Technical Analysis Report Weekly
Hi Traders
GOING LONG OR GOING SHORT RIGHT NOW CAN HAVE US TRAPPED!
Well there was no steam after the smallish 186 move up in the Dow yesterday; however we are not better off in having a larger direction as yet and it may take another two sessions to see evidence.
This is the picture: in the US markets the high on the 8th and the following pattern on the intraday chart is in three waves down, abc corrective pullback that will complete in the next session, or the three wave abc will turn into five waves (‘Impulse’ wave) indicating the direction down, as five waves in the opposite direction gives us another five waves after and small corrective move and in this case would be enough to call a top is place. Both wave counts carry equal weight, so we have to wait.
So, going long or short right now can have us trapped!
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01 Today's EarlyBird Technical Analysis Report – 13 December
Technical Market Drivers
Dow Jones Index 1,973 -1.73%
Base Metals Negative
US Gold CFD 1660
Oil WTI CFD 98
Copper CFD 345
US Dollar CFD 79.50
EURUSD 1.32
AUDUSD 1.072
Dow Jones CFD 11,954
S&P500 CFD 1230
FTSE 100 CFD 5418
SPI CFD 4183
US News Wire
NEW YORK (Dow Jones) – A negative reaction to last week's European sovereign-debt summit by credit-ratings firms sent US stocks sharply lower Monday, erasing all of the stock-market gains that followed the summit Friday.
The Dow Jones Industrial Average was off by 211 points, or 1.7%, to 11974 in Monday afternoon trading. The measure was also stung by a profit warning at blue-chip bellwether Intel, which shed 4.5% and was the steepest Dow decliner.
US August Gold CFD: 1660
The Gold follows stock on another possible down grading of the Euro zone.
The corrective pattern sitting on 1700 breaks lowers i.e. wave two and now a strong small third wave is unfolding, the next level and the first target is MediumLevel 1650 however lower is expected, we are now simply counting five waves down.
If you have added to shorts under 1700 you can cover a percentage at 1650 and add again as 1650 becomes the resistance as wave four, the wave four could bounce back to 1672 -80 this will depend where wave three completes e.g. on or below 1650. Also be aware of the wave count on the Euro and SP500 as these two will be moving together and the Dollar in the same structure but up.
Silver has also made the break lower look to add when 30 becomes the resistance, 28 will be the first other level to add also, be expect a retest from 28 to 30
Oil WTI CFD: 98
While Oil is below resistance 103 (Group1) and above 95 support, its trading within its range basically sticking to TradingLevel 1/100 (TL1) Oil is being pulled by stock to a degree and current move down with commodities, Indices and currencies, we have labelled this move down in the SP500 and Euro as corrective for the short term but can easily be the beginning of the larger move down. Referring to the Oil charts, we are nearly at the point of considering the top of Wave (2) as the last high around 102 however we do need to confirm the move down as five waves (impulse) first. We can look to scale in short on the second failed retest of 100 and under 98. There is risk in this as it would not have the evidence of an impulse wave at that stage. Any way we have time so let’s look to the other markets, even base metals, to look for confirmation of further downside.
Base Metals
US Spot Prices (24HR in l/b)
US Copper: Last: 3.45-
US Nickel: Last: 8.27-
US Zinc: Last: 0.86-
US Aluminium Last: 0.83-
Copper CFD: 345
Copper is moving in much the same pattern as the Euro over the last month, and with the Euro we are counting the move down as a wave B, so the move down in copper as such can also be counted as a Wave (b) at least for the time being until proven wrong. Copper will eventually break lower, it’s just that we are in a larger correction since September and sideways corrections can get complicated but they always break lower once completed. (»Learn more about Elliott Wave Theory)
The 350 has and is the balance line and trading under this Midpoint Levels bring softness. However it would require a few retests to confirm the 350 as resistance and this can come from the 340 or 345. As mentioned the move down is counting the same as the Euro i.e. corrective, so we should see a move up to 372, but remember the larger pattern is down and may not reach that price. It can break lower but first let’s see how the Euro tests the old lows around the 13150. US BHP dropped from 75 to 72 overnight.
Forex Technical Analysis Elliott Wave
US Dollar CFD: 79.50
The main trend is up notwithstanding two possibilities for the short term. One is the price move straight above 80 (TL8) in to Group1 to create the first high above the level then a correction back into 80. The second possibility is that the price will react again at 80 and moves back to 78 and then push up above 80 as in the 4 Hour Dollar chart. (See this by Subscribing Now. Get 1 Month Trial for $19.95)
The TradingLevels Classic pattern at TL8 is clearly visible with the dollar. It has already touched on 80 back in October, the ‘Arrival’ then the ‘Reaction’ then ‘Support’ on 75 and now the ‘First High Above the Level’ then the correction.
EURUSD 1.32
TradingLevels: Retesting Sept lows 13145 would have to expect a bounce, the Dollar at 80 a reaction of some degree?
The 134 is now the market resistance and the price is working with 132 this is the pivot within Subgroup1 and the 130 is Minor Group1, so its Subgroup1 of Minor Group1, this is what the support has been here since 2008, the 130 is Minor Group1 of 1.00 It takes a while to get you head around the anatomy of Group1 but it’s worth it as it defines support and resistance in this region
Elliott Wave: Wave B down to 132 or the larger move down Wave (iii) Either way the weekly and monthly trends are down
Trading Strategy: Choose your degree of structure to trade and set your rules around that. A monthly Robo trade set up has just triggered.
AUDUSD Technical Analysis
TradingLevels: Expect support and bounce from 1.00 the Elliott charts also show support for a wave count at 1.00
Elliott Wave: Wave C of Triangle (E) below 1.00 (see 4 Hour Chart)
Trading Strategy: You have to trade the sublevel being so close to 1.00 (TL1) the other point here is that 1.00 is the line in the sand for the market being positive or negative, currently the price is retesting 1.00 for support and it can move through 1.00 to 98 it would only be on a few failed retests of 1.00 and a move under 98 the first MinorLevel that we would consider the larger picture weak, the price range since October has been narrowing into 1.00 and the next main trend will come out of this narrowing trading range and that’s the trade we want!
Indices
Dow Jones CFD 11,954
TradingLevels: Techncial Analysis
12,000 is still the line in the sand and the price is still developing around it and will continue to do so, it will end up as support or resistance, in the meantime we can work the internal wave count
Elliott Wave: Yes the move down can be bearish but it can also be corrective, we simply have to wait for a certain point in the unfolding structure, I can explain this more clearly in the video
Trading Strategy: Wait, the move down last night needs to complete its five waves down into 11900 or below, then a move up above 12000. We don’t know if the pattern form the higher around 12300on the 8/12th is an abc structure down or the beginnings of the larger impulse, we should know by the end of the next session or the following session and then be able to take positions either long to above 12300 or short for the long term Intermediate Wave (3) down which is quite exciting for bear traders as Wave (3) is the Grizzly Bear stuff! But don’t get too excited we need confirmation first and that can be the 12,000 as retested resistance if not then we expect one more new high in the Dow and maybe not in the SP500 or the Nasdaq.
S&P500 CFDs 1230
TradingLevels: SubGroup1 (SG1-1210|1220|1230) if the price locks under the SG1 pivot 1220 as resistance then the price is trapped to 1200 and a larger bearish pattern is unfolding, there are now two levels of resistance SG2 1272 and the Midpoint 1250 that hasn’t been retested, we have a wave count that should touch on 1220 then move up above 1250 and higher, however the price back at 1200 helps create a top being in place
Wave count: ABC correction down to 1220 then up?
Trading Strategy: The price pattern from the high of the 8th is currently in three waves down i.e. bullish corrective, we would need to see five waves (impulse) down to confirm a top being in place. It is important to bring as many markets as possible into the current picture such as the Euro which has the same pattern as the SP and the SP has the same pattern as the US Dollar inverted, the base metals as the same and so are the treasuries so we need to see which one starts the lead, the Nasdaq has a habit of leading to the down side so we can observe that and also the Dax that cannot get back above 6180 (618).
FTSE 100 CFD 5418
TradingLevels: expect a move below 5400
Elliott Wave: count five waves down from the last high 5565, the price is close to the end of wave three down, so four and five to go
Trading Strategy: expect a bounce as wave four on 5400 and wave five down into 5372
SPI CFD Futures 4183
TradingLevels: The 4272 help perfectly now the 4200 is the pivot in Minor Group1 and if that becomes the retested resistance then the trend is down, the retest will take time, as the 61.8% retracement level target is 4100 so it can reach 4100 then climb back above 4200 as support, we just have to observe it at that point in time.
Elliott Wave: Intraday trend down from last night is completing five waves as is the SP500 and other markets, once this is completed expect a bounce
Trading Strategy: Trade the sublevels and watch the Dow futures cfds during our trading time for leads, also the Euro and the US Dollar as it tustles with 80.
Technical Analysis Summary
Well there was no steam after the smallish 186 move up in the Dow yesterday and we are not better off in having a larger direction as yet and it may take another two sessions to see evidence.
This is the picture: in the US markets the high on 8 December and the following pattern on the intraday chart is in three waves down, abc corrective pullback that will complete in the next session, or the three wave abc will turn into five waves (‘Impulse’ wave) indicating the direction down, as five waves in the opposite direction gives us another five waves after and small corrective move and in this case would be enough to call a top is place.
Both wave counts carry equal weight, so we have to wait. Going long or short right now can have us trapped!
Trading Quote
"The trading system gives the trader the ability to control his or her emotional states rather than allowing them to control him. A system is a disciplined method for organizing dynamic, ever-changing market phenomena". – Howard Abell
Today's Financial Events
Time Currency Detail Forecast Previous
8:45am NZD FPI m/m -1.3%
10:50am JPY Tertiary Industry Activity m/m 0.5% -0.7%
11:01am GBP RICS House Price Balance -25% -24%
11:30am AUD NAB Business Confidence 2
11:30am AUD Housing Starts q/q -0.7% -4.7%
5:30pm EUR French CPI m/m 0.3% 0.2%
5:45pm CHF SECO Economic Forecasts
8:30pm GBP CPI y/y 4.8% 5.0%
8:30pm GBP RPI y/y 5.1% 5.4%
8:30pm GBP Core CPI y/y 3.3% 3.4%
8:30pm GBP DCLG HPI y/y -0.9% -1.4%
9:00pm EUR German ZEW Economic Sentiment -55.7 -55.2
9:00pm EUR ZEW Economic Sentiment -60.3 -59.1
12:30am USD Core Retail Sales m/m 0.5% 0.6%
12:30am USD Retail Sales m/m 0.6% 0.5%
2:00am USD Business Inventories m/m 0.5% 0.0%
Tentative USD IBD/TIPP Economic Optimism 42.5 40.6
6:15am USD FOMC Statement
6:15am USD Federal Funds Rate <0.25% <0.25%
NOTES:
1. Check the Dividend & Reporting section for your stock on this site before trading
2. Prices may change as this report is written while markets are closing/trading
3. Always think things out for yourself, we are only a floor to bounce ideas around.
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02 Forex: EURUSD – Latest Elliott Wave
EURUSD 1 Hour Chart
Monday, 12 December 2011 at 7:35:00PM AEST
Euro is falling, now breaking through the lows from the past week, and it seems pair wants to test 1.3200 lows from 25th of Nov. However, the wave structure from the 1.3550 highs is still very choppy, overlapping and just awful, so as long thats the case a fall is considered as a corrective wave B, but incomplete! So for now, we are still staying with a trend, looking for deeper levels in wave B, currently, with wave (y) in progress, while 1.3387 holds.
EURUSD 4 Hour Chart
Monday, 12 December 2011 at 5:25:00PM AEST – sideways
EURUSD is trading sightly lower, but the price action from Nov 25 still looks unclear and very choppy. We also do not have any strong evidences which would confirm immediate, furthe and significant weakness on this pair. As such, pair simply may still be trapped in sideways price action; incomplete corrective wave 2), with wave B in progress towards 1.3200. We favor a flat scenario in wave 2), which means that wave B) can also reach levels around the start of wave A); 1.3200.
EURUSD Daily Chart
11 December 2011 – prices headed below 1.3144 low
No change!
A bounce seen in September from 1.3144 was a corrective wave E, final leg of a triangle, which reversed from around 61.8% retracement level of a wave D distance. As we can see price is falling nicely seen prices found a peak at 1.4242 region with a structure of a leading diagonal. As such, downtrend is epxected to continue, through 1.3144 low when weakness should accelerate well below 1.3000 and ideally into 1.2400 projected target. For now critical region is at 1.3813!
EURUSD Weekly Chart
16 Octoberr 2011 – Euro in final stages of a triangle
After a sharp move lower, seen in the past few weeks pair has found a support and has rebounded quite significantly since then. As such, we suspect that wave D is complete and that pair is now trading in final stages of a wave B) running triangle, which may complete late this year. Keep in mind that this wave B) is only second leg of a corrective move lower started in 2008. So, once wave B) is done, a sharp sell-off will follow in C) move, below black wave B extreme!
We expect a sell-off on Euro even towards 1.18 while pair trades below 1.4938.
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