be the turn point. The wave 1 (blue) remains intact unless or until price breaks below the turn and PMD on both Weekly and Daily charts still support this assessment. Net negative non commercial COT around the wave 1 turn still holds sway, no new COT data this weekend owing to 4th July holiday, should come in sometime next week. Could get another round of net negatives on the wave B turn. The rally up to wave A (green) was in an A-B-C, which is reflective of a larger time frame complex retrace BUT could also be a straightforward retrace that is already concluded, time will tell on that one. The twin supporting trend lines (The monthly chart lower Flag line and the weekly chart upper Triangle line) reflect a particularly important juncture - a hold or break here will be significant I feel. Note I do anticipate a penetration of the former to touch the latter at fib 88% but we could also get a turn at the Fib 76/78% zone. We had a double bottom on the Daily chart before but now a potential Head & Shoulders could be forming with the potential wave B turn being the right shoulder. A tentative neckline can therefore be drawn, a breakout of which would be a final confirmation of the turn and rally in wave C. So several scenarios are possible at this point, in order of likelihood for me: Wave B turns before the wave 1 (blue) bottom and runs up fast in a wave C, which could be a straight 1-5 move or a more complex A-B-C form. The latter is not good for a pyramiding strategy so getting in early (before the neckline is my call) will be important. Other pairs might offer a cleaner ride that EUR if they are showing a simple form retrace. The previous rally was all the retrace we will get as the market breaks through crucial resistance areas and USD rallies contra to broad opinion. Would probably take more hawkish Fed to drive this scenario or a collapse of stocks etc (are we there yet?). Let's see how the COT data goes over the next few weeks, a new net negative will turn broad opinion bullish USD, which could drive the contrarian scenario 1. The least likely is that USD has gone as far as it is going to go in the long run and ultra Fed Dovishness drives EURUSD up and up. Given the problems in Eurozone I strongly doubt this scenario but technically there is a case so needs to be monitored. It is worth noting that Stochastic typically touches oversold and bounces away up to mark a significant retrace like a wave B. This is not a tradable indicator for me but is a corroborating indicator. Also, until it does touch I would not be calling a bottom. Also need to watch DX and other key pairs like GBP, CAD and AUD for correlating set ups to help identify either the Wave B turn or a break down. If USD rally runs up for a while, as it may well do on (see my DX post), then perhaps Gold/Silver will stay Bearish until their respective turning points? This is not to do with a direct correlation between USD and Gold/Silver but rather a shared driver in Fed policy on the USD and all that this may entail for the wider economy, impact on bonds etc. There is a lot of macro complexity in the markets at present, it all has to be tracked to attempt to make sense of things from a fundamentals backdrop perspective. However price action is the key determining factor for trading triggers for me, as it pertains to my road mapped scenarios. For now I remain temporarily bearish Gold/Silver and am waiting on the sidelines for FX to resolve.

So that alternate set up I referenced on my GBPUSD thread just before the US NFP release seems to have triggered now and looks like this: The move down to the June 25 turn was a wave A with an internal A-B-C The current rally is a wave B with possible turning points at the Fib 76/78% (weekly Flag top line) or Fib 88% (retest of the up-sloping prior rally channel line) After this would come a wave C bear move but the whole move may be complex, with several twists and turns. This might accurately reflect the inherent uncertainty surrounding the underlying health of the economy; geopolitical events; Central Banks return to uber dovishiness and so on. On the one hand it is disappointing for USD Bears like me but I have covered and avoided losses; on the other I managed to go Short Precious metals as a hedge against just this case and if the wave B does materialise then a better short USD will present itself so am fine with it overall. Let's see...

To summarise USD pairs, most will confirm I feel, although USDCAD and USDJPY may not, I see a test of the Fib 62% and associated resistance zone before a drop to close that small price gap and then on down. Hopefully USNFP will resolve this so we don't have to wait another weekend to see what might happen...

So another leg down then and GBP hits a critical juncture with a touch on a support zone with 2 Fib 88%s (one off the wave 1 Blue low (see previous charts) and one off the wave B (Green) low. I am always interested to see a confluence of 2 Fib drawings as the likelihood of it being meaningful is enhanced. There is also good PMD at this point on the 1 & 4H charts and Strong PMD for the Wave 1 (blue) and Wave B (green) turn on the Daily. However there is a larger picture alternative scenario that calls for a lower low on both GBP and EUR before a rally so care and close stops are required if taking a position now. As a result I prefer to wait for a breakout of the channel and ST overhead resistance. This we might get with strength and conviction on the forthcoming USNFP release.

Just to update my Gold charts similarly to my post on Silver Bullet just now (see that one for a more comprehensive view on precious metals). As with Silver, Gold has been stopped at a critical juncture (LT resistance circa 1440). We have seen 2 failed tests of this level now (3 on Silver) both rejected with pin bar price action. If we think of this as a double top (not quite exact but it rarely is, then we can call NMD across this double top (Bearish). There was also NMD at the wave 1 (blue) top and turn on both 1H and 4H Bearish). The rest of the technicals are harder to read than Silver as there are 2 possible ways to read it as follows: The retrace (pink Triangle - daily chart) is a 1-2 retrace and the recent strong rally is part 1 of a much bigger wave 3 rally. This stacks on all levels, including fundamentals but Silver gives me pause for thought as does timing issue (see Silver Bullet post) The Pink Triangle is a pennant that formed at the halfway area and culminated in the recent top (wave 1 blue). This is also highly credible. I guess there is a scenario for a swift breakout through over head resistance but right now the technicals do not support this. As with Silver I see several retrace points and scenarios as follows: Retest of the 1360-80 prior resistance zone or potential neckline (Purple line) at Fib 50% off the May low (Triangle/Pennant low), if scenario 1 above is true. Retest of another possible neckline position (light blue line) or Fib 38% (off the Aug 2018 low, if scenario 2 above is true. Retrace to the Fib 62% off the Aug 2018 low (or a little lower to close that Gap), if Scenario 2 is true. Short term the set up is very similar to Silver, except with a double top rather than a 3X resistance fail, so we are looking for either a breakout up through that critical 1440 zone or a new lower low through 1410 and on down.

Boring day for trading, just as well I have other things to occupy me, would hate to be siting in front of the screen all day today... Just got an alert on USDCAD though and checked my charts to find that this pair have just poked through a significant support level. Could be a breakout of consolidation here for a run lower. Always a risk that this poke signals the end of the current move and a larger retrace so care is needed but one to watch and consider for a Short.

That 4 hour Triangle is bothering me because it was broken too close to the end, conventions charting wisdom suggest a Triangle is less valid the closer price gets to the apex and normally should breakout around 2/3s of the way to the apex. Now price action has given me an alternative upper line. Everything else remains unchanged with my analysis on this pair, a breakout of the new upper triangle line could be indicative of a rally but really needs to be with conviction if a real wave 3 and ideally needs to carry above, and close above, that 11,320 near term resistance zone. I suspect we may have to wait until Friday and US NFP for this. Today we may see a soporific drift or another leg down...

EURUSD has been held at the Fib 62% support zone, albeit with another small leg down. There is a possible Triangle containing the retrace that has been broken with a failed retest and rally away, not yet conclusively. PMD on the 1 hour and a completed 1-5 of a wave C suggest this one may stick. will need a break past the high from earlier today up past 11320 to be more confident.

Both GBP and EUR dropped further, with GBP approaching the previous low people would be forgiven for turning Bearish but the swing traders tenet is to buy weakness and GBP is currently stopped at the Fib 78% in a descending channel that looks like it could be a wave C of a retrace, albeit a deep one. Given GBPs propensity to be spiky and to go deeper on retraces than EUR I wouldn't be surprised to see a test of the Fib 88%, which coincides with the Daily chart fib 88% and the bottom of the channel. Otherwise a breakout of the channel would probably signal a confirmed turn. There is good PMD in play but again this could also support another leg lower.

A break above the wave 1 high (3020) would confirm the move with a target of about 3600 initially then assess price action and indicators for a turn and reversal or breakthrough.

Getting close to key support levels now if Brent is going to put in a wave B turn. Price has just bounced off the Fib 62%, not closed in the hourly candle yet, but just below is an unclosed gap and Fib 76/78% support level. I like the lower fib levels for wave Bs but 62% is a typical level for many retraces so we are in the wave B zone now. If the turn just below 6700 (without closing that gap above) was a wave 2 then the support levels should be taken out in short order as this would be a wave 3 (very strong). Alas nothing is easy and one would expect a smaller 1-2 retrace before the wave 3 really gets going, which could look like a wave B turn... Safest course of action is to wait for either a retrace to a fresh high wave 2 (blue) and gap close, perhaps with a retest of the breakout zone at 6830 or even a test of the Fib 62% at 6900 OR a new low below the wave 1 Blue (circa 5920). Wave Bs are hardest to trade.

EURGBP is taking its time to resolve, just as the retrace on the primary pairs are taking their time (not sure if we are there yet on either of those, looks like another level down is on the cards). However EURGBP is at an interesting juncture. IF my lower Daily chart line is right (and it might not be as there is an alternative scenario that sees another retest of the upper Triangle line of the Weekly chart, but more on that later if needs be) then this line has been broken and held firm on 2 retests. Currently price has dropped away from the line in what may be a 1-2 turn. Shorts here would need stops just above the 2 (green) high, which amounts to very low exposure in my book. The NMD on the Daily has be joined by 2 NMDs on the hourly charts at 2(green) and 2(brown). Scenarios: The market falls away from here as GBP turns ahead of EUR and rallies hard in wave 3 The market reverses through the Daily line and takes out the 2 (green) high, resulting in a likely retest of the upper Weekly Triangle. Any Shorts should have close stops to guard against #2 but exposure is minimal. Chances are fair for a Bear move, although one could point to the strength of the rally so far and reluctance to let go, however the swing traders mantra is buy weakness and sell strength so...

So that inside bar break was indeed a fakeout as the market rallied with a large gap on Sunday open. That gap was almost inevitably filled quickly but what now? Looking at the 4 hour chart we can see the whole rally enclosed by a Triangle (or narrowing channel) that could signify either a completed retrace OR a wave A or a larger retrace. I am still bugged by that small unclosed gap up around the Fib 50% zone (circa 6740). If we get a breakout of the Triangle before this gap is closed then I would favour a larger A-B-C but a rally to close the gap and then break the channel would fit better with a retrace conclusion. There is currently strong NMD and price is one again testing that channel so the former is on the cards, currently. I will not trade until this resolved.

GBP also seems to be at a pivot point. Will it hold here and rally? If it doesn't the Medium term retrace rally scenario comes under pressure.

Looks like EURUSD is signalling another leg down to the Fib 62%, which could also bring up some PMD, or maybe it has already touched bottom, we are there or thereabouts. Also seems GBP is leading EUR, which if true should see GBP leap away into a rally first and this would drive a continuation of the EURGBP Bear move. Either way today should see some resolution.

USD turn back bearish at the Fib 50%? Possibly there is another drop and rally in it yet but this is a decent bet.

UP early this morning because FX is at a tipping point but then I noticed Bitcoin is rapidly approaching a critical juncture based on my analysis. Remember I don't trade Crypto and know little about it but am Bearish on Crypto as a bias, see my posts on @cryptotrader thread about what moves Bitcoin for details of the basis for that bias if interested. Any on a purely technical assessment I have the following to offer: The market may have registered either a 1-5 or A-B-C down from the ATHs to December 2019 turn, which was then followed by a breakout of a Triangle formation to set up the current bull run. The question for me is whether this is a counter trend rally (lash hurrah) or a trend change Price hit the Fib 62%, almost exactly, which when you think about Bitcoin volatility is pretty amazing, and then spiked back down in a strong rejection, very strong when you look at the Daily chart. The last time the charts show that was at the ATH... There are 4 unclosed gaps below the turn point, that is a lot of pull. You might expect 1 or maybe 2 breakaway gaps but 4? Even though 1 was early in the previous rally to ATHs. I was expecting some gap closure and the first one has just been closed. The Daily chart is very interesting, the move up looks like an A-B-C (pink) to me, although I could probably carve out a 1-3 so the current bearishness could be a wave 4 retrace. There has been 1 retrace rally, which would be a 1-2 of a massive bear move OR an A-B of a retrace to that possible wave 4 and then a final push up. The move up can be described as an expanding Triangle, a signal of over exuberance, as if that were needed on this market. Oscillators were over bought and now heading down, likely they would hit bottom, Stochastic at least, before any next phase rally. The critical juncture for me is the confluence of a support zone and the lower line of that expanding triangle (8900-9300). If the market is going to bounce into another final wave 5 rally it must surely do it here? A drop through this zone brings the lower gaps into play. If both are closed this thing is surely going down, down down. Even if we get another rally phase, the fact that it is a wave 5 in all likelihood suggests this will not go too much beyond the previous ATH, or maybe a double top, before there is another retrace of significance. The technicals at this point do not support the hype. Price action is all. Be careful out there in Crypto-land.

Thanks for posting this @dmedin, I hadn't been paying much attention to the sectors on the FTSE of late, being more focused on the US large Caps. Given the strongly Bearish turn of events on Tobacco, note Imperial Tobacco (now called Imperial Brands in a vain effort to eliminate the word Tobacco...) is showing a very similar (even more Bearish perhaps) set up, I decide to analyse it out. My results are as follows and may go some way to explaining why your Short idea failed this time. The Monthly Chart shows the progression on this stock nicely since the beginning of a long Bull move since 2000 that barely blinked during the major corrections on wider indices. This move is in a classic 1-5 (purple) with another 1-5 (pink) on the final wave to the top. The Central Bank bubble rally since 2009 is encompassed within an expanding triangle, a signal of over exuberance. At the top there was clear and strong NMD on the Weekly and Daily to signal the turn. Then the first drop (1-2 purple) broke, and had a failed retest of, a weekly chart ending channel (blue lines on weekly chart). This retest, which took its sweet time, finally capitulated and the market ran quickly down to a Pennant formation (pink line triangle) that occurred with an initial failed breakout of the lower expanding channel line. When the Pennant failed the expanding channel line also quickly failed and led to a sharp drop. This was stopped by a long term supporting trend line after a push through the Monthly Fib 50% and the market closed above this level and is now, it seems, in a retrace rally (not a continuation of the Bearish move). Note the Pennant often signals the halfway point in a move and so it was here. An extrapolation from the Pennant gets to around where the market bottomed out in what I think is either a wave A or 3. We should now get a wave B or 4 (i.e. a rally). If you look at the Daily chart you will see significant PMD at the wave 3rA turn point followed by a 1-5 rally up to what looks like a wave A (NMD on that turn), the first leg of the retrace rally. IF wave B is done, and it might yet run down for a lower low, then a projection of equivalence (i.e. wave A = Wave C in length) gets us to about the Fib 50% and the previous breakout zone from the expanding channel. At present I would anticipate a sharp 1-5 rally up to this area, around about £36 followed by a final phase Bearish drop. Whether this is an A-B-C or 1-5 on the big picture chart remains to be seen. So net I would not look to short this market until a suitable retrace rally turn is identified. However with a large part of the Bearish move done there are surely better Shorting options about? The one thing that interests me with this though is the apparent change of strategy of fund managers, who were crazy for these high divi yielding stocks in the recent past. Could this be a precursor of things to come more widely?

Haven't looked at stocks indices in a while, been focused on FX and catching that retrace move I have been tracking for ages, sometimes you gotta stay focused. Assuming the retrace is indeed on I don't see stocks topping out for a while yet, at least not until USD completes its retrace (likely not at the exact moment). For this reason, and because there is too much Bearish talk about and because of my associated technical analysis I see all the US large caps making new all time highs. Likely FTSE100, Dax and Nikkei will make new retrace highs but probably not new ATHs (although if they did then that might well mark the end...). In addition to all that the Futures & Options non commercial net COT positions are becoming more bullish now but are not yet at the levels I would expect before a major turn (i.e. they are not Bullish enough). I wanted to take another look at the long term picture and am using the SP500, the largest and most heavily traded market and the one with the largest futures and options market too (the E-MINI S&P 500 STOCK INDEX - CHICAGO MERCANTILE EXCHANGE) and with good exposure to the Tech led bubble. Going all the way back to the big picture Quarterly and monthly charts I have the following set up: Massive expanding triangle since the Bretton Woods gold standard was abandoned and money creation via debt took hold. Series of 1-5 rallies interspersed by A-B-C retraces in classic Elliot Wave Theory form. The whole expanding triangle move can be labeled as one giant 1-5 (red labels). When this (era) ends we can either expect an equally massive A-B-C retrace or a complete reversal of trend into a 1-5 down, no telling how far down it could carry. The fundamentals back drop to this is a debt fueled boom and price inflation without wage inflation, plus gap between rich and poor widening massively, civil unrest, geopolitical upheaval, outlandish schemes to open space to tourism and colonising Mars, and protest votes and protest actions in many countries across the world. Time to pay the piper for all that debt fueled growth. The oscillators show the extreme bullish nature of the rally since 2009, being driven by central bank policy rather than underlying economic recovery, or perhaps by the promise of a recovery that never quite materialised. The anti Santa Clause Bear move looks like a 3-4 so we are, it seems, in the last hurrah... The Weekly chart adds a very credible Triangle formation encompassing the whole move up from the 2009 turn. The pennant occurs halfway between the wave 2 and 3 (purple), which is where you want it. The lower line is strong support, stopping the sharp Christmas Bear in its tracks. The upper line is also very strong with many confirmed turns. A traditional parallel channel line does not work so the Narrowing Triangle set up is more favourable. There is clean NMD building on the monthly, not usually something I usually look at on the monthly but this is not by any means a usual situation. The confluence of the Quarterly (black) and Monthly (Purple) lines provides strong resistance but it should be noted that the market can credibly spike through these lines and they will remain valid if it closes back below them within the period, which gives several months/weeks to play with If the market tops with a touch on the Monthly line then we are looking at a top of circa 3050-80, depending on when it happens. However looking at the Daily chart I could see a scenario where a strong over exuberant exhaustion rally occurs that could push through to test the upper daily channel line (blue) before quickly returning below the monthly long term line. There are many possible routes the market could take into any ending price action from here so it is pointless to detail all of them. However I will be most keenly looking for either a rocket to an exhaustion spike, that will probably contain a small 3-4 retrace OR a series of sharp overlapping waves that put in the ending touch and drop through the lower channel line. In any scenario a break of the lower channel line (blue) is a key breakdown signal. For me stocks are too close to the end to hold longs, unless you subscribe to the "new normal" types and the "this time it's different" preachers, which I don't. I am waiting for more price action to reveal a long term Short opportunity but this could be some months away. The big watch out for anyone trading stock indices currently is the overlapping wave scenario, which will manifest as a series of whipsaw price action that could be seen as consolidation but could be death to short term traders. For me I am waiting and watching from the sidelines and trading the clearer FX opportunities.

Aligned to my Silver post, where I am putting most of my precious metals energies for now, I see 2 scenarios for Gold. Short term drop to the potential H&S neckline (or weekly/monthly chart Triangle) and rally again that takes us through the overhead resistance. A Bearish move that takes the market back to close that gap with a retest of the potential pennant (pink triangle) that formed the halfway point in the current rally. I guess there is an addition scenario that the market simply turns up from here and breaks through my last line of resistance into "clear air". The overall move up could be described as either 1 motive wave 1 (blue) and the large A-B-C (red) as a half way Pennant OR 2 separate moves whereby the A-B-C (red) is actually the wave 1-2 (blue). These 2 readings support scenarios 2 and 1 respectively. The wave 1 (blue) turn is on a strong pin bar, backed up by a second in bar in Friday last. Financials COT data spiked to net long highs of +279k on futures and options, very bullish and a contrarian indicator. This spike occurred the very day we saw that pin bar turn. Oscillators are heavily overbought. I believe some form of bearish retrace is indicated but not sure or course how far it will carry.