Technical Analysis Report

01 Today's EarlyBird Report – 2 November 2011 + Video»
02 TradingStrategy: Robo Trades from Mon 31 Nov & Wed 2 Nov»
03 Forex: ElliottWave count for AUDUSD»
04 A FREE Week to View the Members Area»

Hi Traders

THIS CAN BE AN AMAZING JOURNEY TO SHORT

The October rally for Indices is over, as the current move down will soon count as an impulse Elliott Wave 1 (five waves). Once this is completed over the next session or two, then after five waves comes the three wave counter trend, the abc 5-3-5 rally, normally retracing the 61.8% but we won’t focus on the 61.8 we will count the structure as it unfolds upwards.

Once the abc rally for Wave 2 is completed we can short nearly any market, but we will of course focus on certain markets like the Dow and SP500, we will also have the advantage of the technical analysis US Dollar as this is now expected to move up strongly while the Euro heads south.

You now need to put on your thinking cap. If we are correct and the US Indices are now in an Intermediate Wave (3) to the downside, this can be an amazing journey to short so you need to think how to trade long term short: what risks do I take, where and how can I add to positions, what type of retracements should I accommodate, how am I going to get from A to B?

With our Robo strategy you're always in the market, going long and short. No matter what is happening you've got it covered. We share the trades we posted Monday 31 October and todays' as well.

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Speak with you soon, Pete.
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01 Today's EarlyBird Techncial Analysis Report – 9 November

Market Drivers 

Dow Jones – 11,733 -1.86%
Base Metals Negative
US Gold CFD: 1707
Oil WTI CFD: 90
Copper CFD: 350
US Dollar CFD: 77.23
EURUSD 1.3746
AUDUSD 1.0370
Dow Jones CFD 11,730
S&P500 CFD: 1,220
FTSE 100 CFD: 5430
SPI CFD 4172

US News
NEW YORK – (Dow Jones) – US stocks slid in a broad global stock-market selloff, as Greece's plans for a referendum fuelled worries that the euro-zone bailout plan might fall apart.

Stocks backed off session lows, though, after Greek Socialist lawmaker Hara Kefalidou said she opposed the referendum. And a senior Socialist Party official described the referendum as "basically dead," as four deputies have openly opposed it.

The Dow Jones Industrial Average sank 197 points, or 1.6%, to 11,757 in Tuesday afternoon trade, after earlier dropping as much as 321 points. J.P. Morgan Chase led the Dow lower, falling 4.6%, while Bank of America dropped 3.8%. The Dow's decline came after the blue-chip index slid 276 points on Monday, its biggest-point drop since late September.

CFD Commodities - Technical Analysis

US Gold CFD: 1707 - TradingLevels Concept
Short term trading point of view, use the 1700 as support or resistance.
The US Dollar has found its low now and will push higher, this will place selling pressure on gold, the flipside is fear of stocks moving down to propping up the gold market, so working out the relationship between Indices, Dollar and Gold is require, especially now that the Dollar has it’s low in place and the Indices have their high in place, it should be all downhill now for the Indices

Oil WTI CFD: 90
Oil follows stocks and the high of the October rally is now in place and further downside is expected for US Indices and therefor Oil, the current wave count for Oil is correct with the high now in place, the local energy sector can now be shorted.

Shorting Oil – wait for 90 the MediumLevel* to be retested as resistance, or work a series of orders in around the level, consider the next MinorLevels* 88 I 85 I 83 and how you will navigate the trade.
*See » TradingLevels Fast Track Intro

Base Metals

US Spot Prices (in l/b)
US US Copper:     Last: 3.49-
US Nickel:             Last: 8.39-
US Zinc:                Last: 0.85-
US Aluminium       Last: 0.93-

Copper CFD: 350
The move down in Indices is five wave, impulse** so we can expect further down side, however the copper market is only three waves, corrective. The three waves can turn into five so we should just wait and see, as mentioned before I like to wait and study the first swing in the opposite direction, as there are twelve types of correction and by waiting for the first swing to complete its pattern I can then eliminate half of them.
From a trading perspective use the 350 as support or resistance but don’t assume too early, wait for confirmation, the retest.       
**see ElliottWave Article)

Forex Technical Analysis

US Dollar CFD: 77.23
Consider five waves up from 75 to 78 then expect an abc correction down from 78. Once completed a move up through 78 to 80
Based on this the Dollar low is in place and the Euro high is in place, lining up with the Indices. 
Trading Strategy: long on the Dollar, shorting Euro, Indices and trading in line with the trend. Finding the entry and stops needs work, however, the general idea is to follow the wave count and use the levels and the patterns of retest at the levels. 
The wave count for the Indices and the Euro, is we are seeing five waves down now, so there will be an abc corrective rally with a 5-3-5 structure. We would look to short once the abc has completed, seeing what the closet largest number is, i.e. which level and work the pattern around that level. The pattern would be a retest with five smaller waves in the right direction

EURUSD 1.3746
TradingLevels: Just trade the sublevels while the price is in this wave four rally
Elliott Wave: The top is in place and we can expect a long term trend down, we will look at where to short this market over the days ahead we have time on our side. Essentially we are looking for five waves down (not completed yet) then three waves up (abc) and then short from there. We will use the daily and weekly Robo to short this market when the time is right, just like we did before.
The current low is Wave 3 and the current rally is Wave 4, then we want to see Wave 5 down around the 135, but below 136 is the point. Once these fives waves are complete we should then see a rally up and abc correction, we will look to short it at the end of this abc rally for the long term down. I will explain in this morning's video.
Trading Strategy: Short term, we are in a wave four rally and wave four correction are normally the most complicated and therefor as a general rule they are not traded, but of course if your scalping the sublevels then scalp away.  
The wave four should retrace 38.2% of wave 3 or the fourth wave of one lesser degree which is around 13850. You know the 138 is resistance and profit taking (number 8 is profit taking) and the SG2 72 / 13772 is resistance.

AUDUSD 1.0370
TradingLevels: Treat the current rally up off 103 as such a corrective rally and abc which should take it into 104, then just wait for the price to work with 104 and observe the outcome as support or resistance. The rally can be a wave four or a larger wave two
Trading Strategy: If the 104 does become the resistance then use SubGroup 2* (SG2 – 1.0380, 1.0372, 1.0365) as the place to work the trade short, especially using the 72 / 1.0372 as the retested resistance, then the 65 / 1.0365 becomes the trigger to short to the Midpoint 1.0350 you can cover here then re-enter is the Midpoint becomes the resistance. You know SubGroup 1 (SG1 – 1.0330, 1.0320, 1.0310) is always choppy simply because the ratio between the levels is smaller and orders will be sitting at 1, 2, 3 as traders think this way. You should also know by now how to work the price within SG1.
*See » TradingLevels Fast Track Intro

Indices

Dow Jones CFD 11,730
TradingLevels: Important levels 11,800  Minor TradingLevel (mTL8), 11,772, 11,650 and 11,500 MidLevel (ML15)
Elliott Wave: The Wave (2) rally is completed. Expect the price down below 10,000 (TL1)
The price is still in wave 1 down, its completing five smaller waves within wave 1, once this is completed, expect a counter trend abc rally for  wave 2, then wave 3 down.
Trading Strategy: Once Wave 2 is completed we will start shorting.

S&P500 CFD: 1,220
TradingLevels: Down to 1200 for Wave 1 then a bounce abc for Wave 2
Elliott Wave: Like the Dow and other Indices the top of the Oct rally is completed
Trading Strategy: Wait for Wave 1 and 2 to complete and then look to short, probably around the 1250 zone which would be around the 50% retracement level, this is just a guess, lets wait for the structure to catch up for the detail.

FTSE 100 CFD: 5430
TradingLevels: Expect the second bounce off 5300 (mTL3)
Elliott Wave: The same as the other markets, the current low is wave (iii) and the current bounce is Wave (iv) so a Wave (v) down to 5300 roughly (the 5272 is important) this would be Wave 1 and then we would be looking for Wave 2 in an abc 5-3-5 rally
Trading Strategy: Short Wave 2 when its ready is the main trade.

SPI CFD 4172
TradingLevels: Short term the rally into 4200 – Minor TradingLevel (mTL2) – is corrective, so expect further downside
Elliott Wave: Same as the other indices, we are looking for the five waves down to make Wave 1 this should come in around the 4100, any five smaller waves down from 4200 is what you need to track.
Trading Strategy: Short, be on the right side of 4172.

Summary

The October rally for Indices is over, as the current move down will soon count as an impulse Wave 1 (five waves). Once this is completed over the next session or two, then after five waves comes the three wave counter trend, the abc 5-3-5 rally normally retracing the 61.8%. But we won’t focus on the 61.8 we will instead count the structure as it unfolds upwards.
One the abc rally for Wave 2 is completed we can short nearly any market but we will of course focus on certain markets like the Dow and SP500. We will also have the advantage of the US Dollar as this is now expected to move up strongly while the Euro heads south.

You now need to put on your thinking cap, if we are correct and the US Indices are now in an Intermediate Wave (3) to the downside this can be an amazing journey to short, so you need to think how to trade long term short, what risks do I take, where and how can I add to positions, what type of retracements should I accommodate, how am I going to get from A to B?

Trading Quote

"Don’t force trades. Do not attempt to create an opportunity where one does not exist. Be patient."

Today's Financial Events

Time        Currency   Detail                                                      Forecast       Previous   
10:50am    JPY          Monetary Base y/y                                   17.3%          16.7%  
11:30am    AUD         Building Approvals m/m                           -4.5%            11.4%  
7:55pm     EUR         German Unemployment Change              -10K             -26K  
8:00pm     EUR         Final Manufacturing PMI                            47.3            47.3  
8:30pm     GBP         Construction PMI                                       50.2             50.1  
10:30pm   USD         Challenger Job Cuts y/y                            211.5%  
11:15pm   USD         ADP Non-Farm Employment Change       103K            91K  
11:30am   USD         Crude Oil Inventories                                 4.7M  
3:30am     USD         FOMC Statement      
3:30am     USD         Federal Funds Rate                                  <0.25%        <0.25%  
5:15am     USD         FOMC Press Conference    
 

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 here to bounce ideas around.

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02 TRADING STRATEGIES: Robo Trades from Monday 31 October & Wednesday 2 November

See where our trades are now!
Pending positions posted this morning, 2 November 2011 at 9.00AM AEST

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03 Forex: ElliottWave count for AUDUSD

 
AUDUSD 1 Hour Chart
Tuesday, 1 November 2011 at 8:35:00PM AEST

Australian dollar is one of the weakest after RBA cut rates to 4.5%. Notice that move from the top has unfolded in five waves, so technically speaking top is in place, and pair will fall much deeper. For now we are monitoring two counts, but as things stand right now, we really like the first one! Incomplete impulsive decline with wave four pull-backs still to come! In such case 1.0506 shoudl not be reached! 

AUDUSD 4 Hour Chart Technical Analysis Elliott Wave
Tuesday, 1 November 2011 at 6:50:00PM AEST– pair turned bearish

Technical Analysis: The Aussie reversed impulsively from the pick, and is now trading very close to previous wave A) highs. An overlap here will be just another evidence and confirmation for current bearish reversal. We definitely expect more weakness in coming sessions, with at least 3-waves on the downside. Currently, pair still failing only in 1st leg of that pull-back.

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