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Talk to you in 2010

AUD/USD - Wave iv is still ongoing, but close to its top!

Looking at the structure again it was pretty clear, that one more rally in wave c of iv was needed. We are now in the very final stages of this wave iv rally. Ideally we should see one more new high just above 90.08, but at no time can we go above 90.50 or my count will be wrong.

Therefore if you haven't sold AUD yet, you are being provided with a very nice oppotunity once again. Sell on a new high above 90.08 with a stop just above 90.50 or sell on a break below 89.48 still with a stop just above 90.50 for a low risk trade.

EUR/USD - Black circle wave 2 is ongoing

Yesterday I was very much in doubt if black circle wave 2 had ended or not, but in my view wave c was just to small and didn't fit any propper scenario, that's why I stuck with my option 1 calling for a more prolonged correction.

I still think wave b became more complex than I would have anticipated, but that's just how b waves are - unpredictiable.

I have two possible outcomes for wave c:

1) Wave will be 1.618 time wave a ending near 146. If this is the correct c-wave call, then the pink diagonal will not be broken before in the very end of this upmove. If however the pink diagonal is broken, then option 2 takes over

2) Wave c will be equal in length to wave a, but take more time. In both cases don't be surprised to see the upper line of the rectangles be broken, It will not last for long.

Again I like option 1 the best, but will stay fexible to whatever the market is telling me.

USD/CAD - Wave iii of [C] or black circle wave 3 is about to begin

Pinpointing the end of wave ii of wave [C] or black circle wave 3 up, has been painfull, but I'm sure we saw the end yesterday with the test of 103.64. We should soon see the powerfull wave iii up from here.

Please also note the distinct Shoulder/Head/Shoulder bottom, which has formed since August. This formation will be triggerede upon a break above the neckline near 107.
Target for this formation will be near 114.55.

Buy USD ag CAD here with a stop just below 103.64, which would be a low risk trade (1.2% risk).

AUD/USD - Wave iv is most likely over.

AUD/USD is still the most clear among the currencies.

Wave iv most likely found its top at 89.93 yesterday. A break below 88.91 will confirm this count and call for subwave (iii) in wave v down.

If you didn't sell yesterday near 89.56, then sell here with a stop just above 90.50 or a break below 88.91 with a stop just above the top of wave (ii) for a move to at least 87.18.

EUR/USD - What's going on here?

What yesterday looked like the first subwave of wave c turned out to be something totally different. This is exactly why one should be very careful trading corrections. They are impossible to predict and especially the b-wave.

By breaking below 143.53 we have two possible counts:

1) Wave b was a double correction, the first was a flat and the second an irregular flat. If this count (which can still alter to be a triple correction)is correct then we still need a rally higher towards the 145.05 area (the green rectangle).

2) Wave c became a very small wave and black circle wave 2 is finished and black circle wave 3 has begun.A break below 142.62 and more importantly 142.18 will confirm this count.

I do like option 1 the best, but will stay flexible. To whatever the market dictates me.

AUD/USD - Wave iv should be close to its top

On december 23. I wrote that wave iii was finished and that wave iv ideally should reach the 89.19-89.33 area, this area was overshoot in early Europe trading, but wave iv should be close to its top. Wave iv can't go above the bottom of wave i at 90.50, if that happens my count is wrong, therefore every tick above 89.33 is a low risk possiblitity to once more short AUD ag. USD with a 90.55 stop.

Wave iv should decline to at least 86.83 and possibly 85.94, but when wave iv has finished we can draw the wave 2-4 channel helping us figure out where wave v will end.

EUR/USD - Wave b of black circle wave 2 became a triangle

Wave b of black circle wave 2 became a triangle, but I expect wave c to be under way and should ideally hit the upper right corner of the green rectangle on decemer 31.

The ideal target will be 145.52 or just above this area closer to 145.71.

The same structure can be observed in the USD-Index, but a break below 77.37 is still needed to chance the count from my most bullish count, which calls for a rally soon.

USD-Index My most bullish count demands a rally soon

As long as the support at 77.37 protects the downside, my most bullish count is still valid. With that said the decline from 78.44 has a clear five wave look, which would call for a three wave correction and then one more decline in a simple zig-zag correction. Therefore if 77.44 is broken to the downside, then the best count becomes, that black circle wave 1 (not shown) is the best count.

A break below 77.44 would call for a decline to at least 76.90, but more like to the 76.30 area, before black circle wave 3 up set in.

EUR/USD - Wave c of black circle wave 2 is ongoing

Black circle wave 2 is well underway, and wave b of the simple zig-zag ended in the Far East trading overnight. Wave C should now be under way. A break above 143.97 will confirm that wave iii of c is ongoing. If wave c will be equal to wave a we should see a top near 145.57, but it would be a nice fit if wave c was 1.618 times wave a calling for a continuation higher towards the 146.83 area.



I just wanted to show the internal wave-structure of black circle wave 2 with this the 5-minutes chart.

EUR/USD - The black circle wave 2 correction is well underway

The black circle wave 2 I said on december 23. was underway, have developed nicely into a five wave rally from 142.18 to 144.20 as wave a and wave b is currently ongoing. As can be seen in the 5-minutes chart below we are in the final [c] wave of b, which is expected to reach the 143.19 - 143.43 area, before taking of high in wave c. If wave a and c where to be equal in length wave c should find a top near 144.89. That however will most likely make the correction to short, therefore I do expect wave c to be at least 1.618 times wave a, which should bring wave c closer to the 145.72-145.80 area.

As this isblack circle wave 2 I would normally expect this wave to correct between 50-61.8% of black circle wave 1, which should take us up to between 146.82 to 147.92.
The to of wave 4 of one lessor degree comes in at 147.77.



Nice five wave rally in wave a does call for a simple zig-zag up in black circle wave 2.

EUR/USD - Wave 1 in wave [C] down is done

Yesterday I showed this less bullish count in EUR/USD calling for one more low ending black circle wave 1 of wave [C] down, which we saw with the test of 142.18. The break above the light green channel resistance do call for a black circle wave 2 up to the 147.77 - 147.90 area, which is where we finde the top of wave 4 of a lesser degree and the 61.8% retracement target of black circle wave 1 down.

Short positions in EUR ag. USD should be closed or at leasted cut in half.

A move towards the 147.77 - 147.90 area should be used to created new short positions in EUR ag. USD.

Only intra day traders should buy EUR ag. USD with a stop just below 142.18.

AUD/USD - Wave iv to 89.19 - 89.30 has begun

My wave iii target at 87.49 was exceede slightly with a low set at 87.33. The break above the minor channel resistance (the blue channel) indicates, that the wave iii has finished and wave iv is ongoing.

Looking at wave ii I see it as some kind of irregular flat, which would call for a simple zig-zag in wave iv under the Elliott wave Principle of alternation (See A.J. Frost and Robert Precters "Elliott Wave Principle" page 63).
As I wrote yesterday the ideal target for wave iv would be the top of wave (iv) of a lesser degree, which comes in at 89.30, while the 38.2% correction target would come in at 89.19.

Short positions in AUD ag. USD should be closed or at least cut in half, waiting for a new shorting oppotunity close to the 89.19-89.33 target area.

Only intraday traders should try to play the correction buying AUD ag. USD with a stop just below 87.33, but risk is greater than normal, because one would be trading against the main trend, which is down.

Merry Christmas

AUD/USD - Wave iii target at 87.49 hit

On december 15. 2009 I wrote that wave iii was about to gain momentum for a decline to target 87.49. Today we saw a exact test of this 87.49-target followed by positive divergence on the RSI calling for a correction soon. This correction should reache the top of wave four of a lesser degree, which comes in at 89.30.
The 38.2 Fibonacci correction target comes in at 89.19, so we can expect the wave iv correction to reach the target-zone from 89.19-89.30 from where wave v down to 86.51 should be seen.

New highs in Nasdaq, DJT and DTU forces new counts

Focus has shifted to Nasdaq and the secondaries in the last couple of days. The new highs they have made, has forced me to recount the wave structure.

The best count for the Nasdaq favores one more high that would break above the wave 2-4 channel (light gray) before exhaustion will be seen and the end of wave [B] and wave [C] kicking in.



The A-B-C count from the bottom of wave [A] is still the favored count calling for a move into the resistance area between 4,215.67 and 4,317.67, where it would ideally hit 4,317.67 makeing wave C equal in lenght to wave A and marke the ending of wave [b].



The latest strengh in the utilities has forced a total recount of the wave structure since the bottom on October 10. 2008.

The best fit is, that wave [A] ended on October 10. 2008 and we have seen an irregular flat correction and we are currently in the last minor legg up in wave C ending wave [B].

As can be seen we need one more legg higher in wave 5 of wave C, which should ideally break above the gray wave 2-4 channel resistance-line before exhaustion is seen and the beginning of wave [C] down below wave [A] at 294.

Shanghai Composit - Wave 3 well underway

On December 16 I wrote that black circle wave 3 had just begun and that I was looking for a break below 3,080 to confirm and accelerate the fall down to 2,639 and below. We are still only in the very start of wave [C] which ultimately should take us below the wave [A] low at 1,665.

As can be seen we har currently in minor wave iii which should take down to at least the 2,882 area, before minor wave iv should be seen.

EUR/USD - Is the first impuls down close to a bottom?

Here I have showen the less bullish USD-count (the most bullish USD-count can be seen below under the USD-Index post). If this count is the rigth one, then we are close to the bottom for a high wave two correction. And ideal correction-target would be close to the top of wave four of a lesser degree, which comes in around 147,77.

A correction that high would convince the USD-bears, that the USD-fall have been reignited and the USD-bearish comments will be plenty.

USD - Index Still som way to go in wave 3

It has been some time since I have visited the USD-Index, but it has behaved accordingly to my most bullish short term wave count (see my post on December 15)and wave 3 should still have some way to go before making room for wave 4. I expect wave 3 to end close to 78,47, where it will be 1,618 times longer than wave 1.

In a less bullish wave count we are close to finish wave 1 of one lager degree calling for a deep wave 2 retracement, but that would take a break below 77,38 for that count to become the favorite one.

S&P 500 Fractals

This fractals in the S&P 500 index very much resembles the fractals of the German DAX index.

As can be seen we just have or are about to end the fractal of one larger degree with the eight count in place. If you look what happened after the minor fractal eight count finished, that would mean we should see a move down below the big circle five count, which in this case means a move below the 666.79 low on March 6. 2009. That do fit well into the primarly Elliott wave count calling for wave [C] down.

A break below support at 1,083 should confirm that the eight count is complete and that a big scary decline is underway.

DJI - Odds do favor a truncated fifth

The break below support 10,328.29 do favor that a truncated fifth was set with the test of 10,511.30. A break below support at 10,235.32 would add considerable support to the possible top in place as a truncated fifth.

I would not be surprised if support at 10,235 holds for more distrubution going in to the first week of January 2010, before finally breaking and confirming that the wave [B] is over.

On the other hand everybody seem to be holding the view, that the equity markets can stay near their tops through the year end, which should make us alert, that a breakdown might happen earlier.

If you enjoyed my Dax fractional view, stay tuned for one more. I hope I can have it done doing the weekend.

EUR/USD - Very nice Fibonacci fan and channel

You might have noticed, that I have had a bit of time going on "playing" with my charts lately. This is always a good thing to do, because you suddenly see somting new.

This chart of EUR/USD on a weekly basis is based on this playing around.

As can be seen the Fibonacci Fan have locked in the lates up/down moves very nicely and I will befollowing this as we get closer to the bottom.

Another interesting thing is channel I have drawn from the top in early 2005 and the bottom in late 2005 to the late bottom and top in 2008 almost exactly arresting the latest top in late 2009 too pointing towards a decline to the channel-support.

Ben Bernanke man of the year 2009

Time Magazine Yesterday announced that they have choosen Ben Shalom Bernanke as "Person of the Year 2009". It's of cause a great honour and I don't want to discredit him of the honour, but being on the cover of the Time Magazine normally happens right at the peak. Remember when President Putin was choosen as Man of the Year in 2007 his fame was right at the peak.

In the article following the announcment Time Magazine states

"Professor Bernanke of Princeton was a leading scholar of the Great Depression. He knew how the passive Fed of the 1930s helped create the calamity — through its stubborn refusal to expand the money supply and its tragic lack of imagination and experimentation. Chairman Bernanke of Washington was determined not to be the Fed chairman who presided over Depression 2.0. So when turbulence in U.S. housing markets metastasized into the worst global financial crisis in more than 75 years, he conjured up trillions of new dollars and blasted them into the economy; engineered massive public rescues of failing private companies; ratcheted down interest rates to zero; lent to mutual funds, hedge funds, foreign banks, investment banks, manufacturers, insurers and other borrowers who had never dreamed of receiving Fed cash; jump-started stalled credit markets in everything from car loans to corporate paper; revolutionized housing finance with a breathtaking shopping spree for mortgage bonds; blew up the Fed's balance sheet to three times its previous size; and generally transformed the staid arena of central banking into a stage for desperate improvisation. He didn't just reshape U.S. monetary policy; he led an effort to save the world economy".

I don't like the last sentence "He led an effort to save the world economy". We really don't know what he and all the other central bankers has done yet. We don't know if they have "saved" the economy or if they have just postpone the effects of crises created from the credit contraction.
In regards to the Great Depression in the 1930s we should not forget that FED at that time worked under a Gold Standard, which limited their possible ability to act the way FED can today under a floating currency system.

One should also remember that the collapse of the stock market in 1929 didn't cause the Great Depression. The hard time first really began as the "Dust Bowl" forced most of the workers in the agriculture sector to try find jobs in other sectores. In the 1930s about 40% of the economy was agricultural based and the Industrial Revolution had left behind workers from the agicultural sector. Which really sent unemployment into the sky.

So one of my greatest fears is, that governments and centralbankers in their wisdom to save the world, have created even bigger trouble ahead, and choosing Ben Bernanke as man of the year 2009, will expose the fallacy.

Depressions just don't end within a year or two they last for more than 20 years
(23-26 years), therefore they should be carefull whom they give the credit and why...

Russian Stock Index - Wave 2 is almost done

If my count is correct wave 2 is close to its ideal target near 1,472, from where we should see the powerfull wave 3 begin. The real confirmation that wave 3 is in motion comes when support at 1,297 is broken, but the best risk/reward trade, will be close to the top of wave 2 at 1,472 with a stop just above the wave [B] top at 1,508.

Longer term wave [C] should take us below wave [A] at 492.

Shanghai Composit - Wave 3 has just begun

The close below the minor support-line from late September marks the beginning of wave 3 down. A break below 3,080 will accelerate the decline to the 2,639 - 2,710 area, where we finde the next serious support.
Longer term we should see move below wave [A] at 1,664.

Fractals in the German DAX Index

As I was looking at my charts back to just before the major tops in October 2007 I noticed something interesting in the German Dax Index. First I saw that the ongoing correction was very similar to the correction from January 27 2008 to May 25 2008 just to a higher degree.

I have labled the two possible fractals from 1 to 4, but to make them real fractals we need the ongoing correction to end soon and a big decline to emerge.

Whats even more interesting the minor fractal made an almost perfect 50% correction of the decline from 8,151.57 to 6,167.82. The exact 50% correction was at 7,159.70, but the real correction ended at 7,231.86, which was about 1% above the ideal correction-target.

Looking at the ongoing fractal of a higher degree the ideal 50% correction-target would be at 5,870.23 (the high untill now has been 5,898.99). If we where to see a correction 1% above the ideal correction-target we should see a move to 5,928.93 just 29.94 points from the high.



As I was messing around with the above mentioned fractals, I noticed two other possible fractals. This time twisted around, making the current possible-top building process the minor fractal in regards to the top-building process going on from March 11 2007 to January 27 2009 labled from 1 to 7.

If the fractal-call is correct the fractals will have to be identical calling for a top soon for a big and fast decline to 4,524.01, which marks the beginning of the start of the fractal.

Time will show if I have lost it totally - LOL.

I find this world of fractals very interesting, but they can be very hard to spot while going on.

USD/SGD - Important bottom in place

As can be seen on the chart above my count showes that a important bottom is in place for a move back to at least the 155.79 area.

If my count is correcte I would expect to see the ongoing rise to gain momentum for a move closer to resistance at 141.95 before a more serious correction down to the 138.40 - 138.50 area sets in.

Buying USD ag. SGD would make a nice risk/reward trade keeping stops just under 137.69.

Bank Index - Brokedown from a Bear Flag

The Banking Index topped out already in mid-October and has since declined. Since early November a big Bear Flag has been bulding and the Banking Index has now broken clearly down from this formationen. Is should only be a question of time before support at 41.42 is broken for a decline to at least 35.89, but more likely we would see 32.85 - 33.20 area.

Remember that the Bank Index is a leader, and therefore could foretell that the bigger indices is close to there tops.



Yesterday I warned about a possible truncated top(Elliott Wave Principle page 35). We still need a break below 10,398.70 to add confidence to that view and even better a break below 10,328.29.



Finally the possible "Diamond" top in the S&P 500 I showed a couple of days ago is still a possibility - It's not the most pretty I have ever seen, but pretty doesn't necessarily equal the best...

DJI - Truncated fifth wave in place?

Could a truncated fifth wave be in place? We have a clear five wave rally from 10,235.78, which add confidence in a top being in place, but we can first really spot truncated fifths when they break below important support, whivh in this case is at 10,328.29.

Also adding confidence is the negative cross on the MACD indicator and massive negative divergence.

We still don't have enough evidence to call the top for good, but we should stay alert. The very speculative trader sells a break below 10,398.70 with a stop just above 10,511.33 if no new high is seen.

USD - Index minor wave (iii) under way

The above chart show my very bullish count, if this count is correct minor wave (iii) is well under way an should reach 77.60 before the next smaller correction in minor wave (iv)sets in.

AUD/USD - Minor wave (iii) to gain momentum soon

After the very bearish failure break above the light green upper resistance line of the Andrew Pitchfork minor wave (iii) should soon gather momentum as is breaks below the small support line near 90.64 looking for a possible target near 87.49.

Sell this break with a stop just above minor wave (ii) at 91.73, which should make a very nice risk/reward trade.

GBP/USD - Shoulder-Head-Shoulder top finished

A very nice Shoulder/Head/Shoulder top has been building over the last couple of weeks/months. It should be ready to accelerate below 161.65 shortly for a move closer to the 157 area.

Tading a break below 161.65 with a stop just above 163.20 for a move to 157 would make up a nice risk/reward trade.

Is global warming manmade?

I found this most interestly series on "http://wattsupwiththat.com/"

I try to be as objective as possible, but I must admit that the information being pumped out from all medias had me almost convinced, but a series as the above is rather convincing to me.

With that in mind I'm mostly concerned about a deal in Copenhagen where enormous amounts of money will be thrown around having very littel or no effect at all.
Money that can be spend a lot better.

S&P 500 - Diamond top ?

Could a Diamond top be bulding in S&P 500 ? If yes then look-out below!

Wouldn't it just be nice to see the stock market top out soon alongside commodities.

AUD/USD - Short term bearish signal

The failure break above the upper resistance line of the "Andrews Pictfork" is a very bearish short term signal. It should only be a matter of tíme before the low at 90.13 will be broken.

The aggresive trader would sell here with a stop just above the high at 91.94 (Risk is less than 1%)

S&P 500 - Three Peaks and the Domed House

I saw George Linsays chart-formation some time ago and as I was trying get all the small waves to ad up I saw the comparison.

Unfortunately it doesn't it help us alot, as what this formation tells us, is that no. 28 should go back to the starting point of no. 10. In the best case we need one more drop to 1,084 and then what ?

I don't know, but a break below 1,084 could open up the downside for a move closer to strong support near 1,042 and very important support at 1,029.