EUR/USD - Possible Bearish Slingshot is building

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A slingshort very often foresee a very powerfull move in the direction of the trend.

The first chart show a Bearish Slingshot in GBP/JPY foretelling a very powerfull downmove to follow. Just after the slingshort GBP/JPY fell more than 1000 pips, which is a very very good trade and profit.

A Bearish Slingshot could be building in EUR/USD at the same time a hook could also be building calling for a potential powerfull downmove in the near future.

A break below 145.73 would confirm the slingshort and a powerfull downmove.

There is no way to tell how big the downmove will be, but as it could be wave iii it could be quit big.

DJI - The current downmove look impulsiv

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The current downmove look implusive and the break below 9,620.89 means that the top of subwave i has been broken, which eliminates the irregular falt Alternate count I metioned a couple a days ago. That leave us with the only two possible scenarios:

1) The favorit is that wave [B] found a firm top at 9,917.31 on September 23 and wave [C] down has begun, this wave should ultimatly take us below the March 6 low at 6,469.95.

2) That the structur since mid August is a ending diagonal and wave d is currently in progress. If this scenario is to stay valid support at 9,507.77 should not be broken at any time, if this support breaks I would not consider this alternate count anymore.

GBPUSD - GBP/JPY - AUD/USD and NZD/USD

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This will be one of the more unusual posts as the are no Elliott wave counts on the charts, just plain technical analysis, and the reason is, that I have used them for something else.

I still think the are good showing whats going on.

GBP/USD (Cable) has activated a nice Shoulder/Head/Shoulder (S/H/S) formation, with a target near 151. We a possibly seeing a back test of the neckline currently, but when thats done, the target at 151 is calling.

GBP/JPY has a nice double top formation, with a target near 130. The is much more to say about that.

AUD/USD and NZD/USD are both pretty much the same. They are currently back testing the long term uptrend line that they broke in mid-2008. When the back testing is done we should see some massive declines.

If you use ordinary technical analysis, this is one of the few really good oppotunities you get in a year.

DJI - Is the top in place or do we need one more rally higher?

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My count suggest that the top is in place with the 9,917.31 high, but as long as the wave i of red c top at 9,619.70 isn't broken we can't exclude that we need one more rally closer to the 10,000 mark (see the altenate count).

If the Alternate is the correct one, we should see one last move higher towards the 9,923 - 9,953 area, with a slight possibility to see DJI all the way up to 10,097, before the top is finally in place.

No matter what scenario turns out to be the right one, we are very close to the top and should not loose sight of that fact.

Nikkie 225 - Has made a firm top

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Let's take a look at Chinas neighbour Japan and the Nikkie 225.

As it was the case for the Shanghai Composit the Nikkie 225 Index bottomed out in October 2008 and has traced out a big flat correction as wave [B]. By breaking below the support line back from March 2009 we got confirmation that wave [B] ended late August and has traced a small wave i and ii. We are currently in wave iii down, with a first target near the 9,000 - 9,300 area.

Japan has been in economic dulldrums since 1990 as its demographic chaged, like what we are seen in the West too, especialy in Europe, but the US and Canada will feel the Baby-Boomer retierment too, as the consumers will be embraced by a new buzz-word - FRUGALITY!

You better learn this word and the meaning, because it will be the trend for years to come and it will have a huge impact on our daily living.

China to the rescue....

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The Shanghai composit found its bottom already in November 2008, then traced out a irregular flat A-B-C correction. Wave C ended on September 18 and we are currently moving down in wave 3 of C. This wave will problably be the longest and seem relentless driving the market lower.

In late 2008 and early 2009 China was the country to bring the global economy back on its feet, because no other country would be able to. At first glance it might have seem likely, but using the Elliott wave principle it would have been clear from the beginning that it wasn't a option. We have seen many clues that they (The Chinese) would not be the new driver of the global economy. The Baltic Dry Index topped already in early June telling us that global trade wasn't back to "normal". Copper has rallied strongly in a double Zig-Zag as red wave [B], and all odds favor that it found a top in late August as it was also the case with Crude Oil. Crude Oil has also finished its red wave [B] and has begund moving down in the powerfull red wave [C]. This wave resemble the pesonality of a thrid wave.

All of these small clues told us, that things wasn't so fine as the news, CNBC and the talking heads of Wall Street tryed to make us belive. I'm sure they themself belive, that what they a saying is the truth, but I'm certain that they are completly wrong and things will become much worse during the late part of 2009 and most of 2010.

I would rather be prepared and wrong, than unprepared but right!

EUR/GBP wave 1 of 5 is done.

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EUR/GBP has just or are very close to finish wave 1 of wave 5 up from its 2000 low at 56.73.

I do expect wave 5 to finish near 99.60.

But lets concentrate on wave 1 of 5. As can be seen, wave 1 has traced out a nice looking five wave structre, which looks complet. The top of the wave 2-4 channel has been tested, subwave v has a 38.2% relationship to wave 1 through 3, so we should now see a correction down to the 87.46 - 88.37 area, where a 50% retracement would be at 88.37 and a 61.8% retracement would be near 87.46. The bottom of purple wave 4 of wave iii comes in at 87.21 and would be a normal target for the wave 2 correction.

Lets see what the time brings...

GBP/USD - 150.67 is next target.

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We are currently moving down in purple wave iii of red wave iii, which will make this a relentless decline. I will non the less expect a short time correction higher towards the 161.50-60 area before the next seriouse decline towards the 150.67 target.

Fundamentals are beginning to align with the tecnicals, which is common as wave 3 progresses.
Bank of England Gorvenor King has indicated, that a weaker Pound would be preferable to help the industri exporting more.
There have been rumors that the 2010 budget will be cut by 10% and that the quantitative easing will have to be rolled back in the near future. all pointing towards a weaker currency.

I think that Gordon Brown, Darling and King will get a lot more than they bargain for...

EUR/USD - Important support still intact, but...

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The short term support at 146.06 is still intact, but it should only be a matter of time before it's broken. As long as it's not broken it leaves us with an alternative count, calling the move from 148.42 to 146.85 wave a of iv. Wave b ended at 148.03 and wave c ended 146.12 in overnight trading. If this alternate count has any validity important support at 146.06 must not be broken at any time. A break below 146.06 will immiately ad full confidence in the above count.

I do favor the above count over the altenate count, because of the massive both long and short term negative divergence. The almost perfect Fibonacci relationship between wave i through wave iii, where wave v was 0.382% of the distance of wave i through wave iii.

The break out of the Channel also adds confindece in the impulsive count, but again we need a break below 146.06 to realy get things going.

The Banking Index - Might have topped

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Odds favor that wave v of the blue wave c was a failuer, not being able to exceed the top of wave iv. We will need a break below 47.12 and more importantly a break below 45.95 to confirm that scenario, but at this point it looks quit likely.

If the above scenario is correct we are now in the very early stages of wave [C] which will bring us down to and below the bottom of wave [A] at 17.75.

DJI and S&P 500 - could this be it?

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Could the small new top yesterday be it? I do think that wave v of the second Zig-Zag was very small, but it could just be it. Massive negative divergence has long been a warning, that we where closing in on the top. A nice brearish daily engulfin candle was seen in yesterday session in both DJI and the S&P 500 (best in S&P 500).

This morning on CNBC all the talking heads saw the move as a healty correction and they even said that Funds still was sitting on loads of money to invest... Sorry but, the last numbre I saw from end of June their (the Funds) cash-holdings was down to 4,2% just a fraction above the low point in October 2007, but as we have seen a continuation my best estimate would be, that they are below 4% cash-holding at this point.

A break below 9,726.26 and more importantly 9,634.72 in the DJI will confirm that this was it.

In S&P 500 the points will be 1,057.47 and 1,038.89.

There still is a possiblity that this is just a larger wave (iv), but 9,634.72 (DJI) and 1,038.89 (S&P 500) should not be broken at any point if this scenario should be the rigth one.

Time will show.

Oil - Bye-bye Important support has been broken

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Oil broke it - the support line and thereby confirmed that red wave [B] from mid-December 2008 has finished and red wave [C] with and ultimate target below the finish point of red wave [A] at 32.40 will be seen.

How does that fit into a picture of a global economy gaining strengh as all the talkning heads on the news, CNBC and Wall Street analytics claim - IT DOESN'T!

Take a look at the Baltic Dry index, which top out early June. After topping out at 4,291 it has fallen 49.68% to 2,175. The fall looks very impulsive and follows the wave counts nicely.

Ultimately we should see fall below the ending point of red wave [A] at 672, but it will find strong support at 1,796, where red wave iii will be 2.618 times red wave i, but I wouldn't be surprised to see it continue closer to 1,441 before finding strong support.

Also take a look at this article from the Daily Mail:

http://www.dailymail.co.uk/home/moslive/article-1212013/Revealed-The-ghost-fleet-recession-anchored-just-east-Singapore.html

When I went to Athens on vacation this summer I saw the same, amited to a lesser degree, but at least 20 major vessels was anchored up outside the habour of Athens. I wounder how many vessels are anchored up the same way around the world.

In my eyes this does not resemble a global economy growing again. What we have seen since March is Government bailout packages and quantitative easing from the central banks floating the economies with liquidity, which has found its way into the equity markets and some commodities, but by the first word of withdrawing is support, the market turned around.

USD - Index and EUR/USD structure is complet!

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Yesterday I wrote that the wave [B] structure for EUR/USD was almost complet. As you can see above the structur for both the USD-Index and EUR/USD is now complet, and I will be looking for a stronger USD for the coming month.

A break above 77.11 for the USD-Index and a break below EUR/USD 146.06 should be the first real warning that the USD is going to get stronger.

Funny that the dollar-bottom should come right now. Ambrose Evans-Pritchard ran the following story this weekend (sunday) in The Telegraph on.

HSBC Bids Farewell to Dollar Supremacy

The sun is setting on the US dollar as the ultra-loose monetary policy of the US Federal Reserve forces China and the vibrant economies of the emerging world to forge a new global currency order, according to a new report by HSBC.

"The dollar looks awfully like sterling after the First World War," said David Bloom, the bank's currency chief.

"The whole picture of risk-reward for emerging market currencies has changed. It is not so much that they have risen to our standards, it is that we have fallen to theirs. It used to be that sovereign risk was mainly an emerging market issue but the events of the last year have shown that this is no longer the case. Look at the UK – debt is racing up to 100pc of GDP," he said.
Crucially, China and rising Asia have reached the point where they can no longer keep holding down their currencies to boost exports because this is causing mayhem to their own economies, stoking asset bubbles. Asia's "mercantilist mindset" of recent decades is about to be broken by the spectre of an inflation spiral.

The policy headache was already becoming clear in the final phase of the global credit boom but the financial crisis temporarily masked the effect. The pressures will return with a vengeance as these countries roar back to life, leaving the US and other laggards of the old world far behind.
A monetary policy of near zero rates – further juiced by quantitative easing – is completely incompatible with circumstances in most of Asia, the Middle East, Latin America, and Africa. Divorce is inevitable. The US is expected to hold rates near zero through 2010 to tackle its own crisis.

What is occurring is an epochal loss in the relative wealth and economic power of the old G10 bloc of rich countries compared to rising regions of the world. The euro, yen, sterling, Swiss franc and other mature currencies will be relegated along with the dollar in this great process of rebalancing, but the Greenback will bear the brunt.
The Fed's super-loose policy is turning the dollar into the key funding currency for the next phase of the global "carry trade", taking over the role of Japan during its period of emergency stimulus.

Mr Bloom said regional currencies would emerge as the anchor for their smaller trading partners, with China, Brazil, or South Africa substituting the role of the US. Australia is already linking its fortunes to China through commodity ties.

I might of cause have gotten the count wrong... But I really don't think so. Expecting a prolonged periode of deflation will mean that a stronger USD will be seen. The extrem brearishness sentiment towards the USD only 2-3% bulls and one of (if not) the biggest bank in the world bidding the USD supermacy farwell has just set the stage rigth for the USD to rally.

EUR/USD - The total structure looks almost complet

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The entire red wave [B] now looks almost complet. We can count a clear five wave upmove and the complex wave 4 ended with a triangle. The good thing about triangles is, that they predict that there will be one more rally in the direction of the main trend, before being retraced to at least the triangle apex, which in this case would be 143,50.

As can be seen, the corrective wave 2 was a simple Zig-Zag, which due to the principle of alternation calls for a complex wave 4. This complex wave 4 will often come in the shape of a "Flat" or a "Triangle", but in this case it came as two Zig-Zags and one Triangle.

When red wave [B] finaly ends we should see a very powerfull move down in red wave [C], which should ultimately take us down to 123.21 and below.

Oil - Make it or break it...

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After more og less a full month in no-mans land we are back to test the support line from mid-February, if this line breaks to the downside we will see a quick move down to at least 57.

The Support line is currently around the 68.45 level, so this is a make it or break it situation! I do favor that the support line will be broken, but time will show.

I still think the last move up to 75 is a mess and very difficulte count as anything else than a wird looking endeing diagonal.

We can see a possible Shoulder/Head/Shoulder top formation, with two left and two right shoulders. The trigger for this formation will be a break below 67.05 and confirmed by a break below 65.23.

GBP/USD - S/H/S top ?

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As I wrote below as a comment to the FTSE 100 Index the Pound looks very weak and is clearly the weakest of the major currencies against the USD at this point.

When EUR, AUD, NZD, CAD, ect. all are making new highs against USD the Pound is not even close and are showing us, that UK is facing trouble ahead.

It could be economic touble, trouble within the banking sector or maybe even some problem coming from out of nowhere...

A top in GBP/USD (Cable) is firmly in place with red wave (i) and (ii) is place, at the same time a Shoulder/Head/Shoulder (S/H/S) top is bulding and a break below 161.10 (the right shoulder bottom) would call for a move down to at least 150.67, but problably even lower.

Long term a move down to 134.98 and below in wave 5 is expected.

Sentiment at extrem bullish levels

Eventhough I see the possibility for a move higher in the DOW, S&P 500, gold and crude oil and a move slightly lower in USD, the sentiment are now at so extrem levels, that a major trend change could happen anytime now.

S&P 500 and the Nasdaq has reached bullish sentiment at 92%, which is even higher than the levels seen in October 2007. Bullish sentiment towards the USD is again at only 3%. Looking at gold and silver, 92% is bullish on gold and 93% on silver, this simply can't go on for much longer, How is left to buy?

On tuesday, September the 22, we will have Autum Equinox. We have seen more times, that big events happens around that time a year to just be a coincident. Especialy in the currency market Equinox has been the cause of extrem violent swings. Could we see that effect again? Absolutly!

With the USD, AUD, NZD, CAD and EUR at extrems, A sudden turn around shouldn't come as any surpris. Maybe GBP is the frontrunner this time around. Have you noticed how GBP didn't make a new top against USD, when AUD, NZD, CAD and the EUR did? GBP is looking very weak at this time.

Just maybe the trigger for the next market surpris isn't to come from the United Stats, but from the UK. The FTSE 100 has made a prefect double Zig-zag and are currently testing very strong resistance and the top could be close at hand. At 5,190.78 the second Zig-zag (blue) will equal the first Zig-zag (black) in length. If we count the numbre of days from the bottom in March to the top of the first Zig-zag it took 48 days. Currently the second Zig-zag from the bottom of wave "X" has taken 47 days, so monday could be it...

Junk - In its final wave up

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Junk (Symbol: JNK) is tracking S&P 500 and the Dow (see below) higher.

If my count is correct we are currently seeing a big irregular flat that began in late november 2008 red wave [A]. We saw black wave A ending in early January at 33.99. Black wave B ended in early March at 25.55 and we are currently in the late stages of black wave C with and ideal target in the area from 39.86 - 39.98. The 61,8% retracement of the fall from 48.29 to 26.50 is at 39.98 while wave 5 of black wave C will equal wave 1 of black wave C at 39.86. When black wave C is done we should see red wave [C] take us down to 25.55 and below.

I have been forced to change my wave count on S&P 500, as it has been the case on the DOW. My S&P 500 wave count is pretty much identical to my DOW count.

Ideally red wave c will finish in the 1,120.25 - 1,132.64 area. The 50% retracement of the fall from 1,576.06 to 666.92 will be found at 1,120.25. At 1,127.68 red wave c will equal red wave a and finaly at 1,132.64 the red Zig-zag will equal the lengh of the black Zig-zag. So within 12 points we have a cluster of resistance levels all ready to halt this never ending red wave [B] setting the stage for red wave [C], which will take us back to 666,92 and below.

DJI - Sorry, but new count is necessary

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I have been back to the drawingboard, because the break above 9,629,37 was conflicting with my original count.

Originaly I saw the bear-market rally as a triple Zig-zag, but with the break above 9,629.37 that count was no good. Looking at my current count and my former count I do think, that the present count is better and more simple. Let's go through the new count.

In The first Zig-zag from 6,470.11 black wave a and black wave c is equal in lengh. If my pressent count is correct, then at 10,455.11 the red Zig-zag would be equal in lengh to the black Zig-zag. Looking at the red a-b-c Zig-zag internally, then at 10,502.09 red wave c would equal red wave a in lengh. In that area we will also meet the major bear-market trendline, while the 50% retracement of the fall from 14,198.10 to 6,469.94 comes in at 10,336.57. So within less than 200 points we have four important resistance levels.

Looking at the ongoing wave c of the red zig-zag, we should currently be in wave 3, which will most likely finish near the 10,200 mark, making this wave the extended one setting the stage for wave 4 down close to 10,040 before wave 5 of red c higer towards the 10,455.11 - 10,502.09 area, finishing primary wave [B] setting the stage for wave [C] down to 6,469.94 and below.

Shanghai Composit - The set-up for a major collapse failed

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The set-up for a major collapse, that I spoke of yesterday failed and the break above 3,050.46 has forced me to alter my count. Wave finished 3 at 3,036 followed by a irregular flat wave 4 and we are currently seeing wave 5 up , which should idealy end in the 3,120 - 3,150 area. 3,120 is the 50% retracement of red wave 1 down and 3,150 marks the top of wave (iv) of iii. The top of wave four of wave 3 is a very common ending point for a correction to end.

I don't see any reason to change my main count. Red wave 1 and red wave 5 was almost equal in distance. Red wave 1 was 164.23 points while red wave 5 was 167.65 points. Red wave 3 was clearly the extended wave as my count shows. If the ongoing red wave 2 works out as a textbook case wave c of red wave 2 will finish ín the 3,120 - 3,126.50 area, where it will be a perfect textbook irregular flat.

Lets see how this pans out.

Shanghai Composit - The perfect set-up for a Major collapse

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The Shanghai Composit (SSEC) most likely found its wave two top with the test of 3,050.42 yesterday, and the current set-up is the perfect one for a major collapse.

The SSEC showed the way up, as it bottomed-out already in October 2008 and turned down in early August showing us, that pressure on the major indices was building. As we have seen since early August the other major indices has continued higher, making new tops, the US-dollar is at a new low and preciouse metals are making new highs. As all the markets are alignning the rsik for a surprise move in the opposit direction is growing fast.

What could trigger a top? I can spot lots of reasons, that could turn things around fast. Bullish Sentiment is approching 90%, Funds are as invested in equities as they where at the top in October 2007, most cycles are pointing down and the 2 ½ year cycle has turned down together with the 4 and 10 year cycles and will keep pointing down until October 2010. The bulls have interpeteded all key economic figures positivly no matter how bad they where, all that is needed is just a tiny spark that will ignite the current bull-run and turn it into a furiouse bear-market. At the begining the news, CNBC and Wall Street analytics will see it as a healty correction, but when they find them self trapped they all want to get out at the same time accelerating the bear-market.

DJI - There is a very good chance that this could be it

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There is a very good chance that this could be it!

As can be seen, we have seen a nice five wave up from 9,253.08 to 9,713.56. thereby we saw an overshooting of our ideal target at 9,653.90, but a rather small on if I may say so.

If this is it, we should soon see a powerfull downmove take back all that have been gained since the 3 of September. Ideally we will see that been taken back in half the time it took to get there.

The bear market rally since March 6'th has been rather stubbon and have keept going higher and higher, and I can fell that I'm loosing patience, this is nomaly a good sign that the rally is about to be over. I'm as every body else and most have not paticipated in this rally and are about to jump in or have done so lately. If I didn't use the Elliott Wave pinciple I problably would have jump in around now too, just to be looking at my money dissapering.

This is not the time to be long under no circumstance. you should rather be out or short - They are the only two options at this point.

Copper - The top might be in place.

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A almost perfect double Zig-Zag, where the second Zig-Zag was equal to the first has most likely finished and a top is building, shaping up as a Shoulder/Head/Shoulder. A break below the RS bottom at 272 would be first confirmation, while a break below 265 (bottom of the LS) would confirm that red wave [C] has begun. Red wave [C] should ultimatly bring us below the red wave [A] bottom at 125.

DJI - Do we need one more high or is the top in place?

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Every thing seems to fall in place. The USD-Index has reached or is very close to its bottom, metals might need to rally a bit more, but remember how gold and silver continued to rally well into 2008 before collapsing, while equities began falling in October 2007.
Oil is lagging, but again it didn't collapse before July 2008 even later than the metals.

We migth need one more small rally higher in DJI and S&P 500, but we are very close to the top now. If it isn't already in place it could be met later this afternoon. DJI have retraced 38.2 % of its 2007 - 2009 fall and S&P 500 has retraced 50 %, which are normale Fibonacci retracements in a bear market.

When prices begin to collaps again I do expect the fall to be just as violent as we saw it in the autum 2008 and the first quater 2009. It will take many by surprise, as they do expect the crisis to be over. Just yesterday both President Obama and Treasury Geithner said that they have pulled the economy away from the brink of collaps - They can hope all they want, but I'm sure they will be very dissapointed soon.

Also yesterday I saw that Funds now are all back into the market with only about 4% in cash, just as low as their holdings in October 2007. This is the perfect "Black Swan" scenario.
Right now the risk being out of equities or even short is rather low, while risks being into equities could loose you a lot of money quickly.

I hear it over and over again, I read about it and I still think it's the most stupid thing I have ever heared or read: Being in the market all the time is the only way you can nail the big upswings - Yeear right, but you also nail the big downswing and this one is like no one we have ever seen before and could whip out gains made over the past 20-30 years. You are welcome to stay in the market... I won't.

I will rather be prepared and wrong, than unprepared but right!

DJI - Did we see the top of minor wave ii yesterday

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I still favor that the top on August 28 at 9,630.20 ended wave [B] from March. From 9,630.20 we have seen minor wave i down to 9,262.46 and minor wave ii most likly finished yesterday with the test of 9,560.17. From 9,560.17 we have seen minor [i] down to 9,497.19 and minor wave [ii] most likely finished yesterday retracing just above the Fibonacci retracement at 76.4% of the fall from 9,630.20 to 9,497.19. Wave [ii] can retrace up to 99.9% of wave [i], but if it retraces more than 76.4% of wave [i] odds normaly favor a new high above wave [i] risking a move back to 9,630,20.

Minor resistance at 9,555 should now containe any upmove for a break below 9,535.89 and more importantly the bottom of wave b at 9,517.75, which will call for a strong downmove to at least 9,430.

Any break above 9,555 will endanger the minor wave ii top at 9,577.22 and most likely also the August 28 top at 9,630.20 for a move closer to 9,653.95 (wave iv of 3).

The Government can...

You might have heard this song before, and most likely an other version of it, but I think Tim got some very important clues of what is going to happen in the next couple of years, when the bill for all the bailout will have to be paid.

http://www.youtube.com/watch?v=LO2eh6f5Go0

USD - Index In and Ending Diagonal

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Evidence points to and Ending Diagonal developing in the USD Index. The ideal target is close to 76.50, but we still misses two small a-b-c subwaves to finish the formation.

We can see a clear five wave [B] decline from 89.62 and a massive positive divergence developing, which calls for a firm bottom soon and the beginning og wave [C], which will take us back to and above wave [A] at 88.46.

All markets are now in alignment and we will most likely see a violent increase in volatility as imoprtant tops and bottoms will finally be in place.

AUD/USD - Will we see a top just under 87.00?

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We are currently back testing the former supportline of the 2001 to 2008 rise, this former supportline has now become strong resistance and is currently sitting at 86.94. At the same time we have a clear five wave rise from March to the present day at the same time we see a clear negative divergence bulding up, all factors point to a top nearby. You migth gain at best one or two percent, but the risk to the downside after a near 37 percent rise, is much greater.

The name of this game is RISK MANAGEMENT!

So at the very least a protective stop-loss has to be in place at this point. A strategic stop-loss should be placed just below 82.37, which marks the beginning of wave v of 5. A more aggresive stop-loss could be placed just under 84.74. Personly I would prefer to be short AUD ag. USD at this point with a 88.25 stop-loss or I would use one of the two S/L points above to reverse my long position in AUD to short AUD if triggered.

A break below 84.74 and more importantly 82.37 will trigger a move down to 77.00, which marks the ending point of wave 4, but if my count is correct red wave [C] will take us all the way back to and below red wave [A] at 60.04.

EUR/USD - Wave 5 of (B) is still ongoing

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My worries from yesterday regarding the lack of followthough to the downside was well founded. The break above 144.04 and more importantly 144.46 tells us, that the US-dollar hasn't bottomed yet. Wave 5 can best be described as an Ending Diagonal with a final target in the 145.18 - 146.17 area. Where 146.17 reprecents the 61.8% retacement of the fall from 160.38 to 123.28.

When this wave 5 of (B) ends we should see a powerfull move to the downside bigger than any of the previous corrections in wave 5, meaning that it should be bigger that 4.02 figures, which confirms that wave 5 has ended and a move down to the bottom of wave 4 at 137.47 should at least be seen.

GBP/USD - A prefect 61.8% retracement

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Cable (GBP/USD) still looks more convincing than EUR/USD does. After a perfect 61.8% retracement of red wave i red wave ii should be finished and the powerfull red wave iii should bring us down to at least 159.82 - most likely lower.

Everything seem to line up perfectly here. A perfect fibo-retracement, negative divergence, so all we need is a break below 163.63 that would add confidence to my count and a break below 162.83 would confirm a move down to at least 159.82.

EUR/USD - Recount

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I have made a slight change in my count. With todays rally to 143.60 red wave ii couldn't have finished last thursday at 143.48. Therefor I have moved red wave ii to 143.60. A break below 142.85 would add confidence to my count, but we need to see some acceleration to the downside soon.

I don't like the lack of followthrough to the downside, but will give the US-dollar the benefit of the doubt as long as 144.04 stays unbroken. Any break above 144.04 should mean that a new challenge of 144.46 should be seen and we should see a new high near the 145,50 area.

With the US-markets closed today due to "Labour day" I don't expect much action before tomorrow, when the US-market opens.

EUR/USD - Minor wave (iii) should be about to begin

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I am still convinced that EUR/USD topped with the test of 144.46.

I must admit that the waves does a very good work hidding the next big move, but I'm sure it's going to be to the downside. Yesterday we saw a nice backtest of the former supportline (now resistance), even saw a slight break above the line, scaring away the weakest hands.

It now seems that minor pink wave (i) and (ii) is done and pink wave (iii) down to the 141 - 141.10 area is about to begin. A break below 141.74 will add confidence to my count. The minor red wave (ii) high at 143.48 can't be broken at any time, if it does my call for a top at 144.46 will be in danger and risk a new test of 144.46 and problably a move higher towards 145.50 at least.