Mercury

How sound is the line @Foxy

As mentions in my Brent Crude post just now, if USD does go through a period of weakness and Oil does rally then those 2 major drivers of USDCAD should result in significant CAD strength (i.e. USDCAD bearish move. The market moves of late certainly bear this out and now this pair is at a critical juncture. A breakthrough to the downside here suggest that significant bearish move is on the cards. The benefit of entering early at the top of the consolidation zone is obvious but going Short on the breakout with stops just above (sufficient to guard against a retest) is also worth considering. Note: not all breakouts retest. If the EW 1-2 has occurred inside the consolidation zone the breakout can be hard and fast and never look back. Wave 3s are like that and I think this is a wave 3.

Small 1-2 retrace after a channel breakout (slightly adjusted lower line). Retest failure on the lower 4hour/hourly channel line. NMD at turn point (Green B) Large scale Flag resistance line held firm (2 short term test failures & 2 spinning top candle price action Daily candle not yet finished of course but is encouraging in context and multiple USD pairs at turning points. Drop below the 9730 level would be encouraging and if this is a wave 3 it should move pretty fast.

@Theassistanttrader Great question and a H&S on the Dow is a scenario I have penned in and perfectly valid, albeit very shallow so not exactly a strong one and therefore not one I would rely on at this point. I would need to see a break of the recent lows (circa 25,200) to be confident of that scenario. Had all the other US large caps also described a H&S there would be a stronger case but SP500 and Nasdaq made fresh ATHs. The gap never getting closes point is what Chartists refer to as a breakaway gap, they are rare and occur at major market turns and significant continuation breakouts. They are rarely right at the top of the market though (Nasdaq and SP500). The Dow gap is not quite at the top so in theory this gap could be closed without a new ATH and keeping the H&S intact. Other indices appear to be in retrace mode and not yet completed so my assessment at present, subject to continuing price action confirmation, is for more upside before this all shakes out for the Bears. Net, the H&S on the Dow is valid at present but so is another ATH. My approach is to look across all related markets (US large Caps, Russell 2000, Dax, FTSE100 and Nikkei plus USD-DX, Gold/Silver and HG Copper) to spot congruence of major turning points and/or breakouts to signal the markets have peaked or trends changed. What is helpful here is that, to me, some of these markets have already trend changed so I am looking at retrace price action rather than ATHs. The former are much easier to call obviously. My current assessment is as follows: Dow: possible H&S but fresh ATH more likely, subject to ongoing price action. SP500: top of the market possible but fresh ATH more likely, subject to ongoing price action. Nasdaq: top of the market possible but fresh ATH more likely, subject to ongoing price action. FTSE: Top already in. Wave 2 retrace likely in but one more leg up is possible, if wave 2 in then smaller retrace is due before big drop Dax: similar to FTSE, Dax was the first to top out Nikkei: Topped way back in Jan 1990 so on a completely different track but of the recent rally since the central bank interventions in 2008/9 to delay the credit crunch collapse (bias alert!) I believe this market has also topped and is in retrace. USD -DX: has already bottomed out and is in long term rally but currently toying with a retrace bearish move prior to the main event. Further breakout to the upside through key resistance would negate this scenario. Gold/Silver: has bottomed out and is in retrace prior to a major rally. HG Copper Topped out during the 2011 commodity peak but the recent rally has also topped out and is now in a Bearish trend. However, since August 2018 this market has been in retrace rally mode, which some would refer to as consolidation. I am not yet sure if this is done. Could be another major rally to about the 30,000 level prior to a turn and drop or could drop through the 2018 lows to signal a major economic downturn and therefore stock market crash. That's how I see it, I have threads on most if not all of the above if you want to see more detals, how do you see it?

Not a Flag on Nasdaq, rather a deep retrace and bounce off the lower channel line, making this a firmer line of support with 3 effective touches. The Dow did make a pennant and is now breaking out and approaching the upper resistance of a short term range. A breakout to the upside should bring up a fast rally, probably to fresh ATH to close the gap. Same for Nasdaq.

USD has remained in rally mode but is it motive or just a retrace? The market has just hit resistance in the from of a monthly flag resistance line and ST Fib 78% level with EWT1-5 plausible and NMD. A breakout of the ST lower channel line is encouraging for the USD Bears. A break of the Daily chart supporting channel line would confirm a medium term trend change. The EURUSD is bouncing off Fib 76/78% support zone and although there is scope for another leg down for technical reasons I feel like this is a turn I want to be in with close stops guarding against than final leg scenario.

AUDUSD, like other USD pairs, has continued in down but unlike others this pair is close to the previous low, a flash crash spike low. For the Bullish set ups to remain intact the market has to turn around the Fib 88% (surely a double bottom is unlikely. Well Hello! The market opened tonight with a large gap up. It may yet be closed but for now this pair is worth following for anyone interested in FX at present. A break below that lower low will surely be Bearish but if this gap rally is sustained then it will be a powerful turn into a wave C of a retrace rally, that could run hard and fast. I was long off the Fib 88%, now stop protected just below the pre gap low for a low exposure trade. If this pair rallies will the other main USD pairs be far behind? Other technicals are in favour of a rally including: Very good narrowing channel lines on the 4 hour chart Turn is in the Fib 88% zone, last chance saloon for a rally PMD on 4 and 1 hour charts. There are several important resistance zones for the market to clear including the channel upper line around 6950 and the next level at 7070. If this is a wave C turn then I would expect these resistances to be dispensed with in short order.

FX seems to be all about USD strength, although I remain on the sidelines to see whether this materialises soon or requires a large retrace to "prime the pump". One thing that is certain is that EUR has been stronger than GBP, which is exactly according to my road map for this pair (see previous post). The retrace is in complex form, lots of whipsaw, but now has raced into the wave C and has shot straight up towards the 2 resistance zones I had previously identified. At present I am still tipping a retrace of the long term Triangle consolidation lower line but first we will see how a retest of the breakout zone. Long term I am tracking GBP strength vs the Euro with massive structural issues within the Eurozone (fiscal and political) as fundamentals backdrop.

PS: forgot to add, net COT data hit triple digit positive (+128k) on Tuesday last, just as the market spiked and dropped, a contrarian dream... Silver continues to deteriorate into negative numbers. This supports my view that Gold will now hammer down faster than Silver in a catch up move as the non coms unwind their Longs pronto.

Gold and Silver just got simpler for me with Friday's price action. Since my previous post both of these markets have dropped hard and Silver in particular has closed below my potential neckline, albeit marginally and at support. Gold still has some way to go to catch up on Silver. I see the likelihood of a rally from here as low given a dearth of appropriate signals. I still believe it is more likely we will see a rally in precious metals when stocks eventually capitulate, although it could begin first in safety assets as Bulls begin to shift Bearish, the first movers so to speak. I remain in favour of Gold turning around the Fib 50% and Silver retesting the long term supporting trend-line. I will continue to track all my indicators to see if I get an across the board buy signal around these points. Although not at all predictive it does seem like markets in general are trending to a resolution, one way or another, around about the end of May...

Turning back to the Nasdaq for a minute I am seeing an interesting development on the 1 hour chart in support of my Daily chart road map (as posted last Tuesday). The end of week price action put in a lower low and dropped on the final hour of live trading, typically a Bearish signal, but in an end of rally stage there is often a lot of whipsaw action as Bulls and Bears slug it out. The potential for an A-B-C retrace within a Flag consolidation is high. If the market breaks down to the lower (speculative) line and turns around the Fib 50% and then rallies up through the short term resistance then the Flag will be confirmed. So what? Well the flag often marks the halfway point in a rally (+/- a bit) and is this is proven to be a Flag then the end of the rally would be, wait for it... 8000!

Yet another leg back up in consolidation but this time a higher high, which has created a complex 1-2 retrace pattern (see 4 hour chart below). This afternoon this market hit the Fib 88%, quite normal with these types of retraces, which offered a very low exposure Short. The market duly turned and has run down fast, offering a few additional Short points and is currently continuing to trend down. A breakout of the daily trend-line would be a good bearish sign. Note, big picture, this is a retrace move so could have some whiplash in it yet.

USD continues to thwart me, best laid plans and all that, but swing trading is all about dipping in and out until you catch the move for me. The secret is not to lose big on this stuff. EURUSD is at yet another critical point, the Fib 76/78% (short term move). This is coincidental with a previous price gap, a point where not all orders were filled so they may be this time... We have had a small bounce rally here this morning. A break about near term resistance (11190ish could be interesting especially if it happens fast and strong.

Breakout failed on Gold, either a false breakout or a rebound back off resistance Triangle line (take your pick). Doesn't matter much, looks like Gold has resumed the road map path to lower support zones. Picture is even clearer on Silver, which is currently testing a potential H&S neckline. However if Gold does continue down to at lead the Fib 50% then Silver will probably retest it's long term supporting trendline. I await developments, on the sideline, with interest.

After a small bounce off the potential parallel channel line (potential because it only have 2 touches including the recent one so not conclusive), the market has hit a retrace period. Short term support will be important to see if this brings out the perma bulls. A break of the overhead resistance signals a trend to fresh ATH for the DOW at least and likely all the US large Caps. Other markets seem to be in retrace mode (i.e. will not see fresh ATHs as these markets have already peaked). If this latter is true then the retrace price action is a better signal of an across the board rally end than the ATH points for obvious reasons. My lead scenario is for fresh ATHs on US large caps coincident with critical resistance point retrace turns for other indices. Secondary scenario is that end of Bull market has been seen and Dow put in a H&S top. This will be indicated by a break below current short term support on the Dow.

Not a triangle but possible a parallel channel with a turn today off the Fib 62%. A run up now in concert with stocks will leave me tracking to see if major turns occur when Copper reaches it's next Resistance point at circa 30,000.

USDCAD has been quite whiplashy of late, you would have to say it is in consolidation but if you are selling high and holding close stops then no problem. Another break lower today, will this one stick and break lower support?

After a lower high and lower low it looks like a lower high at resistance level today followed by a possible small 1-2 retrace, not yet confirmed. Looking for another drop tomorrow and swiftly to show a wave 3. And if it does then most USD crosses will follow suit.

A drop to the next level, the Fib 62% and strong rally off this level. My GBP Longs were stopped out so I begin again there but my EUR Longs were not and I have added on the bounce today. A fresh higher high tomorrow and this one is set to run and run.

Textbook Bounce and small 1-2 retrace to Fib 62% and then rally away, next stop 8000 and then we will see. Traded this on the Dow as there looks to be more upside if the Dow is to make a fresh ATH. 27,500 anyone?

@Foxy My Longs are much further down and stop protected at BE. I never move stops. Easier to reenter than take a beating. Typically if I get stopped out it is because the set up failed but occasionally, like currently on GBPUSD, a retest of the breakout zone occurs which could still rally to follow the set up. Again, just need to be ready to reenter on that rally if it happens. Not really expecting an over night move on this one, although I know where you are coming from with the overnight thing. I think it may take a a little more time to resolve. GBP and AUD are at pivotal points so worth watching. EUR has some way to go to look worryingly like a Bear in the short term.

The market rejected at the 11260 level but is now testing the Fib 50% support level. This level is also the long term Monthly chart Fib 50% level. A rally here should bring up another test of the 11260 resistance level. A break should see a test of the next support level around 11160.

First support has been broken and now we are at the previous Triangle breakout zone and Fib 88%. This is the last chance saloon for this set up. A break below the B (Green) previous low will bring up a new scenario. Still the indicators still favour a rally but will it be one that carries through upper resistance or just a short term blip? The EWT count is good for an A-B-C retrace plus we have PMD and strong support at the channel breakout zone, a common retest point in consolidation phases. Shouldn't have to wait too long for resolution.

So far looks like a turn off that support I was talking about has occurred. To secure this move I would expect to see a small retrace back down, maybe to retest the lower channel line, which is looking like a decent channel at the moment. A bounce off this would bring up one of the 2 scenarios I mentioned earlier, a retrace to a lower high or a rally to an fresh ATH and end of the Bull.

@Foxy Apologies I didn't see that you had responded as the @tag doesn't seem to have worked. Anyway to respond, I am very bearish the long term for very many reasons, which I have posted on in the past. I have been of this mind set for several years, seeking to capitalise on the big drop when it comes. However I have also been Long stocks in this period as price action dictates. As a swing trader I am looking for medium term zigzags and long term trend changes. My methodology is set up to identify these swings and to dip in with low exposure until a move sticks. So have we seen the end of the US Bull? Chatter would suggest we have but I am not convinced yet. Looking at the chief Bull driver, the Tech industry Nasdaq index, there is an evens case for the top having been posted or another leg up. The draw of the 8000 zone and that very long term resistance trend line (monthly chart previously posted) is surely alluring and there are sufficient "this time it is different", "new normal" type people around to drive a last gasp exhaustion rally, which I don't think we have seen yet. On all the US majors, and also FTSE, Dax and Nikkei, price is at a significant support zone right now. A rally here is to be expected after a sharp drop (zigzag) and would either carry to a fresh high, likely the end for me but lets see how price does, or if the ATH is in we will see a lower low in the from of an EWT 1-2 retrace and drop. Technicals on NASDAQ Daily: We had the current ATH on very strong NMD and a potential break of a narrowing channel (not shown). If this is the end of the Bull then a retrace to that channel breakout zone (circa Fib 76/78%) is on the cards. Price is now at a support zone and if it turns around the current point (or a little lower - i.e. 1 more leg down on the 1 Hour charts) then we will have a parallel channel to track. Stochastic and RSI are in over sold territory, this is about where a short term rally would be staged. A longer term Bear would ignore this point. Indicators are circumstantial not universal, you have to read them in context. Now that all the gaps on the way up are closed on all markets (there is still one on the Dax but much lower down) the way is clear for a rally. There are 2 large gaps in the current bearish move in most markets that remain un-closed. Unless these transpire to be so-called breakaway gaps I expect them to be closed. Critically the top most gap on Nasdaq, Nikkei and Dax are all at the ATH (or recent rally highs in the latter 2 cases), therefore a close of these would automatically deliver fresh highs in the bullish phase. COT data shows the net position as bullish but not overly so and growing despite the Bearish move. The Non Commercials (Financials) don't buy the Bear yet it seems, but then they almost never do. Still I would prefer to see more over exuberance in COT data at the end of this Bull, which suggest another leg up. Major market tops and bottoms largely (always maybe?) go unnoticed with no discernible trigger, despite news outlets doing analytical gymnastics to find reasons, well they have to don't they? There is too much Trade deal chatter for my contrarian antennae just now so I am minded to expect that to be blown away with a fresh rally. SP500 is showing a similar picture but the DOW currently has not put in a fresh ATH and is showing a potential Head & Shoulders, albeit a very shallow one. Chances are the Dow will post a fresh ATH before this is done. If that happens we might expect fresh ATHs on Nasdaq and SP500 as well. However we could get a close of the lower gap only, resulting in a breakaway gap at the top. Also in this scenario we get divergence between the Dow and the other US large caps, which is a sign of a changing market. Either way we get a rally first. It is interesting to note that only the US large caps are in fresh ATH territory. Dax, FTSE100 and Nikkei look more like they have topped out some time ago and are in large scale retraces. I have posted FTSE100 as an example. Here the market looks much more like a pure retrace and we may have seen the top of that and a breakout of a Triangle formation, with a retrace rally to retest this channel. However the current turning point would also be consistent with a parallel channel, which could indicate a new rally high to the Fib 76/78% zone. In short then, it will be important to track all the related markets to sport where market turns are happening in coincidence to get a handle on this thing. I would love to believe we have seen the tops now but I feel there is another twist int he tale to come yet. End of May/early June should be an interesting time. Sell in May and go Away, this time for ever...?