Technical Analysis Report Weekly
 

01  Today's EarlyBird Technical Analysis Report 17 January 2012» 
02  FOREX: EURUSD – Latest Elliott Wave»
03  Trading can be much more than a hobby»

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01  Today's EarlyBird Technical Analysis Report – 17 January

Market Drivers

Dow Jones 12,422 -0.39% Closed
Base Metals Steady
US Gold CFD: 1643
Oil WTI: 99.65
Copper CFD: 367
US Dollar: 81.62
EURUSD 1.2663
AUDUSD 1.0316
FTSE 100 CFD: 5641
SPI CFD 4160

News
US Markets closed and stocks in Europe rally on the back of Bond sales in France

CFD Commodities 

US Gold CFD: 1643
Technical Analysis: The price is retesting 1650 MediumLevel*, our Elliott count is expecting it to roll over down, but we should not jump the gun on a short until the evidence is in place.
Also the move down from the 1662 high down to the low 1625, is not a clear five waves (impulse) it’s more like a three wave corrective pattern, if that is the case then the price should climb above 1650 and if that is the case then a long trade would be created off the 1650 support. Any way we need to wait for a set up
Elliott Wave: Gold fell nicely into 1625 projected area that we highlighted on Friday. But despite that fall, we are still monitoring a wave structure that will send the market lower. We are talking about an expanded flat formation with wave c) underway, which should find a peak in the next two sessions, ideally around 1648-1652 area.
*See TradingLevels article

Silver 
If the 2972 becomes the retested resistance then short, if the 30.00 becomes support then scale in long through SubGroup1* (SG1). *See TradingLevels article

Oil WTI: 99.65
Technical Analysis: The technical resistance is 100 and the supply (sellers) 101, The 101 is also the 61.8% rally target. We need to allow this to play out and we need to see the US market stock market e.g. the Dow play out at 12,500. Do not go long on Oil while the price is retesting resistance as this is a negative bias
Elliott Wave: On our chart the Elliott count is label for further down side, with the price rolling over from the 100, however also be aware of the ABC* pattern, that is from the high around the 6th Jan 103.50 to the low around the 13th 98 can be counted as an abc corrective pattern this is why it’s important to allow this pattern to play out, the real short trade if any is much further out there in time, essentially five waves down then three waves back up then the short, we only have three down at the moment  *See Elliott Wave education

Base Metals 

US Spot Prices (in l/b)
US Copper:           Last: 3.66+
US Nickel:             Last: 8.84-
US Zinc:                Last: 0.88+
US Aluminium       Last: 0.95+

Copper CFD: 367
Technical Analysis: Copper is in an uptrend and should continue, sure it will corrected into and through SG2 365|372|380 and will most likely trade sideways, but the bias is positive and this means the AUSUSD ASX and Asia in general is positive.

Forex 

Forex US Dollar   81.62
Technical Analysis: the dollar is still reacting to the MinorLevel 82.00 (mTL2), the weak spot is it trading under SG2 8172 as this creates the next level down at the Midpoint 8150, this also means the Euro will hold up and stocks can move higher, so the 8172 is a line in the sand you can judge other market and also be on the right side of this price point. This of course helps the AUD up

Forex EURUSD  1.2663
TradingLevels: Support on 1.2672 puts the price at 1.27 – 1.2720 or even high as 1.2772 before rolling over down. While the US Dollar is under 8172 this would be the case, so what that too. And short under the 12672 and then 65 as retested
Elliott Wave: The price did not drop from the 1.2672 and 1.2650 as expected and in fact now find these numbers as support. We are considering the rise as a corrective rally.
Trading Strategies: Use the 1.2672 as support to get to 1.27 exit and once and if support is created on 1.27, scale in. Expect resistance at 1.2720 so this as support is required for higher group. The Dollar would be bouncing of the Midpoint (8150) by then so the 8150 would also be important as support or resistance. And short under the 1.2672 and then 1.265 as retested.

Forex AUDUSD  1.0316
TradingLevels: The price pattern is slowly edging forwards in developing support on 1.03
Elliott Wave: Once retested support is established look for a long trade to 1.04
Trading Strategies:  Support SubGroup 2* (SG2) 1.0272 you need 1.03 as support, tested support then seeing the price build through SubGroup 1* (SG1) 1.0310, 1.0320, 1.0330 you know support on top of SG1 1.0330 creates the higher ground. The current corrective pattern at this 1.03 could get bigger because copper should correct somewhat now however there is talk of China putting money into their system this week; the Shanghai also needs to stay above 2200; also the dollar being under the 8172 is supportive for the AUD. But in the end it’s the retests into 1.03 that you need to observe and work the levels in SG1 especially the support on 1.0330. If this does happen new highs should be made, but there will be resistances at the Midpoint* 1.0350 and SG2 1.0365, 1.0372,1.0380 *See TradingLevels article

Indices 

Resistance: 12500 Dow / SP500 1300 IF they become support, then markets are positive.
If supports are broken: Dow 12272 / SP500 1272 then negative. Dow target 12,772 SG2 if support is found on 12,500.

Dow Jones CFD  12,451 (US Holiday Monday)
Technical Analysis
TradingLevels: The 12,300 and 12,272 are the supports and they are still is play, at this stage the sharp move down is part of a corrective pattern, a move through support 12,272 then we will start to gather evidence of the larger move down and a top being in play. It was our thought to have the high in place last week and that may be the case, but wave structure and pricing evidence is still required. The catalyst for pulling the price down has been the European rating cuts however it’s the Oil being under 100 that is the weight and we are seeing divergence in that.
Elliott Wave: The intraday pattern from the 10th to now appears to be an ABC corrective pattern, until proven otherwise expect a move higher through 12,500
Trading Strategies:  Intraday – wait for a retest to check support into 12,400 SG1

S&P500 CFD  1293   (US Holiday Monday)
TradingLevels: As long as the SubGroup 2* (SG2) 1265|1272|1280 remain the support the market is positive.
Elliott Wave: The pattern below 1300 appears corrective so still expecting a move higher through 1300. That said, there is growing weakness in the trend up and we are searching for the top and the beginnings of a larger move down.
Trading Strategies: For Scalping you can work the degree down from the sublevels*, that is the MicroLevels, as an example, the MicroLevels between 1280 and 1290 would Group1 1281|1282|1283 the Midpoint 1285 and Group2 1286.501287.20|1288 *See TradingLevels article

FTSE 100 CFD  5641
TradingLevels: SubGroup2 (SG2) 5665|5672|5680 is the resistance and supply
Elliott Wave: Unsure, however any longs need to have 5672 as support
Trading Strategies: Only go long if 5672 is the support. When the price moves up to this level SG2 the price will react, so give it time to swing around for a while before thinking going long or short.

SPI CFD: 4160
Technical Analysis
TradingLevels: Intraday, support on 4172 is required for long trades, you can take on higher risk is you like and buy above 4150 with stops at 4143 as a move under this stop would have created a corrective rally with further downside to come.
Elliott Wave: Still looking at this larger corrective pattern as just that corrective, but the 4150 would really need to hold now otherwise a larger degree of pattern would be unfolding and this opens a more bearish window
Day Trading Strategies: The same as yesterday, look for support in SG2. Work any trade from SG2 4165|4172|4180 the 4172 is the important price point. Remember the Shanghai really need to remain above the 2200 and also observe the AUDUSD to see if it can develop support on the 103 this would be help full.

Summary

US Stocks and Bonds were closed last night (US Holoday), so for direction we can look at the Dax and UK, such as UK BHP being positive and steady and the US Dollar Index being under 8172. This should reflect back here to some degree on our markets being steady today.
The Shanghai market was also down yesterday and as long as it stays above the 2200 we can consider the low there still forming but we must trade lightly in all markets at the moment as the US markets are still facing resistances – the Dow 12500 & SP500 1300 place a negative bias. The only real positives are the base metals and the possibilities on the China market from this current low, but remain aware this forming of a low can disappear quickly.

The ASX200 to be positive needs to build on 4200 as support and if it slips under the 4150 then it’s not a positive look for this market. Anyway volumes are light and we should be trading smaller position sizes and small trading ranges

Another weakness in the air is the US reporting season this week. As there are something like 40 big companies reporting earnings (which aren't looking good based on the amount of current downgrading last week) this could be the catalyst for the Dow to rollover under the 12500. So don’t commit to the long side too much!

The ASX Q4 2011 Activities / Production Report are out this week

Trading Quote

You may not understand it fully right now, but the market is always right.

Today's Financial Events

Time          Currency   Detail                                                  Forecast    Previous
 8:00am     NZD            NZIER Business Confidence               25  
10:00am    USD            FOMC Member Duke Speaks      
10:50am    JPY             Tertiary Industry Activity m/m             -0.3%           0.6%  
17th-20th  GBP             Nationwide Consumer Confidence     41                40  
1:00pm     CNY             GDP q/y                                              8.8%            9.1%  
1:00pm     CNY             Fixed Asset Investment ytd/y             24.2%           24.5%  
1:00pm     CNY             Industrial Production y/y                    12.3%           12.4%  
1:00pm     CNY             NBS Press Conference      
1:00pm     CNY             Retail Sales y/y                                  17.2%           17.3%  
8:30pm     GBP             CPI y/y                                               4.2%             4.8%  
8:30pm     GBP             RPI y/y                                               4.7%             5.2%  
8:30pm     GBP             Core CPI y/y                                      3.0%             3.2%  
8:30pm     GBP             DCLG HPI y/y                                    0.2%             -0.4%  
9:00pm     EUR            German ZEW Economic Sentiment   -49.5              -53.8  
9:00pm     EUR            CPI y/y                                                2.8%             2.8%  
9:00pm     EUR            Core CPI y/y                                      1.6%              1.6%  
9:00pm     EUR            ZEW Economic Sentiment                 -48.7              -54.1  
9:00pm     GBP            BOE Gov King Speaks      
9:00pm     GBP            CB Leading Index m/m                      -0.4%  
12:30am   CAD            Foreign Securities Purchases            6.97B            2.03B  
12:30am   USD            Empire State Manufacturing Index    10.7               9.5  
1:00am    CAD             BOC Rate Statement      
1:00am    CAD            Overnight Rate                                   1.00%           1.00%  
5:30am    GBP            MPC Member Posen Speaks

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02 FOREX: EURUSD – Latest Elliott Wave

EURUSD 30 Minute Chart
Monday, 16 January 2012 at 7:25:00PM AEST

We definitely expect further weakness on EURUSD pair after a sharp fall on Friday with extremely bearish sentiment at the end of the day. As such, current rise from 1.2621 low is considered as a corrective move, likely wave 4 which still may test 1.2700/1.2730 area before downtrend resumes towards 1.2600 and even 1.2550 levels.



EURUSD 4 Hour Chart
Monday, 16 January 2012 at 5:55:00PM AEST – wave 5) underway

EURUSD reversed nicely on Friday from 1.2880 resistance area, former lows, and fell impulsively below 1.2660. So as expected, wave 4) was an expanded flat, which means that prices are now falling within wave 5), which will be targeting 1.2500/1.2550 projected area in this week. Generally speaking Eur/Usd is still in lower lows lower high mode, which is indication of a downtrend, so weakness may extend further while 1.2880 Short-term critical resistance holds.

EURUSD Daily Chart
15 January 2012 – weakness in progress

Once again euro moved sharply lower with increasing bearish momentum at the end of the week and is trading nicely towards 1.2500 projected target. We are still monitoring the falling price action within impulsive sequence in blue wave (1), which may even reach level around 1.200 in coming weeks if lower lows, and lower highs formation will continue ! Short-term critical resistance is now at 1.2878!

EURUSD Weekly Chart
02 January 2012 – wave C) fall to come

A significant weakness in the second part of 2011 puts more weakness into play for 2012, as recent decline suggests that huge running triangle in wave B) is finished with sub-wave E at 1.4240. In fact, we can see a head and shoulder pattern that was unfolding since 2010, which also appears complete after a broken neckline in the past few weeks. As such, we believe that Eur/Usd will fall sharply in this year with wave C) headed towards 1.1000.

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