Technical Analysis Report Weekly
 

01  Today's EarlyBird Technical Analysis Report 10 January 2012» 
02  FOREX: GBPUSD – Latest Elliott Wave»
03  Get a Grip»

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01  Yesterday's EarlyBird Technical Analysis Report – 10 January

(We had sound issues with 11 January EarlyBird Video, so we're giving you 
10 January EarlyBird which we think is still pretty relevant. 
It gives you an idea of what we have EVERYDAY when you're a Member!)

Market Drivers

Dow Jones 12,386 +0.21% (630AM)
Base Metals Positive
US Gold CFD: 1613
Oil WTI: 100.50
Copper CFD: 342
US Dollar: 81.45
EURUSD 1.2740
AUDUSD 1.0215
Dow Jones CFD 12,374
S&P500 CFD: 1278
FTSE 100 CFD: 5623
SPI CFD 4105

News
NEW YORK: Dow Jones – U.S. stocks staged a modest advance Monday afternoon as investors weighed the unofficial kickoff of the U.S. earnings season, due with Alcoa's report after the closing bell, against a batch of unsettling headlines from Europe.

The Dow Jones Industrial Average added 20 points, or 0.2%, to 12380, building on its 1.2% rise in the first week of the new year. Standard & Poor's 500-stock index edged up two points, or 0.2%, to 1280 and the Nasdaq Composite gained four points, or 0.1%, to 2678.

Alcoa was the strongest blue-chip stock, rising 1.9% as investors awaited the aluminum company's fourth-quarter results. Analysts surveyed by FactSet Research are expecting, on average, a loss of a penny a share on revenue of $5.76 billion. The unofficial earnings-season kickoff comes as several bellwether companies have tried to ratchet down Wall Street's expectations in recent weeks.

But European markets finished lower after the leaders of Germany and France on Monday turned up the pressure on Greece and its international creditors, amid building worries that the euro-zone's Greek bailout was unravelling. The Stoxx Europe 600 shed 0.5% and Germany's DAX lost 0.7%. Weak German economic data contributed to the glum mood.

CFD Commodities 

US Gold CFD: 1613
Technical Analysis: You know the trend up 1520 to 1630 is now struggling, displaying overlapping wave structures, i.e. intraday corrective patterns, you also know the support is 1600 and that the price is trapped in subgroup1 (SG1 {1610|1620|1630}) and you know how to work SG1 (SubGroup1)*, you also know the 1650 is a MediumLevel* and carries more weight than MinorLevels or sublevels, so you know you cannot go long unless 1650 is support, a retested corrective support. The Elliott Wave pattern is suggesting that once the corrective pattern is completed at 1600 it will test higher at the 1650.
Strategy, would be to allow the corrective pattern on 1600 unfold further to show a more completed abc corrective pattern before looking for support for short term longs from 1620 support to 1650, in fact there are better markets to trade than gold at the moment while this market is topping into 1650.
*See TradingLevels article

Sliver 
Silver is also correcting in  line with gold, with the resistance and supply at 30.00 (TL3)*, this intraday correction on the hourly chart is that a corrective pattern, it much the same as the US indices and should push higher to TL3, if you are going that direction make sure you have retested support on 2900. The 72 on the sublevels is working ok so use the Midpoint and SG1 and SG2 to work entries and stops. *See TradingLevels article

Oil WTI: 100.50
Technical Analysis: Oil is retesting 100 (TL1)* and when a price is working with any level/price we have to also take on board the next smaller degree of level and in this case 98 (mTL8) and accommodate a move to the next smaller degree with your analysis or trade, if you wanted to break that down further for stops entries etc. you can work into sublevels and at 98 you have SG1 above 98 and SG2 (SubGroup2)* below, the SG2 97.80|97.72|97.65* also in this case the 97.72 with the two 7’s make it stronger as you know numbers like 272 and 772 carry more weight than the normal 72, this is an example that can be used with all the degrees of levels in any market.
Anyway back to the bigger picture with Oil. You know that 1 is the strongest number and in this case 100, so the price is going to be here for a while but you knew that when it arrived, so we should just observe the pattern play out, we don’t normally trade around levels unless its completing a corrective pattern. *See TradingLevels article
The Elliott wave pattern is looking checking for support for a move higher, Oil follows stock, and we also expect Indices to edge higher before rolling over, so Oil is much the same, so are precious and base metals

Base Metals 

US Spot Prices (in l/b)
US Copper:           Last: 3.38-
US Nickel:             Last: 8.63+
US Zinc:                Last: 0.84+
US Aluminium       Last: 0.93+

Copper CFD: 342
Technical Analysis: Developing support on 340 for a push to retest 350 the Midpoint, any push up here will be in line with Indices and other commodities and should be short lived, at a guess a move to supply at 345 – 348 and then a retest of support 340 which should fail.

Forex 

Forex US Dollar   81.45
Technical Analysis: The trend up off 80 (TL8) is correcting itself, as are other currencies AUD and Euro doing the mirror opposite.
Volume supports are SG1 of 81 (mTL1) and SG1 of 80 which is the 61.8% retracement level either are acceptable for the corrective pattern down to achieve, so what we normally do using Elliott is follow the corrective pattern, if we are patient we will see what type of corrective pattern we are working with, the simple abc Zigzag or something more complex. An abc would likely find 81 as the support, this would be a shallow correction at 38.2% if this is the case then the Euro will be the same for a short trade and the Euro does have shallow retracements when trending, well more often than not.

Forex EURUSD  1.2740
TradingLevels: Intraday, the rally to 1.28 is part of the wave four correction which you need to understand. All the sublevels between 1.27 and 1.28 are going to important, there are two 72 numbers here, the 1.2720 and the 1.2772 these two levels are with in Group1 and Group2
Elliott Wave: The wave four rally* is underway, Elliott traders don’t normally trade wave fours as they can get choppy, wave fours are normally sideways and complicated, such as double zigzags and triangles  *See Elliott Wave education
Trading Strategies: Follow the wave four as an abc correction and look to short the wave c  after it moves above 1.28 then comes back down below 1.28 and finds it the resistance on the retest.

Forex AUDUSD  1.0215
TradingLevels: Like the US Dollar and the Euro, the AUD is also doing its abc correction or waves 1,2,3, once you understand the shape of these pattern you can observe the price working around and through the levels and in this case with the AUD, its above TL1 (1.00) but in Subgroup1 (SG1 101|102|103) you have to know what Group1 is and all the different aspects of it in terms of analysis and working trades be it within the group or building a larger trade from the group. But for the time being we are seeing an three wave pattern unfolding, we are now entering the second wave, wave b or ii between 102 and 103 (1.0272), we should simply allow all three wave to unfold, then look for the trade.
Elliott Wave: abc correction in Group1 (Alternative count, impulse structure down)
Trading Strategies:  Once the abc or impulse shows its self we can then pick up the direction, either count, we have to wait for at least three waves and we are only starting to see the second wave, that is wave b or ii as it starts to find support on the pivot 102 in group1, if it does move up from here it will be choppy with resistances at 103 and 1.0272

Indices 

Dow Jones CFD  12,374
Technical Analysis
TradingLevels: There is no change in our interpretation of the Indices. 
Elliott Wave: Supports 12,300 and SG2 12,272 expecting a push higher through 12,400
Trading Strategies:  If your trading long the safest way is working the 12400 as support and trading to 12,500 and exit.  As the Dow works every 100 points

S&P500 CFD  1278
TradingLevels: The same as yesterday, the volumes in the US are still low, another point is the US earning season is starting. Technically the price is at an old high from late Dec so the price is struggling, we are expecting it to break higher, then come back down and test the old highs as support. The MinorLevel 1,300 (mTL3) is the main price to the upside and this is also the top of Minor Group1 (MG1) so you should know what to expect at this level, firstly the price will unfold in the shape of the tradinglevels Classic pattern across mTL3 with SG2 developing as the support, yes it is support now, but in the future once it makes new highs the SG2 will be retested again {SG2 1265|1272|1280} (65/72/80)
Elliott Wave: Corrective pattern in SG2 and expecting a break to the upside 
Trading Strategies: Work SG2 to mTL3. Stops under the 1272 when 1280 develops support then lifting to 1277 when 1283 develops support, these are Microlevels. Essentially the levels are degrees of structures based on Group1 the Midpoint and Group2 or 1,2,3,5,8 Fibo

FTSE 100 CFD  5623
TradingLevels: Support 5600 The current corrective pattern can have another push down and the upside target is for new highs. If you are going to go long then support on resistance is safer, that is 5650
Elliott Wave: Targets 5772 - 5800
Trading Strategies: Correction are tricky they can simply expand, however most Indices are moving together and so are the commodities, this is a fear factor in the markets, so when you see the boards lighting up green then go, but the safe support confirmation would be the 5650 with the 5600 as the main support, but while your waiting for the 5650 support you may see a push lower first, if so look at other indices for support like the DAX on 6000, its resistance is the 6200 which I see as 6180 ratio, if the 6000 becomes resistance and the 5600 becomes resistance on two failed retests then scale in short

SPI CFD: 4105
Technical Analysis
TradingLevels: If the US Indices are going to push higher from their current corrective pattern, then we will see a lift here off the 4100 and you can work the SG1 4110|4120|4130, if the 4100 has two intraday failed retests then the bias is lower and you have to work the SG2 4080|4072|4065
Elliott Wave: Keep an eye on the Dow during our trading time, we are expecting a move up, but we are not seeing it?
Day Trading Strategies: The China trade figures will lift or drop the price today.

Summary

US Earnings season is starting…
The US and European Indices are moving together and their current intraday corrective pattern are as mentioned yesterday expected to push higher, but we aren’t seeing any volume come in to do it?
The other drivers, commodities, precious and base metals are all moving together also and they too are moving in line with US and European Indices, when markets all move together they have lost their personalities, it’s a fear base element, we can give it some space based on holiday volumes, any way this makes the analysis somewhat easier, however we still aren’t seeing any moment, well there is still two hours of US trading to go so we should see the US markets push higher.

In the Weekly Cycle Tue is the profit taking day and therefore we should see a positive move on the ASX. It may pay to create a few long trades today to hedge our shorts, also remember to trade smaller position sizes than normal.

Two points, if the US markets do push higher, that will lift our markets, but the China/ Shanghai also needs to establish its low, if it can do that while the US pushes up then we have a short term trend up, nothing to get too excited about, but it would see any stocks that have been moving up move up quicker. 

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02 FOREX: GBPUSD – Latest Elliott Wave

GBPUSD 1 Hour Chart
Tuesday, 10 January 2012 at 6:19:00PM AEST

Cable is showing very similar wave structure as Eur/Usd; advance from the lows appears corrective because of slow and overlapping price action within parallel lines. However this one is lagging compared to euro, so we still want to see support channel line broken, before downtrend is confirmed. 



GBPUSD 4 Hour Chart
Tuesday, 10 January 2012 at 5:23:00PM AEST – corrective price action complete

We reworked the wave count on cable after impulsive fall from recent 1.5671 swing. We know that impulsive waves shows direction of a larger trend, so with this being said, the most recent upward leg from 1.5360 is done, which means that pair should move into a new low! As such, we think that wave 2) was a running flat, and that pair is tin a sub-wave 1.

GBPUSD Daily Chart
08 January 2012 GBPUSDDaily – wave 2) done!?

A decline from 1.6170 can be counted in five waves, with wave 5 low just above 1.5300 area from where we a sideways move over the past few weeks. AS such, we came out with an idea that wave 2) may have already reached a peak and that weakness will follow in coming days and weeks. But we however still want to see a 1.526 breakout; 2011 low, which will send the pair down minimum to 1.48!

GBPUSD Weekly Chart
02 January 2012 – wave (B) triangle

Oil reversed perfectly lower in the past few months from 115 resistance region, where we believe that wave B) found a top since prices collapsed through the lower support line of a corrective channel. As such, wave C) is underway, with prices headed towards the levels seen at the start of 2009. Currently, we are monitoring a corrective rally which should stop at the channel trend-line; support becomes resistance at current levels!

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03  Getting a grip and with time to spare is easy for our Members! 

Members get Robo trades daily! We offer Robo trades on selected ASX and US code. Watch out for UK ones next week. Try it for a month and enjoy the results!  

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