Mercury

Silver is a bit more buoyant than Gold just now and following a slightly different form in that the 1-5 down took a bit longer to achieve and looked like a breakout initially but then rallied back sharply. Price action within a consolidation zone is often like this, lots of whip saw action and we should see a turn and drop again once the market has tested a suitable resistance zone (Fib 76/78% is just above. Non Commercial net COT data is deteriorating for a high 2 weeks ago, as with Gold, and again if this continues we will see a drop off next week.

Still waiting for the ST retrace and drop, coming up on the Fib 62% but not there yet. Lower high put in but not yet a lower low. Non Commercials net COT data deteriorated by 20k off the highs of last week, if this continues then the bear will continue for a while yet. A retest of the 1360 seems like a reasonable bet, after that, well we shall have to see how price action goes...

GBP is proving a bit stronger than EUR and at an important juncture. That small retrace I though might happen at the end of Friday did do now it remains to be seen as to whether this pair hammers down or hangs around for a bit longer. It does seem like a breakout to the the down side is on through.

AUDUSD has been particular strong it seems and perhaps one to watch for clues. Again not sure when the turn will come but I am expecting one before this pair is really set to hit those retrace highs.

My wave 1 placement was premature, no matter, another leg up is fine and the further the wave moved the more secure my breakout Long trades will be. Don't know when or where the first wave 1 will conclude and don't care as I am not seeking to trade this short. I am waiting patiently for a sufficient retrace to add to my current Long positions and patience is the key thing here. On the Daily the bounce off support has been decent and so far looks good for a turn. Do need to see that short term 1-2 and rally away to confirm.

LOL @dmedin I feel you. However if you are interested in trading individual stocks and are not considering what the sector or indeed the whole index is doing then how do you decide if the individual stock is going up or down? Or put more pointedly where in the cycle is the stock you are interested in? If you are not using a technical analysis technique to do this (line EWT) then you have to look at fundamentals. Personally I prefer to do both. I do not think intrinsic value is a good basis for trading, investing maybe but it doesn't matter what the intrinsic value of a particular stock is in a market crash, everything goes down... Regarding your question about individual stocks vs the indices, that would seem to be a good topic for specific thread, if you would care to start one. I am sure there are many different opinions on the forum that may be beneficial to hear.

@dmedin, your A-B-C doesn't really stack. Typically the wave C ends beyond the wave A. Although I have seen some deep EWT users label a retrace as you have, I have generally ignored this because it seems like force fitting via exception to me (I am not that deep into EWT truth be told). If a set up doesn't conform to the standard modes I tend to simply wait for further information in the form of price action and look at other markets, there are many many more options out there after all. If I look at BAT now, and please be advised that I do not look at individual shares much anymore so this is just a cursory look, I do not see any change from my previous detailed post above. Therefore the A-B-C (pink - weekly chart) is still on. You may recall that I wasn't sure whether the wave B (pink) was done or not (2 placements). When I saw a slightly higher high on the Daily I though maybe it was done and the retrace rally was on. However now that the market has moved back down there are 2 scenarios present for me as follows (see daily chart): the current bearish move is just a natural zig zag within a wave C that will carry on up in due course the whole move off the wave A (pink) is not yet concluded but is tracing a so-called complex retrace that is made up of a series of whip saw A-B-Cs and the recent top is a wave B (red). If that so we can expect a wave C to conclude with a lower low, maybe around the Fib 62% support zone. (and note there is a small A-B-C (blue) within the current move that fits better). Wave Bs are tricky moves to trade, I tend to try and avoid then until an obvious conclusion (turning point) and seek to catch the wave C OR just leave it alone until the retrace is done and catch the bigger next move down (in this case) because after a retrace, or counter trend move, comes a return of the motive wave (in this case down). There are surely better opportunities (and safer) elsewhere than trading this set up at this time. Even if you were minded to catch the retrace, say at £36, wouldn't there be bigger opportunities elsewhere? Seems like the bulk of the move down on BAT and similar sector companies is done now. I agree with @Foxy that I would not Short BAT as a retrace is on but I have different reasons I think. Check out my monthly chart on my first post for my long term view, which is also unchanged. I believe we have seen the top on this sector now, and this is a significant change in the stock market as a whole, in terms of money managers seeking high yielding stocks that are engaged in significant buybacks. Obviously this strategy is no longer working for tobacco companies and the reality of declining markets and the inevitability of vaping regulation is taking its toll. So after a retrace I expect a break of that LT trend line and a drop to the end of the Bear. Meanwhile the momentum stocks in the rest of the indices will keel over and join the early movers heading down. In terms of sector we also have property under pressure, most stocks on the FTSE didn't recover from the credit crunch and are now heading down for the final leg, similar to tobacco. Also, critically, Retail is under pressure with many companies in this sector having apparently topped out. Question for you Dmedin, have you assessed all the sectors to see where the best opportunities are? If I was still trading individual shares I would be focusing on sectors that are about to top out, or recently may have, to get Short early. Once a sector or share has made a major turn and moved significantly (in the case of tobacco over 50% decline) it is too late to join as the risk of significant retrace is to great and there are likely better opportunities elsewhere. Of course your trading methodology needs to be geared to identifying and entering turning points as opposed to trend following, where you wait until the trend is well bedded in. BTW, a long term swing trader will deploy both of these methodologies so for me it isn't about 1 or the other it is about using the right method at the right time. So second question, do you have a methodology that is designed to deliver against your treading strategy? These are rhetorical questions of course, for you to think about rather than answer. EWT is useful for both swing trading and trend following but the most critical thing is being clear on your overall strategy and picking the right vehicles to execute that strategy.

@dmedin, your A-B-C doesn't really stack. Typically the wave C ends beyond the wave A. Although I have seen some deep EWT users label a retrace as you have, I have generally ignored this because it seems like force fitting via exception to me (I am not that deep into EWT truth be told). If a set up doesn't conform to the standard modes I tend to simply wait for further information in the form of price action and look at other markets, there are many many more options out there after all. If I look at BAT now, and please be advised that I do not look at individual shares much anymore so this is just a cursory look, I do not see any change from my previous detailed post above. Therefore the A-B-C (pink - weekly chart) is still on. You may recall that I wasn't sure whether the wave B (pink) was done or not (2 placements). When I saw a slightly higher high on the Daily I though maybe it was done and the retrace rally was on. However now that the market has moved back down there are 2 scenarios present for me as follows (see daily chart): the current bearish move is just a natural zig zag within a wave C that will carry on up in due course the whole move off the wave A (pink) is not yet concluded but is tracing a so-called complex retrace that is made up of a series of whip saw A-B-Cs and the recent top is a wave B (red). If that so we can expect a wave C to conclude with a lower low, maybe around the Fib 62% support zone. (and note there is a small A-B-C (blue) within the current move that fits better). Wave Bs are tricky moves to trade, I tend to try and avoid then until an obvious conclusion (turning point) and seek to catch the wave C OR just leave it alone until the retrace is done and catch the bigger next move down (in this case) because after a retrace, or counter trend move, comes a return of the motive wave (in this case down). There are surely better opportunities (and safer) elsewhere than trading this set up at this time. Even if you were minded to catch the retrace, say at £36, wouldn't there be bigger opportunities elsewhere? Seems like the bulk of the move down on BAT and similar sector companies is done now. I agree with @Foxy that I would not Short BAT as a retrace is on but I have different reasons I think. Check out my monthly chart on my first post for my long term view, which is also unchanged. I believe we have seen the top on this sector now, and this is a significant change in the stock market as a whole, in terms of money managers seeking high yielding stocks that are engaged in significant buybacks. Obviously this strategy is no longer working for tobacco companies and the reality of declining markets and the inevitability of vaping regulation is taking its toll. So after a retrace I expect a break of that LT trend line and a drop to the end of the Bear. Meanwhile the momentum stocks in the rest of the indices will keel over and join the early movers heading down. In terms of sector we also have property under pressure, most stocks on the FTSE didn't recover from the credit crunch and are now heading down for the final leg, similar to tobacco. Also, critically, Retail is under pressure with many companies in this sector having apparently topped out. Question for you Dmedin, have you assessed all the sectors to see where the best opportunities are? If I was still trading individual shares I would be focusing on sectors that are about to top out, or recently may have, to get Short early. Once a sector or share has made a major turn and moved significantly (in the case of tobacco over 50% decline) it is too late to join as the risk of significant retrace is to great and there are likely better opportunities elsewhere. Of course your trading methodology needs to be geared to identifying and entering turning points as opposed to trend following, where you wait until the trend is well bedded in. BTW, a long term swing trader will deploy both of these methodologies so for me it isn't about 1 or the other it is about using the right method at the right time. So second question, do you have a methodology that is designed to deliver against your treading strategy? These are rhetorical questions of course, for you to think about rather than answer. EWT is useful for both swing trading and trend following but the most critical thing is being clear on your overall strategy and picking the right vehicles to execute that strategy.

There is a Chinese curse @786Trader, "may you live in interesting times." We certainly do... Here on the forum at least we can try to keep it real, whatever that really means. One thing I believe wholeheartedly is that the markets will do whatever they are going to do regardless of Trump, Brexit, Yellow Vests or anything else. I am more focused on data, technicals and price action than Trumps shenanigans. Still it makes for good theater, you have to give him (and the British and EU politicians) that...

This pair has held below the Weekly Triangle line (Purple) and so far respected the potential ending Triangle (Pink). Now a break and failed retest of the Daily channel line (Blue) brings up a lower low. Might get a small retrace as GBP plays catch up with EUR on their respective retrace moves but overall look set fair for a sustained period of bearishness. I would ideally like to see GBP turn shorter than EUR and rally away faster to gain confidence in this pair remaining bearish but the technicals are looking favorable just now.

If you haven't watched it already check out today's interview with Milton Berg on Real Vision. There is so much to glean from this single interview about how technical analysis really works; how markets are sentiment driven not fundamentals (intrinsic value) driven; How swing trading is far more profitable than buy and hold, if you can do it right and even a call on likely S&P500 tops. There is even something in there about astronomical cycles, and before you snigger, what about the famous Santa Claus rally... Anyway you have to check this out if you at all interested in technical analysis, probably the best Real Vision video to date, and I seen a lot of them.

AUDUSD is pleasingly strong at present with a longer rally duration than EUR and GBP. This makes my Longs off the turn that much more secure against a deep retrace than on other pairs. This has bee a bit of a feature of AUD for a while now, having seemingly hit the wave B turn earlier than the others and already put in a 1-2 retrace. This fits as the wave 3 is usually a strong one so I would not expect AUD to retrace too far this time.

Similar story on GBP as with EUR with an A-B-C retrace potentially in play. Here though I a tipping the Fib 62% as the most likely retrace turn point, which would be consistent with the breakout on the pink channel line and an A-C equivalence in length (a typical feature within EWT). However I cannot rule out a test of the lower line (grey) at the Fib 76/78% so again price action will be key to deciding.

Looks like we may be getting that retrace I was referring to earlier. A possible small A-B (grey) looks to be done as price moves lower. Obviously need to break below the wave A and then it is all about where the turn will happen (or will it carry on down for a test on that LT supporting trend line. My lead scenario is for this pair to test the breakout zone (circa Fib 76/78%) but I will watch the form of the price action within the coming small wave C for clues and other related markets.

Similar set up to that posted on my Gold/Silver rally thread. Again the wave B (green) held, this time at Fib 62% ( a bit weaker than Gold perhaps, which is consistent with recent price action. I wonder will that correlation continue on the way down? Also similar to Gold we have a small 1-5 down and now potentially tracing out an A-B-C retrace to retest the channel breakout zone, or a bit above perhaps. Again a break to a lower low on this move, with a 1-5 down and an A-B-C up is bearish. A retest of the 1490 would then be indicated and a break of this brings up the scenarios for a longer bearish move previously noted. Alignment between Silver, Gold and USD is obvious at present as it seems that Fed policy in particular holds sway. Not sure we will have to wait for final Fed rate decision on USD pairs, maybe ECB and BoE will have something to influence before that but perhaps Silver and Gold will be more reliant on the Fed?

That potential wave B (brown) in an A-B-C form (light blue) held at the Fib 78% off the previous high/low and moved back off this sharply. Now looks to be putting in a small 1-2 retrace (maybe to the Fib 50%) after a small 1-5 down. If this concludes as such that will be a 1-5 down with an A-B-C up and a new lower low completes this move then this is a bearish set up and I would expect a retest of the 1380 support and a likely break through of that to test lower levels. All this while Silver does similar and USD is starting a retrace higher...

Silver price coming up on that wave B channel lower line. A breakout here will be a strong bearish signal with still plenty of oscillator down side before this thing becomes oversold. Should run for a good bit yet... For me the key here is to spot the bottom, not so much to Short, having said that I am Short both Gold and Silver from their respective wave B turns and now stop protected as BE, however I wont be adding as trading within a Triangle consolidation is fraught with whipsaw danger.

Classic quick break and failed retest on the Daily channel line. A long way to go yet and can't rule out another later retest just yet but the signs are set fair for that GBP strength I have been tracking. Thanks Richard and the BBC 😉

I agree with most, if not all, of that @786Trader. I have access to insight from UK retail through various sources who work in the sector and I have been tracking negative development in retail for over a year now. The picture is poor and deteriorating, probably because of similar reasons to those you cite for the US (expansion of gig economy jobs at expense of traditional jobs = less security, more multiple job taking, less money in the pocket, more debt etc). I think the consumer is jaded and concerned about the future so keeping their money in the pockets. I also think there has been over expansion in retail (not just, property as well). As regards Trump, I think his ace is really about tough stance against companies shipping jobs overseas. This is how he won the rust belt, and consequently the election. So long as he keep this pressure up and continues to challenge law makers on what his base sees as their self interest (a wide variety of subjects there) the the actual economy may be secondary. I do think his current low interest rate stance is to pick a fight with the Fed. He was calling for higher rates while running for office while Yellen was being Dovish, now that the Fed has turned Hawkish he is calling for lower rates. I think we wants the fight (again taking the fight to what his base would see as the bloated bankers and left leaning academic economists - draining the swamp or whatever he said). All he really needs to be able to do is blame Yellen and Powell for the next crash/recession due to their manipulations (and probably Obama for bailing out the banks and spending on Obamacare) and he is bullet proof. So net I think his posturing is about creating that "get out of jail free" card, perhaps because he and his advisers see the next crash coming on his watch?

EURGBP has poked down through that daily chart channel line. This is not yet conclusive of course, the day isn't over yet and this pair can be a bit whip lash. Nevertheless it is an encouraging sign that GBP may well be stronger the EUR, at least for a while and contrary to the conventional "Brexit Bad!" MSM push, the latest coming from none other than Richard Branson (like he knows anything about FX!) and a few days before that the BBC opining that the "Pound heads for two-year low as holidays begin" due of course to Brexit (not at all political those 2 articles then..!) Branson: https://www.bbc.co.uk/news/business-48942631 BBC: https://www.bbc.co.uk/news/business-48926232 Still I love this stuff as it often marks a turn the other way (contrarian dream). Will it? Technicals suggest yes. Let's see. PS: Branson is right if he means that GBP will go down vs USD but probably not vs EUR, more for Eurozone issues than UK issues but both are heading down vs USD regardless of Brexit, and have been for years prior to Brexit. It is all another classic case of Post Hoc, Ergo Propter Hoc (and confirmation Bias).

Similar set up to my Silver Bullet post with Gold, being a bit more buoyant than Silver at present, having carried to the FIb 76/78% (only Fib 62% for Silver so far). No doubt there could be another leg up to 88% and 78% respectively but that would not negate the A-B-C set up and if we do see a firm turn back down then Gold could well accelerate to catch up on Silver as the Long holders cover, which could see Gold break through than 1360 level and head on down.

With the strong rally yesterday, especially on Gold, we may not be surprised to see the precious metals Bulls out in force, and they may yet be right, however price action within a consolidating Triangle, which is what Silver remains in, is typified with lots of whipsaw price action. But can we make sense of the chaos? I think so. I think the move down was a wave A (green) but it was in an A-B-C form rather than the usual 1-5. The rally could be (unconfirmed as yet) a wave B (green). It was stopped at the Fib 62% and looks like it may be turning back down. There are no other clear signals, you often don't get many on a wave B, but Stochastic on the 4H is overbought. If USD puts in a rally for another leg up to key resistance (see my "what is the USD doing?" thread) then Silver and Gold could put in disproportionate bearish moves, which could see Silver carry down to those support levels I have earmarked.

At face value it looks like USD topped out at a wave B (green) just short of the monthly channel line (down sloping) and the Fib 76/78% resistance zone, all perfectly reasonable, the market turns when and where it will. We have seen related turns in several USD pairs as well. However I do have one watch out on this, which is that until I see a retrace with a lower high and drop away I will remain nervous. If this is a wave B and turn into wave C we can anticipate a strong bearish phase for USD but markets do not move in straight lines and at the beginning of such a move we may see a deep pull back int he short term. This of course offers a good chance to get into the move if you missed the initial breakout. On DX in particular, and on EURUSD as well, I have a concern that because neither of these markets found their key support/resistance levels for the turn they may put in a higher high/lower low, respectively, and test these levels before beginning that strong move. I have less concern about GBP and AUD as I think their turns look more solid (and EURGBP is looking like a good Short, so GBP could enter a period of relative strength vs EUR). USDCAD may also be a bit suspect. If EUR and CAD were to put in higher highs, probably USDJPY as well (it is looking a bit more positive that the others, maybe related to stock bullishness), then DX could put in a higher high while GBP does not. AUD is not part of the basket so not relevant except as a general, broader, USD indicator like all the USD pairs. So net I have 2 scenarios for USD/DX (and EURUSD, and maybe USDCAD😞 The turn has completed and carries on down fast and strong but not until we see a small, short term retrace The recent turn was an initial wave A (Brown) that requires a B-C to complete the larger wave B (green) at stronger resistance levels before the wave C Bear truly begins. Again note that I see this borne out by potential similarity on EUR, JPY and maybe CAD but likely not GBP. And if this does happen then probably Gold/Silver takes another leg down (more on that later).

Price stopped short of my lower trend line but does that mean the retrace is over? It does not necessarily, unless and until we see a break through the June highs. So far the whole move has an air of a complex retrace, which would indicate that the current rally is a deep wave B rather than a return to the motive wave. Currently my technical assessment is pointing to the whole retrace being a 3-4 complex retrace, which when completed would set up a final wave 5 rally to end the while rally move. This could already be in play but currently price is getting stopped at the Fib 76/78% zone, where the previous reaction rally to the fast drop was stopped.

@Foxy, looks like you were right so far. The Pennant I though I had has morphed into a channel. Wave Bs are tricky beasts (if this is a wave B) but price is hitting some resistance at the top of the channel, coinciding with the Fib 76/78%. If this resistance holds and price turns back down this could mark the wave B (brown) of an A-B-C form larger wave B (green), which would then set up a strong rally, perhaps to close the gap above (circa 6740) or a bit more. The price action in this rally so far doesn't really conform to a larger wave C rally, not a motive rally up to fresh highs. Rather it seems more like a consolidation retrace, but this is Oil so you never really know where you stand... Also there is a price gap on last nights open, which normally should be filled quickly.