EUR/GBP - Triangle or a complex double correction?

After topping at 98.03 (wave 3) on the last trading day 2008 (30. Decmber 2008) EUR/GBP has been in a long sideways correction. The question is, if this is a triangle or a complex double or maybe triple correction?

I do favor the Triangle concept. First triangles are common in wave 4, they tell us, that we will have one more thurst in direction of the main trend and then a important long term top or bottom. In this case a top.
If my assumption is correct then we can expect a move closer to the 91.60 area as legg D in the triangle calling for legg E down. Only a break above 94.12 (legg B) will aborte the triangle look making the complex double correction the favored count.

Non the less ultimately we should see one more rally above the top of wave 3 at 98.03 for a move closer to par (100.00) in wave 5.

Elizabeth Warren - The David and Goliath storry

"The problems could not be more obvious, and quite frankly, the solutions are just about that obvious, but we just can't seem to get the two together...The reason that we are not changing things right now is because the banks have lobbyists in Washington in numbers I have never seen...People who just want to advocate for American families, people who want some changes to level the playing field do not have that kind of lobbying power. And so what we are really watching here is a David and Goliath story."

All the same markets

I was in Thailand on vacation in November last year (lovely place), but the local Thais has a saying going something like this:

Same same but different

This saying fits nicely to the markets rigth now. They are more or less at the same junction, but the count is a little different for all of them.

I have choosen to show you a few, but as you can see they all look a like (please also see below at the AORD).



Above you can see the daily chart of the FTSE 100



Above the DAX on 30 min. basis.

Australia Ordinaries - In the early stages of wave [C] down

I have shown my prefered count of the Australia Ordinaries.

As can be seen wave [B] ended after a perfect 50% retracement of the prior wave [A] and the following decline was a beuatiful five wave decline telling us, that wave [C] has begun. We are only in the very early stages of wave [C] down, which ultimately should break below the bottom of wave [A].



Closing in on the bigger picture we can see a clear five wave decline from 4,983 ending wave 1 at 4,483 (a nice 500 points drop). Wave 2 is currently ongoing. I would expect wave 2 to peak near the 61.8% retracement of wave 1, which would make it peak near 4,792 (also finishing the right shoulder in a nice looking Shoulder/Head/Shoulder top).

Take care when wave 2 peaks as the wave 3 decline will be much more powerfull.

AUD/USD - Room for a move closer to 90.92 before the next move lower

The bigger picture tells us, that wave [B] finished at 94.04 and wave [C] down is ongoing. Wave [C] should ultimatly end below wave [A], which ended at 60.04.

I have shown my prefered count, which as can be seen, shows that we have seen a couple of waves one's and two's. Wave 2 should be very close to its top, if we haven't already seen it. The ideal target for this wave 2 is in the area from 90.41 to 90.92.



The above chart shows the hourly chart. Again we should ideally see one more new high reaching the area between 90.41 to 90.92, but a top could already have been seen with the 90.37 high set on the 17 of Febuary.

When wave two finish we should see a shape decline in wave 3 of [3] down.

Vacation time

I will be to Austria on vacation next week. I will be back on saturday 20 Feb.

I looking forward to a nice week with down-hill skiing as you can see i'm a pro...

Take care and see you next week

DJI - The wave 2 correction was a bit more complex

Yesterday I showed you a possible Shoulder/Head/Shoulder top in the S&P 500 and wrote that the set-up was the same in the DJI, but the S/H/S top was never triggered, instead it evolved into a triangle wave B of wave 2, and wave C of 2 is now finished or very close to, we may need one more high just above 10,161.34 to finish wave C and wave 2 before the on-set of wave 3 of 3 and you know what that means - A very powerfull decline to at least the 9,385 area, but we could see wave 3 decline all the way down to the 8.906 area.

The position and count is the same for S&P 500.With targets near the 982 area or even the 922 area.

S&P 500 - Possible S/H/S top setting up as wave 2

My count favor that wave 2 of wave B finished at 1,079.13, which was just below the 61.8% retracement of wave 1 and we should now be in the very early stages of wave 3 down. A break below 1,056.56 would confirm wave 3 is in motion.

I do look for a decline in wave 3 to at least 981.67.

The picture is the same for DJI by the way.

EUR/JPY - wave 2 became more complex

As can be seen above wave 2 became more complex with an "x" wave, but it does not change the bigger picture calling for a move closer to 121,36 area shortly.

The talk about bailing-out Greece may have delayed the decline, but it will not prevent the decline.

The new trend "Vampires" is not a good sign for the stock markets

Vampire movies are very popular at the moment. It all startet last year with the "Twilight saga" being filmed. The Vampire theme in the Twilight saga's latest movie "New Moon" portraiting teenage girls falling in love with teenage Vampires and Vampires as sexsymbols. The TV-series "The Vampire Diaries" is made over the same theme. Themes like that are bull market movies and they where released right at the [B] wave top, but the theme is changing for more fearsome creatures like the "Wolfman", The shift towards brutal and fearsome creatures show us that a shift in the mood is happening and the change is for the worse. We have seen these types of movies before. In 1922 the very gruesome-looking "Nosferatu" Vampire was released and during the depression years "Count Dracula" was very popular. If the Wolfman becomes a hit, we have one more fact confirming a shift in the public mood for the worse and the continuation of the bear-market.

EUR/USD - Time to begin wave 3 of red circle wave 3

My prefered count shows that wave 3 of red circle wave 3 is about to begin taking EUR/USD down to 131.16.

Remember that wave 3 of 3 is very powerfull and relentless in its personality.

If my count is correct then we most likely won't see a bail-out of Greece. At least not from its Euro partnes, but as Otmar Issing says maybe the IMF is a better idear

EUR/JPY - The correction from 120.67 is done

The correction from 120.67 seems to be over and the nex powerfull decline should be under way.

As can be seen the fall from 124.27 is clearly impulsiv forming wave 1 at 122.96, while the rise to 123.88 is clearly correctiv, so we can expect a break below 123.46 and more importantly 123.19 soon calling for a decline to at least 121.76 as wave 3.

Please be aware that this count is only the part of the bigger count calling for a much deeper decline.

DJI - What an ugly day yesterday...

Trying to read every little squiggle yesterday, after rumors about bailing-out Greece, was the closed one could come to hell.

But the just over 61.8% retracement of wave 1 of black circle wave 3 at 10,132.42 (the high was 10,138.22) was just the perfect ending point for wave 2 calling for the onset of wave 3. A break below 9,976 would confirm that wave 3 down has begun for a move closer to the 9,359 area at least.

I don't see the bail-out of Greece as positive in any way. Yes it removes the problems that Greece have, but it just lays the burden on the Euro-Zone instead. I still find it hard to belive, that the Germans is willing to bail-out the Greeks. Germany bail-out East Germany and the cost was huge and whats more they speak the same language, but I'm sure they don't have the same warm feelings towards the Greeks (I have absolutly nothing against the Greeks don't get me wrong, but why should the Germans suffer because the Greeks was having a ball? Sorry I just don't get it)
What about Portugal, Spain, Italy, Ireland will they be bail-out too? The Maarstricht don't even allow a bail-out, who will they by-pass that? How if UK Denmark or Hungary gets into touble will they be bailed-out. Remember in 1992 when the British Pound broke the EMS-system. At that point the UK Government bet on the Germans would come to their rescrue, but they didn't do that.
The questions are more than the answers at this point.

Please see the below statement from Otmar Issing:

"If Greece needs a bailout, it would be far better for it to seek one from the International Monetary Fund than from other euro-zone countries, Otmar Issing, a former top official of the German and European central banks, said Friday.

“I don’t think that the E.U. can impose the kind of sanctions that would be needed, and it would make Brussels too unpopular,” Mr. Issing said during an interview by telephone from his office near Frankfurt. “A better way is for Greece to approach the I.M.F. It is the only institution that can impose strict enough conditions.”

Mr. Issing was chief economist of the European Central Bank from 1998 to 2006 and one of its most influential executive board members. Previously he spent eight years as a board member of the Bundesbank, an institution that expressed doubts about the wisdom of expanding the euro zone beyond core West European economies.

Bailing out Greece would involve “a more or less disguised transfer of taxpayer money,” he said, “and I don’t see any support for that from the people in Germany or elsewhere.”

DAX - Wave 5 of Black circle wave 1 is on

All odds favor that wave 5 of Black circle wave 1 is ongoing. I do expect this wave will decline to near to the 5,345 - 5,350 area before Black circle wave 2 can be expected.

The ideal target area for black circle wave 2 is from 5,720 (50% retracement) to 5,810 (61.8% retracement), but as the general mood is deteriotating fast it could be less, but time will show

Gold - Follows my fractal count perfectly

Some time ago I said that minor fractal number 5 was in place and that minor fractal number 6 was ongoing. If minor fractal number 6 will be equal in size (percent wise) to major fractal number 6 we will se a 25.48 percent decline from 1,161.50, which will give us a target near 865.55. There will be some strong support along the way down, but as this is a C-wave its personality will be as a wave 3 - strong!

I'm sure that the gold bulls will not look pleasantly upon a break below support at 1,000, as this will destroy their invers Shoulder/Head/Shoulder.

Just remember one thing. the long term uptrend in gold is still firmly in place this is legg C of the ongoing correction, but investing in gold was becoming way to crowded.

EUR/USD - Red circle wave 3 is ongoing

Sorry for now being so active this week, but I have rather busy.

It has been sometims since I have talked about the USD. Today I have looked at EUR/USD as this cross leads over the USD-index currently. The reason of cause is the trouble in Southen Europe with Grees and Portugal, but Spain is doing everything it can to be center of the storm too.

It's clear that red circle wave 1 and 2 is in place and red circle wave 3 is ongoing. The break below 137.37 made it clear that the rise from 124.55 in early March 2009 was a three wave affair (overlapping wave 4 and 1, which is not allowed).
Looking at red circle wave 3 wave 1 ended at 138.63 and wave 2 topped at 140.28 and wave 1 of 3 most like enden yesterday at 135.86 excatly at the channel bottom. I now expect a small wave 2 of 3 rally towards the 137.43-137.53 area, before the next legg lower will be seen. Expect red circle wave 3 to reach at least 130.80 (1.618 times red circle wave 1). Stay with the dollar!

DJI - Wave 1 of black circle wave 3 is done or very close to

Just a quick update. Yesterday I said that black circle wave 2 was finished and black circle wave 3 down has begun. We have just seen wave 1 of black circle wave 3 finished or is very close to, so tomorrow expect a minor rebound in wave 2 towards 10,074 and maybe just above 10,100 before wave 3 begins.

VIX - Is in an ideal position to take off again

The VIX-Index is in an almost ideal position to take off again, having almost tested the 21 day moving avg. (mid-point of the Bollinger Band). A break above 23 would be confirmation that the VIX is ready to shoot higher.

DJI - Black circle wave 2 most likely finished

My favorit count shows that black circle wave 2 most likely finished with the test of 10,314.84, that was was just a bit above the 38.2% correction target at 10,312.07.

A break below 10,233 and more importantly 10,173 would confirm the next move lower has begun.

I will be looking for a move to at least 9,224 in black circle wave 3.

DAX - Minor wave 4 is most likely done

Minor wave 4 most likely ended just below the ideal target-area at 5,746-5,754 (the top has been 5,733)A break below 5,667 would confirm the top calling for a move closer to the target near 5,500 as the bottom of wave 3

DAX - Count favors that wave 4 is ongoing

My favorit count (as per above) favors that wave 4 is ongoing. Wave 4 is becomming a more complex wave, which is quite normale. I do look for a move closer to 5,740 - 5,750 before ending wave 4, but the risk is of cause that some kind of triangle is developing.

DJI - Evidence support that black circle wave 2 is ongoing

My favorit count at this point is, that black circle wave 1 ended at 10,055.46 and black circle wave 2 is ongoing with an ideal target near the 10,258 area (top of wave 4 of one lessor degree). As this is wave two we could see a higher correction towards the 10,391-10,472 area before beginning black circle wave 3.

There is still the possibility that we are still only in wave 4 calling for wave 5 donw below 10,044.66 before ending black circle wave 1, but this count is a bit messy and therefore not the prefered at this point.