Mercury

Looks like it was a Flag after all. This is very Bullish in my view. The break of the Flag was a good trading point Long and if there is a sustained resistance breakthrough this rally could run up to the 1350-1400 area before we see any retrace of significance, which will be a prelude to a much, much larger rally..!

Yeah could be @cryptotrader but that is only a reflection of market sentiment in my opinion. If the majority are inclined one way then the market will go that way. There are so many analytical and trading techniques, as demonstrated by this forum, so as to render any notion that technical trading works because everyone believes in it in my view. There are many people who are hugely skeptical of analytical techniques, just as there are also those who do not believe that news really moves markets. Personally I prefer to let the price action do the talking but only within the context of long term analytical set ups. Let's see what happens next but for now I am 50/50 on either scenario. One thing I do believe is that when it breaks out this Gold/Silver rally will be big and may be an easier trade than shorting the indices, I have certainly found it to be so far.

Yeah could be @cryptotrader but that is only a reflection of market sentiment in my opinion. If the majority are inclined one way then the market will go that way. There are so many analytical and trading techniques, as demonstrated by this forum, so as to render any notion that technical trading works because everyone believes in it in my view. There are many people who are hugely skeptical of analytical techniques, just as there are also those who do not believe that news really moves markets. Personally I prefer to let the price action do the talking but only within the context of long term analytical set ups. Let's see what happens next but for now I am 50/50 on either scenario. One thing I do believe is that when it breaks out this Gold/Silver rally will be big and may be an easier trade than shorting the indices, I have certainly found it to be so far.

As with a lot of markets we are seeing consolidation in Gold and Silver. I am wondering whether the Gold consolidation could turn out to be a Flag (a natural pause in a strong rally). I am currently anticipating a retrace further down prior to a strong rally phase for both Gold and Silver. This could happen if one of 2 scenarios as follows: A shallow retrace to about the Fib 38% area to complete a Flag formation A deeper retrace to Fib 50 or 62% in 1-2 style retrace. At present I would be looking for Gold and Silver to begin to rally prior to Indices top out and fall but as usual will let price action be my guide and patiently await developments. I will be looking to add to my Long positions at a suitable turning point on price action and with other supporting indicators showing a high potential for that rally resumption.

All the major indices, including Nikkei, seem to be at consolidation and turn points to me, if the final leg up thesis is valid. Looking for the first time for a while at the DAX, which I don't usually trade, I noticed a potential Pennant/Triangle formation, which has just touched the bottom line and bounced away. A breakout of the upper line would confirm another leg up but a spec trade at the bounce is also a decent low risk entry. A break through the bottom line would be bearish and suggest the final top is in before the greatest Short of our life times. For now I am leaning towards a final leg up scenario unless or until proven otherwise. Close stops and tight money management is required more than ever if this is in fact the end game of the Central Bank bubble.

When you're wrong best recognise it and move on. All my USD pair longs are now closed for no loss but I am not sure this means the big USD rally is on yet. If crucial support levels are broken it will be but I think we will have a few twists in the plot before that happens. On GBPUSD I was never fully happy with the set up as the Wave B retrace did not drop into my preferred turn zones. EUR was better but still turned a bit early and AUDUSD did not match at all. So now I see only 2 scenarios: This current move carries on through near term support to trigger the big USD rally The move is merely the conclusion of the Wave B to either Fib 62% (12,900) or Fib76/78% (12,800) before a hard rally away in Wave C to my original retrace level of about 13,800. Incidentally the turn points are the same as my original target for Wave B.

AUDUSD pushing hard against a critical resistance zone. Being rebuffed this hour but could be setting up for a fast break that may be a signal for EUR and GBP, also knocking at the door of their respective overhead resistance. Break-throughs across the board will signal a sharp rally in my opinion. Anyone got a view on these USD pairs? Anyone trading them?

You raise an interesting topic @TrendFollower and one that was much debated a while ago. Are we going to see a period of runaway inflation caused by the central banks trying to inflate away debt OR will this backfire and drive the global economy into a deflationary depression as a result of excessive monetary easing (love that phrase, hardly appropriate for run away money creation...). Let's face it a massive markets crash is more aligned to a depression Regarding Gold/Silver, in normal circumstances gold is seen as an inflation hedge and the reverse is also true. However a full on depression is not normal. This is scary shhhh and in such circs I would expect a rush to something tangible as money supply contracts and people loose faith in it, e.g. Gold. I might also expect real assets to be in vogue such as copper etc. but who knows, I wasn't alive for the last depression so I have no personal experience of one. I don't think anyone has experience of what we are witnessing right now. In some ways I don't really mind what drives it so long as I stay in a long precious metals rally. The only way I can do this is by using technical analysis.

All 4 major stock indices that I track bounced off long term support yesterday, really getting going in after hours trading... Dow/SP500 did it on Daily chart support whereas for Nasdaq and FTSE it was weekly chart.

Yeah let's see if @elleanalysis that out of hours trading does the job. Wouldn't be the first time the pros waited for out of hours to make their move...

Yeah but now the Dow has hit the 25000 support zone and bounced. Will it be sustained?

I think you meant £1225 there @TrendFollower. I think a combo of yesterday's stocks drop, inherent uncertainty today, USD weakness and just general oversold nature of Gold/Silver on technicals is driving for now. I agree, and it is part of my game plan, that Gold will not break 1400 mark without major Bearish stimulus elsewhere (be it stocks or bonds or both) so that is worth watching too to assess Gold. Also agree your point re Silver. Indeed we have seen that amplification in price action of late. I think Silver was just on a down amplification after having been more bullish than Gold recently and I expect Silver to rally harder to it's equivalent of 1400 for Gold, which I think is around about 1800. Regarding retrace from the 1400 area for Gold (or wherever this rally phase tops out). I would not expect price to see 1200 again (subject to how high the rally goes and accepting that a near term retrace back to 1200 is eminently possible). Let's say price goes to 1400 and then retraces before a push through, then I would expect max a Fib 50% turn (about 1280). This is all speculation of course but if we have seen a major turn in the market on both Gold and Silver then the next phase rally will be an EW wave 3, which would run hard and long (i.e. retraces would be more shallow). Net, my current feeling, subject to what happens in Stocks and Bonds over the next few days, is for a rally up towards 1400 and a retrace before a very significant rally wave to break the potential H&S neckline and go way beyond. As you say, this will probably only happen on a major Stocks/Bonds downer but it could begin just on the fear of that...

AUDUSD still going OK WRT my road map. Currently the market is recharging via a ST retrace for what I hope will be a sustained break through the overhead resistance. Such a break will find little further resistance until the Daily Tram-line. I also attach my Daily chart to illustrate the big picture target (7800) but could end a bit earlier when the Fib 50% comes into play. A word of caution though, whereas GBP and EUR look like they have completed an A-B and should run up in a final Wave C of the retrace AUDUSD has not yet completed the Wave A even (unless for some reason AUDUSD will now rally hard and not look back - i.e. on a completely different trajectory...) . For the moment I am assuming AUD will not out perform USD in the medium to long term and therefore my road map sketches out that A-B-C format. Of course I have no idea exactly where this will happen so the road map is indicative only, pending further price action. The word of caution is to guard against loading up into a probable Wave A turn back down to Wave B. Actually the trading points for me are now and after the Wave B completes (excluding day trading of course). Another thing to note is that when AUDUSD does retrace into a Wave B (if it does) then we might see a corresponding consolidation phase in the Wave C rally on GBP and EUR. It is always nice to see these kinds of correlations.

Full retrace to previous breakout retest circa 13,800 is my target with similar targets on EUR and AUD.

Agreed @TrendFollower we absolutely need Gold to not just stay above 1200 (as in hover) but to push on through 1220. May get some retrace/retest action during all this as there is a fair bit of resistance to get through but I don't think we need to see stocks crash for this to happen. USD falling is sufficient to lift precious metals but a long term rally would probably not come until stocks do top out and go into a long term Bear market. However I might expect Gold to be up around the 1360-1400 mark at that point and the surge to break my Weekly Chart H&S neckline. That is my road map in any case.

Nice analysis @elle, Out of hours can be a pain overall but useful perspective. Interestingly for me the 2 drops you have highlighted with arrows both follow an A-B-C retrace pattern, well the current one isn't complete yet but still. If we are to see a rally out of this it will have to start at or soon after US open I feel. Quite normal to get an initial move the wrong way and then a turn into the trend for the day on opening, so that could be an initial further drop (call it a catch up on Asia and Europe drop if you like) and then a turn and rally. MY Daily Dow chart shows similar support level to yours around the 25,000 mark, a zone I had picked out before the current bear move. It also coincides with a supporting trend-line.

A word on the EURGBP Triad with everyone focusing on stocks and USD it is easy to ignore the third leg of the Triads. I think this one in particular has a lot of points to offer (and already has for me - warning I am Short this market so I have a bias for that to continue). As previously posted, I am taking a contrarian stance here, in that I believe GBP will be stronger than EUR against the USD, although both will suffer. I have a Strong Triangle formation on the Weekly chart, which has been poked through to the down side this week (not yet a confirmed break out though. I think this is a long Wave 3 motive Bearish move and, if right, I am expecting some retesting of the Triangle bottom line, maybe in consolidation phase before a resumption of the bear move down, which would be quite fast and hard. There is a chance of a so-called hard retest (or fake breakout) and return to Resistance around the 8850 level within the Triangle. This would then be a point where either the Bear resumes and an eventual Triangle breakout occurs later OR the Triangle consolidation continues on up. As I expect EUR to play catch up on GBP in the coming days the retrace fits but not sure for how long until both GBP and EUR complete there respective retraces vs USD. For EURGBP to go full Bear either GBP must retrace further and faster than EUR and/or then EUR bear is worse than GBP. If I am right there is 4000+ points on offer on this market.

With all the bearish action on stocks one might have thought Gold and Silver would explode into that rally I have been mapping out. They didn't, rather they went into a small slide/consolidation with Gold being a bit more bullish. USD didn't rally either, which makes me think the stocks Bull is not quite over with. It is nice to have markets behaving in concert but it often doesn't happen and that often doesn't mean much. I stick to the technicals and trade off those signals, regardless of other so-called fundamentals or news. In the case of Gold and Silver I got some buy signals over the last day or two. Gold went into a small consolidation triangle after a retrace move back to the LT trend-line, which remains stubborn support. It then broke out of the triangle into a rally phase with a brief retrace back to the ST support level before rallying away. If this continues the Daily Triangle upper line comes into play. A strong break here will be very bullish, a rejection may mean another leg down to the LT trend-line. Silver is showing similar but more volatile. A retrace back to the original Daily tram-line breakout (support level) was forestalled with an early turn off 1 hour ST support and a break out of the 4 hour chart Triangle (pink lines). If this is sustained in line with Gold rally then the odds are for a strong rally in both. For those who like a bit of fundamentals: USD weakness supports commodities (Gold/Silver is quoted in USD as an FX cross) Professional investors keep a balanced portfolio for risk purposes (although I think this is a bit crazy myself) so the idea that investors would be buying gold simultaneously with stocks is not so strange If the stock markets bomb, Gold/Silver will rally, this is almost the only thing that history guarantees us If stocks rally from here the worry about exposure will also increase, Gold is a hedge

Impossible to draw any conclusion with one move of course but surely not a safe haven? That said Gold/Silver didn't jump, well has now but not during. Most other currencies are holding up well vs USD but not bitcoin. So is bitcoin a value store (replacing Gold etc) or a currency or something?

One additional thought about all this. If this is the end then why hasn't USD taken off? It may yet of course but so far it has gone in the opposite direction, albeit only in a small move. Maybe it has all gone into bitcoin? (Ah! maybe not... - sorry couldn't resist ?). Therefore I remain cautions about jumping on the Bearish bandwagon (which as a perma bear is saying something I recognise!) there will always be another opportunity. I am sticking with my road-maps on FX and therefore also on everything else for now until the market confirms it of tells me something else is happening.

My FX trades are working out OK at present, despite the apparent mayhem in Stocks. One positive about trading multiple asset classes is when one gets too hot (or cold) you can focus on others. I'll be waiting and watching on stocks but focusing on FX and precious metals, which are all moving according to plan just now. AUDUSD is a particularly interesting one from a technical POV. This market retraced way down to a double bottom (small scale so not really a true double bottom) but the point here is it did in fact show a retest of 2 possible tram-line set ups (don't know nor care which is valid at this stage) and then rallied away. We are seeing strength in EUR and GBP despite stock declines and if this sticks and AUD makes a new high then there are 700+ points on offer.

In a post, somewhere, can't remember which thread, I observed that the US large Caps looked bearish while the FTSE and Nasdaq were giving some bullish signals. I wondered whether we could see divergence, but should have known better. The stock indices remain joined at the hip and I suspect they will all the way down too. However the question is whether this is it or not. I have been waiting for a strong retrace of this nature in an EW3-4 fashion to set up a final leg to top out the market and this looks like it at present. Will we see a sharp "buy the dip" reaction or is this really the end? Answers on a post card please...

Sometimes there is nothing to do but sit back and watch the mayhem, unless you got short that is... I find myself wondering if this is the start of something bigger or will we see another short term drop and instant buy the dips push back? USD is sluggish but not accelerating away, which makes me think it could be the latter but I would trade it...

Agree @Caseynotes but even if it goes into the 1000s that, what 4000ish points with very high margins and volatility. there are way more points on offer on stock indices if we get a bear and on a USD rally. Even EURGBP is set to offer 3-4K with much lower margins and more manageable volatility.

On the FTSE100 there has been a bounce this hour, not yet pushed through the resistance and upper tram-line but somewhat encouraging for those seeking a rally. Next few hours will be interesting, will the FTSE take off on its on volition or wait for US stimulation. Note of caution there is a fairly chunky divi today on FTSE I think, so watch out for that.