EUR/USD - Black circle wave 2 up is in progress

Black circle wave 2 up to at least the top of red circle wave 4 at 138.17 is ongoing.

From the bottom of black circle wave 1 we have seen wave A and B and are currently in the beginning of wave C up. If wave A and C are to be equal in lenght wave A will finish in the 136.13 area. If wave C rallies beoynd that level we will have to look for wave C ending near the 137.54 area instead.

EUR/USD - Wave 1 down is done

The break above 135.00 confirmed that black circle wave 1 ended with the test of 132.65. We can now expect a multi week correction bringing us back to at least the wave 4 of one lessor degree high at 138.17.



My Cycle indicator also indicates that a bigger correction is under way.

Australia ORD - Continues to push higher

The AORD continues to push higher and with the break above 4,904 does clear the way for a continuation high towards the January 11. high at 4,983. That said the AORD is very overbought at the moment.

Only a break below 4,848 will indicate that a top is in place for a decline to at least the 4,734.91 area.

AUD/USD - Weak price-action

The latest price-action might force me to change my count. If resistance at 91.98 is broken to the upside, the the series of 1 and 2's get's cancellet and will instead be labled as a A-B-C correction and the ongoing rally, will be a new impulsiv rally, which ultimately will break above 94.05 top.

DJI - Indicators are rolling over indicating a top soon

Wave E in the Expanding Diagonal is still in motion, but as can be seen the indicators are rolling over indicating a top will be in place soon.

All requierments for wave E are fulfilled, but we must accept a new high as long as 10,816.43 isn't broken to the downside. A break below 10,816.43 would point to a top in place and call for a decline to at least 10,475.41.

EUR/USD - We need one more decline to end wave 1 down

First lets take a look a this long term picture above. I have shown it before, and as can be seen, we are currently testing the last Fibo-fan suport. We saw a test of this suport in late 2008 and in early 2009 and both time it held firm, so this a support that has great importance.



Taking a step down the time frame, we can count a clear five wave decline from 151.41 as black circle wave 1. When this fifth wave down is done, we can expect a multi-week rally towards at least the red circle wave 4 top at 138.17 in black circle wave 2.



Taking an other step down the time fram to the 240 minutes chart we can count wave one-two-three down in red circle wave 5. wave 4 problably finished at 134.94 and wave 5 down is under way.

There are two important things to notis.

1. Wave 4 is not alowed to break above 135, as wave 4 then would enter into the area of wave 1, which is not allowed.

2. Wave 3 became smaller than wave 1, which tells us that wave 5 can't break below 131.90 as that would make wave 3 the smallest wave, which in not allowed under the Elliott Wave Priciple.

Looking at the two corrective waves - wave 2 and 4 we can see that wave two was a flat, which due to the priciple of alternation should make wave 4 a zig-zag, which we have seen. A break below 133.45 will confirm that wave 5 is taking shape.

As a five wave decline can be counted one should be ready to accept a bottom soon and a wave 2 correction.

S&P 500 - A slight change in my count and the Expanding Diagoanl stays

I have been working on my counts, trying to figure out a way to explain this wired moves. I was very sad when my Expanded Diagonal count got blowen away last week, but going over my charts and counts suddenly gave me the above option. This slight change moving B not only keept the Expanding diagonal alive, it also opende up the possibility for wave E to move even higher yet.

Yesterdays high could be a top, as it has taken half the time to develop wave E than wave C, but I do think it would fit the picture nicely if wave E went just slightly above the Expanding Diagonal resistance-line, but it is not a "Must".

A break below 1,152 would be the first serious sign that the top is in place.

The picture is the same for the DJI.

EUR/USD - Wave 5 down is ongoing

It has been sometime since I last visited the EUR/USD cross (Feb. 06), so it's time to update the larger picture.

The break below 134.32 yesterday made the decline from 151.41 a five wave move, which has long term implications going forward.

First lets try to pin-point some possible targets for wave 5 down. The first target would be at 132.45, where wave 5 would be 61.8% of wave 1. At 130.30 we find the 78.6% retracement target of the c-wave rally from 124.55 to 151.41.

The wave 2-4 channel points towards 130.30 as the most likely target.

The chart below is the USD-index, which is the invers picture of the above. Target is most likely near the 61.8 retacement at 83.73.

Gold - Major decline ahead!

Take a good look at the above chart. First a big Shoulder/Head/Shoulder top (Mother factal), which was activated in late January followed by three back-testing stabs at the neck-line and today the child-fractal Shoulder/Head/Shoulder has just been activated, calling for a shap decline.

A shape decline would also fit my long term mother/child factal below.

FTSE 100 and DAX - Wave [B] is done

Wave [B] peaked a couple of days late in regards to the ideal time on March the 16 and both indicies peaked a little higher, than the ideal top, but as said last week. The form was right and it would just be a matter of when and not if.

The bigger picture is now calling for wave [C], which will have a target below the bottom of wave [A].

Because of the speed and the very small corrections be aware, that the coming decline in wave [C] will be very violent too.

Remember Newtons 3. law about "Action = Reaction"

Australia Ordinaries - Wave 2 is done

Wave 2 need one more rally to 4,892.20, which was within the ideal target area from 4,885 - 4,893. Wave 2 ended just above the 78.6% correction high of major wave 1 down. A break below 4,794.10 will confirm that wave 2 peaked at 4,892.20 a accelerate major wave 3 down to next support at 4612 and the bottom of major wave 1 at 4,483.30.

As wave 2 became a simple Zig-zag. We already know, that major wave 4 will be some kinde of flat or a triangle due to the Priciple of Alternation.

Be ready for major wave 3 down, as this is a very/the most powerfull of the waves.

AUD/USD - Wave 3 down is ongoing

Wave 2 found its peak at 92.51 just below its ideal target at 92.64. Wave 3 down should now be ongoing and a break below 90.94 will confirm the peak and the wave 3 decline. First target would be the wave b low at 87.99, but we should see wave 3 fall to at least 80.23.

S&P 500 and the DJI - Top in place ?

The S&P 500 index not only blew the Expanding Diagonal, but also rallied past the ideal point where wave c would equal wave a in length. Lokking at the DJI it ended almost perfectly at the point where wave c where equal in length to wave a. The Expanding Diagonal is still very much a live. Finally seen from a timing point of view we needed a couple days more than the ideal timeframe, but that is not the most important issue - FORM IS ALWAYS MORE IMPORTANT!

It's still very early, but I will risk calling a top here. If it's the final top is still too early to tell. But we are way overbourght here, we have Negative Divergence on all indicators, so it might be the final top.

Crude Oil - Wave 2 is done and wave 3 down is ongoing

After a nice back test of the Ending Diagonal suport line I think it's safe to conclude that wave 2 is done and wave 3 down is ongoing.

A break below 79.17 is need to confirm wave 3 down, but it should only be a question of time before that's seen, calling for a decline to at least 77.05.

The bigger picture calls for a decline to suport in the 73 area.

Crude Oil - Ready for the next legg down?

It might be.

As can be seen we had a nice back test of the Ending Diagonal suport line, but we need a break below 81.40 to gain more evidence. A break below 81.40 should yield a new test of the 79.21 area at least.

Possible tops in the major indices today?

As can be seen on the above charts of the S&P 500, DJI, FTSE 100 and the DAX the time for a top is just right and so is the form, which is more important.

What excuse will we finde in the news for the possible sell-off later today or tomorrow?

Maybe just maybe the FOMC will be more explicit on the "Exit strategies" at todays meeting, being the excuse to sell of stocks.

Risk-taking is on the rise

Yesterday I saw an article in The Wall Street Journal under the title "Rally Is a Tale of Wounded Stocks. The main issue in the article is, that it's the lower-quality, smaller sized companies that has rally the most since the February low. That means risk-taking is on the rise and that the current rally is a very weak one.



Compared to the NFIB-Index which fell in February til index 88 from 89.3 in January, the willingness to "pick-up" the small lower-quality names doesn't make sense to me.
I know that the NFIB-Index can't be compared directly to the small S&P 500 companies, but I'm sure that they are feeling the heat too. See this article below written by Bruce Phillips about "Small Business Sees Grim Future I do think, that it nails how many of these companies feel too.

Small Business Sees Grim Future — With Good Reason
by Bruce Phillips Monday Mar 15, 2010
For most of the past 15 months, the Index of Small Business Optimism from the National Federation of Independent Business has been at or near historically low levels. Sadly, the index— which measures, among other things, job creation, current and future sales, future sales, profits and financing opportunities — paints a pretty bleak picture, and rightfully so.
Main Street has been left behind as corporate America — aided in some instances by government rescue money — continues to recover. It seems that as corporate profits recover, large firms are doing little to reduce unemployment and increase consumer spending
Small firms, meanwhile, continue to struggle. On the one hand, sales are scarce in many retail sectors on Main Street. Look at the many small eateries, apparel, and novelty stores disappearing from downtown areas and suburbs. Slack sales are generally the reason.

Looking at the Retail Index below. The best count is that the decline from February the 20, 2007 to November 21, 2008 was a simple A-B-C Zig-Zag correction, which I count as wave [A]. The ongoing rally is best counted as a A-B-C correction too, but in this case a Irregular flat (nice alternation), which will be counted as wave [B] calling for a decline to the low of wave [A] in wave [C] at least in a flat or lower if it becomes a irregular flat.

Back to the ongoing wave [B] we are currently in wave 5 of C. Wave 3 was smaller than wave 1, which limits the length of wave 5 to max. 503.44. But as wave 1 and 3 are almost equal in length I would expect wave 5 to be smaller. The first obvious target would be 38.2% of wave 1 through 3, which would give a target at close to 461 A clear break above 461 would make the 479 area the next target-area and then the 503.44 as the absolute maximum.

As I said, I do prefer a top near the 461 area.

DJT - The top is in place!

With the new high at 4,337.07 today the last legg of the [B]-wave rally is in place, that also means that the entire up-move since March 9, 2009 has found its top and wave [C] down below the low of wave [A] 2,134.21 has begun.

Expect a break below suport at 4,265.75 to be seen soon, calling for a decline towards 4,129, as first suport.

Australia Ordinaries - Is wave 2 done or do we need one last rally higher?

Is the wave 2 rally done or do we need one more rally closer to the 4,883 - 4,885 area before wave 2 is finally done?

One could make a case of the final wave 5 of C being a Ending Diagonal, but if this is the case, then the E-legg became a truncated top (lower top than the C-legg), this is a very early call for that. Therefore I do favor one more rally higher towards the 4,883 - 4,885 area to marke the final high a the finish of wave c of 2.

Only a direct break below 4,731 will confirm that wave C finished at 4,849.20.

No matter which count is correct I would not fight hard to squeeze the last percent out of this market. I would just sell out here and even concider selling short at this time.

AUD/USD - A move closer to 92.64 is possible

The break above 91.50 has opened two possibilities.

1: That wave C will hold suport at 91.09 and rally directly to 92.64 over the next couple of days. A break below 91.09 would eliminate this count.

2: That a wedge shape formation is building. If this picture is the rigth one, suport at 91.09 will be taken out for a move closer to 90.54 finishing legg "D" and then a final E-legg higher towards maximum 94.47. This picture is the least likely and least prefered at this time.

A directe break below 90.54 would eliminate both counts a favor that wave 3 down has begun.

Looking at the massive divergence on the RSI, this rise clearly looks corrective and not at all like a impulsive rally. Had it been a impulsive rally then the RSI ideally would make a new high as wave 3 of 3 unfolded, which is very unlikely in this case. therefore all odds favor, that this is only a correction.

Crude oil - Wave 2 up could have peaked today

The [B] wave in oil has been just as hard to read as the major stock indices. I don't know if is only me or if I got Expanding Diagonals on my mind after digging deeper into them the last couple of days, but a Expanding Diagonal does fit the picture perfectly.

If my count is correcte wave [B] ended on January 12 with a top at 83.95 followed by wave 1 of [C] down to 72.48 and wave 2 of [C] has become a irregular flat (See the hourly chart below for the details of wave 2 up).

It is a bit early to call the ending of wave 2, but the form is right with sub-wave e peaking at 83.10 today just above wave c high at 82.96. The following break below the suport-line of the Ending Diagonal at 81.39 is the first indication that wave 2 is finished. I would like to see a break below wave b of the Ending Diagonal at 80.18 soon, adding further confindence to my assumption that wave 2 has peaked.

S&P 500 and DJI - I need to change my count

On Tuesday I wrote, that the DJI and the S&P 500 indices should make a new high alongside new new high made in the DJT, but I still held on to the possibility, that both the DJI and the S&P 500 didn't have to make a new top and thereby make a Dow Theory non-confirmation top.

Looking at the S&P 500 index above, that possibility is now a very very low problability option at this point, almost testing and breaking above the 1,150.41 high calling for a continuation towards 1,154.56 where wave c of E would equal wave a of E in length.

I have spend quite some time trying to uncover the pattern developing and the very best count (now my favorit) is that an expanding diagonal (See the Elliott Wave Principle page 37) is developing.

As can be seen wave E is currently ongoing. If wave c of E is equal in length to wave a of E, then we should see a top near 1,154.56. If however wave E breaks above 1,154.56 is can't rise higher than 1,165.53, where wave E would be equal in length to wave C. In this case wave C represents wave 3 and wave 3 can never be the shortest wave.

The pink box show the ideal top and time for wave c of E. It's very common that the upper part of the box will be broken slightly before topping out. Looking at the time aspect the ideal top will come on Tuesday the 16 of March.

I just want to add one important thing. I still regard the rise from the 666.79 low on March 6. as wave [B] and not the start of a new impulsive rise, that means that the low of wave [A] at 666.79 should ultimately be broken in wave [C]



The reason I picked the S&P 500 as my main index this time (I'm an DJI man) is that it's much more clear in its structure.

Ideally the DJI will break above the January 19 high at 10,729.82 too, but as can be seen, it's much weaker than the S&P 500 so we could see a truncated (See The Elliott Wave Principle page 35) E-wave high below 10,729.82. If that happens it will make a Dow Theory non-confirmation, which is often seen at important tops or bottoms.

However if the January high at 10,729.82 breaks the ideal target will be 10,784.52 where wave c of E would be equal in length to wave a of E. From a timing point of view a top should be seen on March 16.

The absolut maximum wave E can reach is 10,885.95, which is where wave C (3) and wave E will be equal in length. Again wave C, which represents wave 3 here can't be the shortest (See The Elliott Wave Principle page 31).

DJT - Top in place ?

Just a quick follow-up on yesterdays post on the DJT.

We got the extra squiggles and a new high at 4,331.26 and a break above the 2-4 channel, we might just need one more new high, but it's not a must. The key is a break below support at 4,231.35, if that support breaks it would indicate, that a top is in place and that would most likely be followed by a break below 80 in the Stochastics, which would also indicate that a top is in place.

We still have non-confirmation of the new high in the DJT from the DJI and the S&P 500. If they don't confirm the new high and supports begin to break it will be very bearish.

DJT - Made a new high for wave [B] - Bullish or bearish?

DJT made a new high above 4,265.46, which should cause both the DJI and S&P 500 to follow and make new highs soon too, but if they don't make new highs and supports begin to break, that would be very bearish due to the Dow theory of non-confirmation.

Looking at the wave-strauctur for the DJT it seems that we need a couple of squiggles more to end the rise from February 5.



I still think you can make a good case of a top in the DJI soon and below the January 19 high at 10,729.87. The count on the DJI is my favorit count, but below on the S&P 500 chart you can see a slightly different count, but that would still call for a top soon and below the January 19 high.

What could and should concern is of cause, that the 78.6% retracement of black circl wave 1 has been broken, that does weaken the black circle wave 2 case, but wave 2 is allowed to retrace up 99% of wave, which make wave two's more tricky.

A break below 10,523 would be first small indication that a top could be in place, but a break below 10,376 and more importantly 10,185 is needed to confirm the top is in place.

Australia Ordinaries - Wave 2 of wave [C] has hit its target-area

The target-area for wave 2 that I laid out last week, has now been tested. It could still move a little higher closer to 4,861 - 4,893 area before topping out.

A break below 4,765 would be the first serious indicator, that the top is in place.

AUD/USD - Wave ii still ongoing, but for how much longer?

Faliuer to break below support at 89.70 has prolonged wave ii. Resistance is now found at 91.50, which should mark the absolute high of wave ii.

As can be seen on the 5 min. chart below, a five wave structure can be seen from the low 89.76 and the small triangle forwarns that a top is nearby. We do need a break below 89.76 to finally call the top, but it should be a low-risk area to sell AUD in front of the 91.50 area.

A break below 89.76 will be first serious indication, that a top is in place for a continuation lower towards support at 88.05 and a break here will confirm the top.

DJI - Wave 2 have peaked or is very close to

I have shown my favorit count. As can be seen on the hourly chart above wave 2 has peaked or is very close to. That should mean a break below 10,417 tomorrow and break below 10,188 should follow within the next days.

The chart below is a 5 minuet chart, where the final fifth wave of c og 2 can be viewed. As can be seen the wave (ii)-(iv) channel has just been reached by wave (v).




As stated above, this is my favorit count, but what's the risks to this scenario?

The 61.8% retracement of wave 1 has been broken. This is allowed by wave 2, but should be viewed as a cautioning sign.

The 78.6% retracement of wave 1 has been broken too. Again that allowed by wave 2, but more often than not means a new high above the 10,729.82 high will be seen. So why do I still favor a top in wave 2? Because form is more important, than retracement targets, and we clearly have a five wave rally in wave c of 2 in place.

DAX - Wave 2 is very close to its peak

Just a quick word on the German DAX-Index.

As can be seen on the chart sub-wave b is now equal in lenght to sub-wave a and the 61.8 % retracemnet of wave 1 is just above at 5,840.31. So sub-wave c and wave 2 is very close to its final peak from where wave 3 down can begin.

Stay tuned.

EUR/USD - This chart speaks for it self

Enjoy!

AUD/USD - Has sub-wave ii finally ended?

Sub-wave ii became more complex than I anticipated. The little new spike above 90.68 to 90.85 yesterday reminded me of something we saw i this cross not far ago. In late November early December we saw the same thing. I have boxed the two incidence in red.

They are not fractals, but the uniformity is quiet big.

If sub-wave ii has inded topped we should see the strong sub-wave iii take us below support at 89.32 and important support at 88.00 very soon. I would expect sub-wave iii to take us down to at least the 78.65 area.

DJI and S&P 500 - Is close to end wave 2

In my post regarding DJI and the S&P 500 index, I wrote that we could have seen a top in wave 2, but prices was not allowed to break above 10,392.68 for the DJI and 1,111.13 for S&P 500 as that would call for one more rally above 10,438.40 in wave v of C for the DJI and a final rally higher towards 1,120.52 for the S&P 500.

If this wave 2 rally goes to its extrem we could a test of 10,538.24 for the DJI and 1,133.67 for the S&P 500.

Nothing has changes in the bigger picture, which still calls for a wave 2 top soon and the beginning of wave 3 down.