Mercury

Weekly Triangle line is still holding (still need to get to the end of the week above) and with the FOMC behind us and the Fed seemingly set on reentering the currency wars with dovish policy we can be reasonably confident that it will hold. GBP seems like a hotter buy to me if an A-B is already in and the EURGBP Triad looks favourable to GBP.

GBPUSD drops down to execute a turn on the Fib 88% to complete an A-B. If this holds (i.e. a break through the 12,430 support zone does not occur in the near future) we can expect a fast rally wave C. PMD and a credible EWT A-B-C retrace form supports the rally. Might see a small 1-2 before a large rally gets going, although I can see a bit more to go in the initial wave 1 yet. Buy the dips as the Fed reenters the currency wars. I am Long off the Fib 88% turn and stop protected just below against a deep 1-2 retrace.

FOMC is done and no real surprises. DX has completed a failed retrace of the Channel (Triangle) breakout. Next stage should be a medium term retracement Bear phase that I might at this stage expect to carry to the Fib 62% and a retest of the lower Weekly/Monthly channel/Flag line at around (9100-200). A break below the 9600 will confirm.

Price is currently testing the weekly Triangle support line (Purple) (this can drop below mid week but to remain valid it must return above by the end of the week). There is a lower shorter term trend line (pink) and the weekly channel (or flag) supporting line (Purple) is at the Fib 76/78% support zone. At this point it all looks like a breakout and retest of the Weekly Triangle but that retest could be a hard one in that it may penetrate through and pull back above during the course of the rest of the week. I am targeting that Fib 76/78% level for the turn with stops below the 11100 level. A break of this level would reverse the scenario to a Bearish one. The FOMC outpourings at 7PM UK time will be pivotal this time. I see similar set ups on a number of pairs and DX.

Gold hit a new high as my road map had projected and right on cue bounced back down off the potential neckline resistance. The drop was quite strong, stronger in Silver and produced a Bearish pin bar on the Daily chart. COT was high at net +205, supporting a contrarian turn however it has been a lot higher so this is not conclusive. I could easily see another leg up before a drop, especially if USD drops off from here. Ultimately I would need to see a breakout of the crucial resistance zone to get Long again but am not minded to trade this Short as there are too many scenarios in play. If a Bear move is on the cards I would expect a break and retest of the 1 hour Triangle and rapid fall away. Of course we would see this kind of price action for a short term bearish move as a presage to another higher test of Resistance above.

EURGBP has been stuck in a consolidation zone since it apparently topped out early last week. Obviously such a zone can break either way another small leg up for a retest of the weekly line cannot be ruled out. However this pair does look to have broken the Daily channel line support (see hourly chart for more details). My case for the Bearish turn is outlined in previous posts above. Since my last post the Hourly price action has seen this par caught between a short term narrow band support/resistance with 3 failed tests of the final ending channel breakout zone (circa 8920). This occurred along the daily channel line but the most recent price action shows a break and failed retest of this line and then a small 1-2 currently in play. I will be looking for a break below 8870 support zone to gain confidence in a Bearish move for this pair but it is worth noting that the stop placement just above the recent highs provided for low exposure and he margin requirements is low relative to USD pairs. If my long term prognosis is right and this pair now moves into a fairly swift move down any Shorts at current levels become self funding. I would be expecting a fast drop in 1-5 form followed by a larger scale A-B-C retrace that then sets up a long term Bear market.

Last ditch support for GBP as it hits the Fib 88% (fairly rare) turning point. Usually the game is up when we get past Fib 78% and it could still be but the late rally on the 1 hour chart gives a bit of hope that this market, aligned to other similar pairs, is turning. As with EUR I would like to see a short term 1-2 move and rally away to confirm.

EURUSD has travelled all the way down to my final turning point and put in a late rejection of the support zone around the confluence of the Fib 62% and the Weekly channel (or Triangle) line that was broken back in early June with a couple of short term failed retests. I find this to be a fairly common occurrence with the third failure being the charm. This retrace is also shaping up to be a classic EWT1-2 retrace prior to a strong wave 3 rally. Clearly a break through this support behind the weekly channel line is a very negative signal and could bring up a retest of prior support at 11,100. At present I see this as the lesser likelihood scenario. It could be possible to get a so-called "hard retest" of the channel line whereby the market retests the up sloping weekly trendline forming a head and shoulders. For now I am looking at the 1 hour chart late Friday price action as a signal of a stop at turn. I would be looking for a short term rally and retrace in EWT1-2 and rally away to confirm. If this market rallies then it is likely that most other USD pairs will do likewise.

So the retrace carried on higher on USD and ended the day at my final turning point option on EURUSD (see separate thread). I have reevaluated DX with a new position for my Weekly channel line, that now more closely mirror EURUSD. USD (DX) seems to have ended the week with a retest of this line and short term rejection, not yet confirmed. However if price action on Sunday and early Monday moves away from the retest resistance zone then confirmation will not be far away and if this is turning into a wave 3 it could move swiftly. With FOMC coming up next week that could prove to be the short term trigger for a resolution to this resistance point. I will be seeking an earlier indicator than that in the coming days.

USD is approaching a retest of a weekly channel line that was broke back on June 6th. May not quite carry to the line on the 1 hour representation and has just tested the horizontal resistance line with a failure. I am expecting another leg up before this gets Bearish again, mirror of EURUSD and a breakout of the short term retrace Triangle would be a good signal that the turn has taken place. Obviously a break of the previous low around 9600 is key.

USDCAD enters my next resistance zone and bounces back down. I have a breakout and potential failed retest on a weekly channel line. For this to hold it ought to close below at the end of play today (being the end of the week). Might not be quite there yet but the signs are growing for a reversal and continuation of the Bearish move. Other pairs are also approaching important turning points and DX is also overall at or near a critical juncture. Conventional wisdom might be to wait for "news" in the form of FOMC next week but by then it may be too late and the news hounds will be talking about how the market had already priced things in, or other such platitudes. I prefer to let price action decide. On this one, and related markets, we may see another leg up or we may see a drop from here, ya pays yer money etc etc.

Retrace trade is playing out well so far but not yet fully triggered for me. If I look at the Dax I see the following: Daily chart Channel line has repelled 2 retests now, right where I was targeting. The first was with a pin bar on the Daily (Bearish candle signal) with Stochastic over bought (intermediate wave turn signal). EWT count seems like a 1-5 to me, hence my Wave A or 1 marker. On the Dax hourly you can see that move close up. The market is seemingly trading in a tight channel just now, the breakout of which should resolve the medium term direction (fakeout not withstanding). NMD at the Wave A/1 pin bar turn and credible small 1-2 (or A-B) retrace (brown) but a break of the support levels will be required to confirm. SP500 looks similar, if less spiky, with a channel breakout and apparent failed retest, although I can't rul eout another small leg higher in the US markets at this point. Again the support break is the key here (or alternatively a clear break up through resistance). The FTSE100 may provide an early clue here as it approaches support and a Third channel breakout. If you want some corroboration on this, check out the Real Vision Trade Ideas video clip of Joe Perry - 11 June (I just caught up on this yesterday since IG launched their collaboration with RV (excellent move IG, well done!).

Coming back to the Dax, at the close to day (of the US markets that is) the Dax has crucially remained below the Daily channel line after a hard pin bar failed retest. There are many scenarios in play though, which makes Stocks difficult for me to trade, I prefer fewer options. Therefore I am staying out until things clarify. Still it is important to keep tracking the scenarios until the fog lifts. The scenarios I see in order of preference are: The market turns down, perhaps after a small relief rally (see 1 hour chart) and then puts in a wave B before rallying to conclude the overall move before the big Bear gets going Allied to fresh ATHs on US large Caps we see a fresh wave 2 high on European and Nikkei indices (in the case of the Dax to the Fib 76/78% zone The turn now is the end of the rally and the market hammers down past previous lows The market turns up and breaks through the channel line and carries on up to destinations unknowable... As a perma (ish) Bear I discount scenario 4 so that really leaves me with 3 credible scenarios. My lead scenario retains the integrity of the Dax channel line but allows for US large Caps to do their thing separately.

So looks like the Wave A was a wave C retract top as the market puts in a lower low, albeit tiny just now. Could be a double bottom with a rally to come but also could easily travel down to the next support level before putting in a hard rally, which I still think is on the cards, chiefly owing to the number of unclosed gaps. The top most gap could very well be a breakaway gap as these tend to occur on breakouts but the other 2 feel to me like just regular gaps. In terms of the case for another leg down then, the Daily chart shows the follows: A nice clean 1-4 (brown labels) that could terminate with a wave 3 Green (or pennant/Flag) and a strong counter trend rally that should take out the first two gaps before turning. A close of the previous rally unclosed gap before the wave 3 ends Note the retrace I have marked as 3-4 brown could also be a short pennant, which would suggest the bearish move continues to close to Pink 1 (circa 5000), however at this point I do not think so as it would leave too large a retrace to close the 2 gaps. My strategy is to hold my longs above the wave 2 (brown) breakout but wait for developments to reveal themselves and focus on other markets that are clearer and have greater potential.

Do you mean blue 1 near 11,120? If so then yes you could assume the brown 1-2 is part of the while move up. I don't like the price action on that through, the move from brown 2 to pale blue 1 seems more like 1 wave to me and the nested scenario fits better. Given that brown 2 retraced very far it doesn't change the current retrace targets so I am ambivalent about it.

This pair didn't have the juice to breakout today and like EUR has reversed, likely in a wave C to conclude a retrace move that ought to carry to below the Wave A point (12650). For my money it will at least make the Fib 62% but the Fib 76/78% is also likely, these lines of support straddle the original channel breakout point.

Short term trend change in USD and related FX pairs this afternoon. Looks to me like a retrace bearish move at present. On EURUSD I have a wave 1 channel breakout to the downside to begin the wave 2 retrace. It is likely that the lower low this afternoon represents the conclusion of A-B part of the retrace, which would therefore drop reasonably fast in a wave C to conclusion. I have several candidates for that conclusion, targeting the correct one will require looking across several pairs and DX for congruence as well as primary signals like PMD and a strong wave C EWT count. Price action will tell the tale, should take the rest of the week to resolve. I cashed my channel breakout Long as this is likely to be taken out on the retrace but my other Longs are firmly below the Weekly channel line and therefore safe unless the market reverses into a long term Bear.

Which is one reason I don't day trade. Alternative scenario played out with a larger scale A-B-C retrace in operation. Next potential turning point is the Weekly chart channel line retest (13340-80).

If USD weakens and Oil strengthens what then is in store for USDCAD? As both of these scenarios is bullish for CAD one could look for the pair to continue it's Bearish path with some momentum. A possible small relief rally has hit my first resistance level and rebounded back down. Until there is a break of the recent low there is always a chance that we could see an extended consolidation/retrace period that carries another leg up to the next resistance level but for now it seems set for a fall to me. The negation of this set up to another leg up is a break of the recent high (13310), which amounts to a very low exposure trade in my book.

Looking for a small scale 1-2 retrace before the Bearish Phase really gets going. Possibility of another test of the overhead resistance trend line (i.e. another leg up). A break below near term support should trigger the Bearish phase in what is either going to be a wave B of an overall counter trend move OR a wave 2 of a 1-5 motive move that bring up a fresh ATH and probably the end of the Bull.

After a retrace bearish move GBPUSD is coming up on a couple of key resistance levels. A break of the top one would result is not that much resistance until about the 13200 level. Supporting this is the EURGBP breakout to the Bearish side in play as I write. Long term prognosis remains unchanged.

Looks like Brent has reached the zone I though might be a wave B after rejection in the first resistance zone with small scale NMD and a credible EWT count to signal the end. Of course the retrace might have already ended and a break of the key support around 5925 or thereabouts would confirm this for me. In the meantime the market is rallying off the Fib 76/78% related support and potentially setting up for a strong rally, quite possible aligned to FX pair rallies against the USD. We may be in for a period of USD weak, Commodities rally (I'm specifically referring to industrial commodities like Oil and Copper rather than precious metals, which are also influenced by the Greed/Fear sentiment equation and their own intrinsic market player sentiment. In addition to all that there was strong PMD at the recent bottom, which may still hold sway, and there are 3 price gaps above that could yet be closed before this market resumes it long term course down.

Nice move down through the 1 hour potential ending diagonal (or channel) followed by a couple of failed retests, the second one being right on the Fib 50%, before this pair fell away to now test the Daily chart larger channel support. A break here, after a small scale 1-2 retrace should bring up a move down to the next support level. Medium term I expect another reasonably significant retrace before the Bear really gets going. A rejection on the channel line will suggest another retest of resistance (or maybe another leg up) but those are scenarios 2&3 respectively for me at this point. Let the market decide...

Looks like the wave A (or possible 1) has concluded. Might expect a bearish period to bring up a wave B (or 2) and then another rally. Similar set ups on all the major stock indices.

COT is Commitment of Traders. The US Commodity Futures Trading Commission produces this data every week. It is based on CoB each Tuesday but published every Saturday. It basically shows the volume of futures and options Longs and Shorts split by market participant types and the net change week on week. I use the combined Futures and Options reports and am interested in the net Long/Short position of the non commercials. You can get data for commercials, non commercials and others. There is a lot of data in there but I focus only on the Commercials and Non Commercials. The Former is industry (e.g. Oil companies for Oil, miners for copper etc). For FX it is corporates seeking to hedge their businesses currency exposure in normal operations. The Non Commercials are the financial services organisations, many of them are trend following hedge funds. As a contrarian I am looking for when the Financials are overextended at a relevant turning point (based on my analytical methodology) and seek to go the other way on trading signals. This is a scenario supporting analysis rather than a trading trigger, which is why I referenced it as support for a major swing to counter trend on USD in my answer to you question. See link below to the relevant website. https://www.cftc.gov/MarketReports/CommitmentsofTraders/index.htm