Mercury

Fully agree @dmedin, not only do I only look at the longer term charts but the time elapse between the points (same for double tops) must be at least 3 months (just a rule of thumb). Even then you can get these formations at continuation zones so context is king. A chartist will only look for such formations at the end of major phases (for EWT that means at the end of a wave 5 or C). However that doesn't mean short term chart users can't get a bearing like this as well but again it needs to be at a likely point of trend reversal for me, otherwise I prefer to use EWT as a guide.

I did see a piece that referenced the Canadian economy and the cannabis industry. It basically said the bets placed on cannabis are turning sour, can't remember the details alas.

Could be. I only look at H&S on Daily/Weekly charts at the end of major trends but that would fit my EWT lead scenario for a bear phase in GBPUSD. Also note other USD pairs are holding back so USD strength still rules. Fib 62% (13,100) could be key but GBP is spiky so could spike up through and fall back. Hard to trade, I will wait for a confirmed turn. A break of the previous high (13,175) would not negate the longer term bearish scenario, even though the 1H H&S would be negated.

Don't know anything about Wheat @cheviot and can't get sufficient years of data on IG to get a purely bearing, however the chart from 2000ish they do have looks very similar to some agri crops I do track and trade (NY Sugar No.11 and Aribica Coffee). All of these soft commodities seem to have topped out during the commodity super-cycle top in 2011ish and since then have been in decline, whereas some of the harder commodities and precious metals have rallied harder, and in the case of PMs the general market bias is definitely bullish (not yet convinced!). In my Coffee and Sugar posts I have discussed the case for an impending massive cyclical bull market on the basis that we have been at or near the long term range bottom, although there was still room below. These markets took off, especially coffee BUT now it looks to me like Coffee is reversing and is more likely to put in lower lows on the long term trend before that Bull can take hold. I had reversed and shorted Coffee near the top of the recent rally but thought it was a bullish retrace rather than a reversal. Sugar is not there yet, although I am tactically Short now and waiting to see how it plays out. My concern is that Sugar could follow all the rest of the Softs (And indeed hards as well, currently) lower. Part of my thesis for a bull market in the making was technical and part fundamentals (As always). The Fundamentals part was that in a trading range market, once you reach the bottom (or top) the probability is massively in favour of a reversal into the opposite trend. Timing is hard as these markets can stay hugging the extremes for a long time. There are signs that in both Coffee and Sugar farmers are leaving the market (supply issue building). However, as @TrendFollowermentioned a while ago I believe, there was is a large stockpile of coffee about to be released on the market in Brazil. Sugar definitely has a supply problem though it seems. Another part was the idea doing the rounds of hyper inflation, driven by central banks getting what they have been seeking but not being able to control it. This is being called the "reflation trade" and unsurprisingly not everyone agrees with the hypothesis... The third factor was a falling USD, which ought to be good for commodities in theory (doesn't trump supply demand drivers though) but currently it is looking increasingly likely we will see DX at about 10000 (currently 9760ish). So all in all it seems that another period of commodity bearishness is in play (check also the thread on HG Copper). I remain convinced that a commodity bull market is going to happen and that softs will be the place to be when it does as I feel that industrial commodities will get hit by a recession (we may get that inflation trade first though, especially on Oil, which may then trigger the stocks crash and reflect the recessionary forces). All of these markets are related but food and water security is the single biggest issue the planet faces long term, far out weighing climate change (the climate gang are talking about the wrong things!). If the population is set to grow to somewhere between 9-13 billion by 2100 where is all the food and water going to come from? That's long term of course but if prices are depressed and farmers leave the industry then supply shortages at low prices are inevitable. Cue prices increases, and probably in a dramatic fashion. The question remains, when? I thought we might be there but this months price performance on Coffee makes me thing we are not yet.

Chance of a retest of the 1380 breakout level in an A-B-C retrace move.

Bitcoin is really sketching out almost perfectly from a technical analysis perspective: We have had a turn at the bottom of a narrowing channel (or consolidation Triangle) We have had a head & shoulders pattern through this bottom, which alas did not quite close a price gap (this is my only pause for concern on a major rally phase being in play) There was strong PMD at the Head bottom. We have has a H&S neckline breakout and a coincident weekly channel breakout and a short term failed retest of these then a rally away. We have has a second EWT 1-2 (blue) (first is noted as pink), which hit the Fib 38% and then broke resistance last night. This is very bullish. Right now we are looking at a smaller 1-2 (1H chart) however there is always the possibility that the recent breakout zone will be retested before the next assault on 10,000, clearly a point of important resistance on the charts.

Agree, probably best to wait for the Fed to do it's thing but be aware moves can be fast and contrarian around these big info/data releases and as the Fed is really the only bull driver right now for me care is needed... That said Oil and Bitcoin have relatively little to do with the Fed, as do Soft commodities, except in so far as USD impacts short term. I am Short Gold off the turn and Long Oil similarly. The advantage of picking turns is getting in early with very low exposure if wrong. The other way to go is to wait until a new trend is established and buy/sell the retrace but the draw-down exposure is invariable much much larger. All has to be part of your methodology and baked into your rules for taking a trade and stop placement. Even with this there will be times the market just isn't in your favour. Minimise losses during these times and let your winners ride. Challenge is different when you are in on a run; when to take profits, when to let run long term... EWT helps a lot with this, if you get it right of course...

Not sure where you are on this. Can you attach an wave annotated chart?

I presume you mean in this phase? I actually think it will hit both but it will rally to $85 (or more maybe, a break of the previous high at $86.70 would set up a much more bullish scenario) and then it will drop to Earth and surpass the $50 level. Long way to go on this yet. In terms of this phase, if price does drop back down and breaches the $56-55 level then a test of the $50 level is on and a break of that level opens up the market to a massive bear. This is my long term scenario. Can it do that in this phase? Of course, it just isn't my lead scenario. So net, if we do see a rally from here (the Fib 88% and therefore last chance for a wave B - I don't buy a double bottom in this scenario) then my large A-B-C back to $85 is a possibility. EIA up today so that is likely to be a make or break for these 2 competing scenarios which are, wait for it, Up or Down. Who knew...!

Have you got a view on that to share? My view is the most likely scenario is down, which I have already posted on previously. The price action is still consistent with that view. The point of my post was to reflect that Silver has turned first and hard and Gold may now follow. I traded Gold accordingly. I didn't trade Silver because the risk and volatility is higher but the potential gain on Gold medium term is equivalent or better with respect to margin requirement and at a lower level of exposure. That is multiplied now as Silver has already dropped.

Will Gold now follow Silver down? Silver has made a lower low and looks intent on putting in a bearish wave C. Gold is on a slightly different path but directionally similar.

Maybe...

I find myself wondering whether Gold will follow Silver down and if so will this be correlated with a Stocks rally (at least temporarily) and/or a USD rally. Stocks do seem to be preparing for a US opening surge up, which at present I am tracking as a likely relief rally but naturally could be a motive wave to new ATHs. I like Gold/Silver for a bearish phase prior to a major fundamentals driven surge to new highs. The technicals align for a significant retrace down and the general market zeitgeist seems to be heavily weighted to the Bull side (contrarian signal). Recent price action since the highs could be seen as an A-B (or 1-2) and price on both Silver and Gold turned back down around the Fib 62% level.

This pair has been in a textbook 1-5 bear phase since the Aug 2019 top and turn (wave 2 pink). Nothing dramatic but a steady 1000 points; it is nice to have a steady trade that is somewhat immune from the vagaries of USD... The market looks to have put in a wave 1 (blue) right about where I was looking for it at key support BUT price did penetrate this support a bit to put in a long term lower low (see previous posts weekly chart). This gives me more confidence in my lead scenario that we are now in an A-B-C retrace rally that, when it tops and turns, will set up a long term bearish run. This is contrary to received wisdom that GBP will get hammered as a result of Brexit but I have been making hay out of that contrary stance since Aug so all to the good. So far so good and now we may be seeing the conclusion of the A-B (green) with a pin bar reversal off the Fib 62% (wave A green to wave 1 blue) and a breakout from a 1H channel, with GBP breaking down also (see my GBP thread). There was strong PMD at the wave 1 (blue) turn and oscillators are coming out of over sold at the wave B (green point). There was strong PMD on the 1H chart at wave B (green) as well and the wave B is in a 1-5 profile. Several candidates for a turn, which will naturally be dependent on what we see in terms of price action ont he other legs of the triad but for now I fancy the 9000-9100 area.

While waiting for Stocks to resolve the current support level (rally or breakdown?) I am interested in GBPUSD. I think USD generally is on another rally phase but GBPUSD looks set for more weakness than some others, especially if I look at the EURUSD and EURGBP triad. The big picture looks as follows to me: Dec 2019 high looks more like a potential wave A than a 1 (could be a bearish A-B-C - i.e. we will see lower lows vs the Sept 2019 low). So two main scenarios, both bearish. My A-B (brown) could be a 1-2, which would follow the lower low scenario but for now I see it as an A-B and am tracking where a wave C might end and turn. Candidates include a retest of the weekly channel trend line breakout zone (circa 12,700) and that would be the Fib 50% level. Also a retest of that weekly channel line around the Fib 76/78% is a good candidate and depending on what happens on EURUSD this second target would fit better with the EURGBP leg of the Triad where I see a strong rally in the offing. The recent price action is also either an A-B (pale blue) or a 1-2 and there is a small price gap around the 12,950 level, which I think will be closed. This would result in a lower low vs the 14 Jan low and then a test of the late Dec low (circa 12,900) would be on. A break of this low would put this pair in clear space for a longer bearish move in line with both my scenarios. I do not have a bullish scenario from a technical standpoint at present and with the trade negotiations and EU separation coming up uncertainty seems to be a key fundamentals driver at present. I suspect we will see this, and the general USD strength playing out for a while yet. That being the case, the technical scenarios are all bearish, just a question of which one plays out.

Looks like the daily channel lower line is holding, for now. If this is sustained, with PMD on the 1H and a clean 1-5 down then I would except a relief rally to close the gap and then turn back Bearish, maybe around the Fib 62%, maybe a bit higher, depends on price action in the rally. Similar picture can be seen on other US large caps and the Dax. However the Russell 2000 has broken its daily lower channel line, which is supporting a medium term Bearish bias. Copper continues to perform very bearish, FWIW.

🤣

It's got room to fall to $15.80 but that doesn't mean it will.

And that applies in spades for the stock market! Pejorative statement, that is your thinking fast not mine. All I am suggesting is that the Labour party needs to be honest with itself in diagnosing why it got such a hiding rather than palming it off on superficial reasons like "it's all about Brexit init? And next time that won't be an issue so carry on regardless..." The UK soundly rejected the Remoaner position and the ultra left offering. Can't see that changing, unless maybe we get that depressionary recession some people are talking about, in which case it probably won't matter who is in charge...

Possible but I would need to see a lower low (below $50 on Brent) to take to Shorting at this juncture. Currently price is halted at the Fib 88%, maybe that's all the Bears get in this move?

Checking in on the markets during my mid morning coffee break is a pleasure today seeing the growing wall of red of stock indices (simply because I am Short Dax and Nasdaq, not for any other dystopian - not sure why the spellcheck has a problem with that word... - doomsayer reasons). Chatter linking this to the China virus reminds me of the talking heads conclusions in the immediate aftermath of the Brexit referendum and the historic landslide victory by the Conservatives in the recent UK general election. Many, if not most people need to have some simple reason for events, whether it is in the wider world or the markets. For Brexit it was lies and stupid racist people; for Labour's shocking GE result it was Brexit or maybe it was Corbyn. Neither of those are sufficient reasons nor tells the turth of a very complex situation. The Remoaners failed to fully appreciate this and lost, if Labour do not get the complete picture and act accordingly they will had the Conservatives decades in power. Such thinking leads people, via a process that Daniel Kahneman referred to as "thinking fast", to fall into the trap of "post hoc, ergo propter hoc" conclusions (literally translated as after, therefore, because of it). It means that because an event comes after another event it there must be a cause/effect relationship but it very often isn't true or isn't the whole picture. What Kahneman refers to as "Thinking Slow" is analysis as opposed to gut reaction. It is hard to do. It taxes the human brain and body to put in hours and hours of analysis, ask anyone who does it for a living, it is exhausting. I have laid out the high level summaries of my technical chart analysis and fundamentals assessments previously, I am not going to go over it again (phew!). As I have mentioned before there are a lot of economic data coming out in the next 2 weeks and most of it is critical to the projections for the economy (Note: the consensus is still calling for steady as she goes...). Markets do not need a reason to go down, they need a reason to go up, else they go sideways or crash/correct. Could the big players be getting wind that all is not well with the economic data? We have had a slew of bad data from the UK and the EU powerhouse (German) for many months now; no one really believes the data coming out of China; Emerging markets are precarious and rising USD is making matters worse for them; Central Banks are apparently buying gold like never before; Japan remains moribund and they have a regional banking crisis in the wings; the European banks are risky at best and even the US an UK banks may not be as robust as we are led to believe. Central banks keep pumping the economy with accomodative policy, which started in 2009 and never stopped, not exactly the recovery we were all promised! Housing markets remain overheated with a correction or crash more likely than not and falling house prices generally impact house owners confidence and consumers and companies and governments are maxed out on debt. If we cannot issue more debt then the fuel for the post 1970s boom is removed. No wonder the central banks have the taps full on, they know what will happen if they turn them off! ⚡💥🔥❄️ So it will not take much my friends for the pebbles we are now seeing to turn into something more nasty. For me the perma-bulls need a clean sweep of consensus beats in US data across GDP growth; Capital expenditure (aka investment); ISM manufacturing; ISM non manufacturing and NFP. And what if we get another months NFP miss..? Yeah but what about earnings? Well check the following out: https://insight.factset.com/sp-500-earnings-season-update-january-24-2020 "In aggregate, companies are reporting earnings that are 3.2% above the estimates, which is below the five-year average. " "The blended (combines actual results for companies that have reported and estimated results for companies that have yet to report) earnings decline for the fourth quarter is -1.9%, which is smaller than the earnings decline of -2.4% last week." BUT STILL negative "If -1.9% is the actual decline for the quarter, it will mark the first time the index has reported four straight quarters of year-over-year declines in earnings since Q3 2015 through Q2 2016." "The blended revenue growth rate for the third quarter is 2.9%, which is slightly above the revenue growth rate of 2.8% last week. If 2.9% is the actual growth rate for the quarter, it will mark the lowest revenue growth rate for the index since Q3 2016 (2.7%)." "During the upcoming week, 147 S&P 500 companies (including 14 Dow 30 components) are scheduled to report results." - I'd say this is a pivotal week... Hmm, remind me what happened in 2015/16 again... China virus? Ok but surely fears over the wider economic data deterioration, earnings projections and the fact the the stock market valuations are simply too high MAY just also be having an effect? Unless the Fed drops rates and ramps their QE4 programme (I think they will stand pat this time and by the time they react it will be too late) we need earnings beats this week and next as well as data beats. In such an environment a betting man would favour the odds of a few misses that would cause a drop rather than a clean sweep that prompts a rally and even if it happens what level of beats across the board would be needed to stimulate anything other than a marginal rally? Conclusion: The odds favour sufficient poor data to cause a significant correction at a minimum. The odds of a clean sweep beat of sufficient size to prompt a major breakout rally must surely be astronomical. If anyone has more detailed analysis on this I'd love to hear it. BTW: I expect a relief rally before any major drop so not suggesting to load up on Shorts just now. Be careful out there...

The A-B looks like it was very small indeed, if my retrace scenario remains in play. Price is approaching the Fib 76/78% level I was targeting and the move looks very similar to the bear phase after that drone attache gap rally. A turn an rally in Oil would be bearish for stocks as well so here's hoping...

Another stocks wobble, another potential bull end (or maybe just a significant bearish retrace for US large caps) and another round of Bears getting excited and perma-bulls pulling out trend charts to ward off the evil eye. All in a days work. As a swing trader, although I do not trade stocks long anymore due to the inherent risk, I look on this with a view to what evidence there is for the Bear case (plenty of perma bulls to offer the rocket to the moon scenario...). My last post was on the Dax, it having just made a new ATH. My working hypothesis on the Dax now is for a double top rally end. In my last post I projected the scenario wherein a bearish 1-5 would be followed by a relief rally that failed to make a higher high. This is exactly what we got with a Dax turn at a confluence of the previous ATH and the short term potential ending channel upper line. This was also just short of the Fib 88%, a strong attempt at a higher high but, as of today, ultimately a failed attempt. This coincided with a strongly bearish daily candle of US large caps that resulted in a bearish weekly candle. So the outlook is set for a bearish week next week perhaps, unless we get an early doors buy the dips rally. With a lot of heavy data releases out next week any negativity at all could send the whole pack of cards into a collapse, this is the nature of where we are with stocks I feel (i.e. when it happens it will happen fast and furious). Some other stock indices are also showing negativity. The Russell 2000 is very interesting because it was stopped by a daily channel lower line on Friday but another bearish day on Monday or an ultimately bearish week would see this broken after a potential wave 2 (purple) off the ATH), a very bearish scenario for momentum stocks. The Nikkei put in a lower high on Thursday and sloped off down from there after a double top. The FTSE100 did something similar. Note all major indices turned on significant NMD, with the possible exception of the Nasdaq. If we also look as the FANGs the picture looks proto-bearish too with Amazon and Netflix having posted their ATHs back in 2018 and looking like they are at or near relief rally turns; Facebook turning down similarly to the Nasdaq as a whole; Apple possible breaking back into a channel and Alphabet unable to break $1,500 on several attempts and also breaking back below a key upper channel line. Add to that the crazy Tesla melt up, unsustainable, and things are at least worrisome for the perma bulls and the bears are pricking up their ears and sharpening their claws... In other markets, USD and Yen are strengthening (generally a directional signalling of stocks bear); Gold and Silver are catching a bid; Copper is falling; DJTA remains stubbornly below ATHs (a blow for Dow Theory using bulls) and the 10 year T-notes seem to be going Long again. All of this can be seen as aligned to stocks bear phase and I can't find any clashing correlations for that scenario. None of this is conclusive as yet and it is quite possible we could see a retrace and higher ATH on US large caps (after a bearish retrace I feel) but other markets look decidedly bearish for the long term. Price action and the nature of any bearish phase will be an important "tell" but for now at least some sort of bear phase seems possible. It could be fraught for both bulls and bears during next week as data releases and Fed rate decision comes in but if price follows my road maps I will trust the technical turning points. I am Short the Nasdaq and Dax off the top and turn with very low exposure stops and waiting to see if addition opportunities present.

Copper did indeed hit the weekly channel line and wound up with a close below it. No sign of this bearish phase abating and with other commodities also in the red and USD rallying it may be the much hyped reflation trade is postponed. More crucially could sustained copper bearishness be signalling poorer economic activity, which might imply the recent stocks quiver on Friday is merely a precursor for a sustained bear phase? With USD and the Yen both showing strength this would certainly seem to be a reasonable scenario to consider, at least short to medium term.

Price has been held at a possible weekly chart trend line but if you delete that line and look at other indicators it seems like the upper channel is likely to be hit before the rally ends.