EUR/USD - The correction from 124.52 became complex

The correction from 124.52 became a a double zig-zag, but the end result will still be the same. We will see one more rally higher towards the low 125 area to end the entire correction from 121.52. In the short term a break above 123.72 will confirm the rally higher.

As can be seen on the chart above, the RSI showed divergence at the 123.23 bottom.

AUD/USD - The correction from 80.70 is almost over

The ideal target zone for the correction has been reached and it's just a question of time before the correction is finished. The low 85 area has been reached and there is a small posibility that we could see a slight extension higher to 85.85, but I would not wait to long and hope too much for that outcome.

A break below 84.84 would confirm the top is in place.

EUR/USD - The correction higher is still ongoing

The Correction higher towards 125.10 - 125.40 area is still ongoing.

The correction lookes like a dobbelt zig-zag, where wave c1 was equal in length to wave a1. we should see a rally towards 124,70 - 124,80 from where a move lower towards 124 and mayby even 123.56 should be seen, before the final leg higher towards the ideal target area near 125.10.

EUR/USD - The triangle is "dead" with the break above 123.43

The triangle concept died with the break above 123.43. Instead a invers Shoulder-Head-Shoulder bottom has been activated, calling for a continued rally towards the 125,10 - 125.40 area.

The flat wave iv concept seems more and more likely.

EUR/USD - A triangle might be building

The waves since the bottom of wave 3 has been somewhat wird looking, but the explanation for that might be, that a triangle could be building. If thats the case, then we should see wave E of the triangle rise towards the 123.20, before we will see the final thrust out of the triangle to the downside. This thrust should ideally decline to the 119.32-120.18 area.

S&P 500 - The correction from 1,041.32 has more upside

Wave I from 1,219.80 down to 1,041.32 took 21 days, so expecting the entire decline to be corrected in just a little over 1 day is not likely. I would expect it to take something like 8 to 12 days. If however the red alternate count is the correct one, the decline wave 1 of 3 down took 8 days and the wave 2 correction should take 3-5 days.

I still expect resistance at 1,090 to be broken for a move closer to the 1,153-1,171 area, before the next big move down sets in.

EUR/USD - Something doesn't look right

At this point we could be making a flat correction or a running triangle as wave iv. The daily chart isn't to much help rigth now.

Looking at the 5 minutes chart below that might give us a clue... Looking at the decline from 126.72 I can count five waves down, but the last wave doesn't look quit right. If we only look a wave 5 down wave iii is 1.618 times the length of wave i, but the onging wave iv has overlapped wave i, which leaves us with only a expanded endendig diagonal as wave 5 down. If this is the case we can't have a break above 123.43 before we have seen one more decline below 121.53.
A break above 123.43 without the decline first, would raise the odds that we are in some kind of flat correction or a running triangle of some kinde.

EUR/USD - Short term rise to 123.11 then down again

Just a quick update.

As can be seen on the 5 minutes chart above, we should see a small rise higher towards 123.11, which is both the 38.2 retrecement and the top of wave iv of a lessor degree. From 123.11 we should see a new decline down to 121.05.

If 123.11 is clearly broken wave 2 will extend higher towards 123.24-123.39 area before the next decline is seen.

S&P 500 - Wave I down ended just above the target

The rally in the late houres of the tradingsession yesterday has broken above the wave 2-4 channel of wave 5 down, and at the same time broke above the centerline of the wave 2-4 channel line of the entire fall from 1.219,80 to the low of 1,041.08. That break increases the odds that wave I down ended at 1,041.08 just 11 point above my ideal target at 1.030.

We should now see wave II towards at least 1,108, but I wouldn't be surprised to see wave II reach 1,153-1,173 area (the 61.8% retrecement and the high of wave 4 of one lessor degree)

If the alternative count (in red) is the right one we should only see a move higher towards the 1,091 area and maybe 1,123 before the next steep decline will be seen.

EUR/USD - Is the correction from 121.43 over?

The long term picture is very bearish for EUR. Support or what was supposed to be support didn't support much and was broken without much fight. A very big Shoulder/Head/Shoulder is clearly visible and call for a decline towards the 87 area.

Taking a closer look, here at the daily chart. We can see, that the market is oversold, but we still don't have any divergence, which is the main reason for my call for a continuation towards the 116 area, before a more serious correction will be expected.

Taken a even closer look, here the 5 minutes chart, we can see a possible five wave decling in making as long as 124.71 isn't broken to the upside. A break above 124.71 would make decline from 126.72 wave b of a flat correction, while a break below 121.74 will make it a five wave decline a wave 1 of 5 down.

I favor the wave 1 of 5 down.

S&P 500 - Getting close to its ideal target for wave I down

If my count is correct (without sounding to cocky it has been spot on until now) we should soon find the end of wave I down from the top at 1,219.80. The ideal target is near the 1,030 area, from where a correction to at least 1,103 should be seen.

What make me believe that we is close to the end of wave I down and not the much more bearish alternative wave count shown in red. On the daily chart we now have a small divergence on the RSI, which would be expected at this point, showing us that the move down from 1,219.80 is becoming exhausted. If however prices collapse clearly below the 1,030 area and the RSI breaks below the low from May 6. I would switch to the much more bearish alternative (seen in red).

The break below the May 6 bottom has destroyed hope for many that this was only a correction and the mood has become much more bearish for the longer term - They (the bulls) just don't know it yet...

AUD/USD - Short term picture

With a low at 80.70 wave I down ended and we are now in the middle of wave II correction, which ideally will reach the late 84 area or the low 85 area before turning down again in a new powerfull sell-off in wave III

VIX - In "Extrem fear" territory

The VIX-Index enter Extreme fear territory today. This is the first time during this new uptrend that we have entered this area. During the last uptrend the first time the Extreme fear territory was entered was in early October 2008. Expect a deeper move into the Extreme fear territory in the coming weeks.

S&P 500 - Wave iii is evolving nicely

Just a quick update.

Wave iii of 3 of 5 down is evolving nicely. Today was a very negative day, but as we have just started wave (iii) of iii of 3 down we should see more downside pressure tomorrow.
I looking for a move down towards the 1,043-1,050 area before wave (iii) is finished.

S&P 500 - Wave iii of 5 down is progressing well

Wave iii of 5 down has broken the minor channel support, which is classic as wave iii accellerates. I still expect wave 5 to end near the 1,030 area (red box). If my count is correct we should see a wave II correction higher towards 1,100 and possibly even to the 1,168 -1,170 area, before wave III down begins

AUD/USD - The decline is extending

The support near the 84 area only provided a minor correction. The next support area will be seen near 81.19, if we are going to see a correction from there we might just see a correction up to the 85.00 - 85.67 area before the next legg lower.

Remember the decline in AUD/USD can be very very steep just take a look at the chart to the left and see what happend in mid to late 2008.

EUR/USD - Is the EUR short trade getting crowded?

Yes in the short term, but looking at the longer term No!

The low that we saw yesterday at 121.42 violated the channel support line, but couldn't maintain the violation, which points to the fact, that wave (iii) of 3 down is finished and we now in wave (iv). What can we expect of wave (iv)? Wave (iv) doesn't really have to do much, at least not when you think in points gained. The run we have seen towards 124.45 could be enough, but we most likely would need some more time, before being able to make the final low of wave iii down. However if 124.45 is broken to the upside, we could see a continuation higher towards the 127.37 area.

You migth ask why I expect more downside to be seen? Take a look at the RSI indicator. we have no divergence on the 14 days RSI, which tells me that this most likely is only wave (iii) of iii of 3 and we should see more downside after this correction.

Also take a look at the stochastics indicator at the bottom. Yes we are in oversold territory, but we have "only" been there for about 4 months and we have no sign of a turn rigth now. If you look at the rally from 124.52 in the first quater of 2009 the stochastics indicator went to overbought territory and stayed there for 7 months in a row before turning down. That said we don't have stay in oversold territory as long as that, but we most likely isn't done with the downside yet.

S&P 500 - Wave iii of 5 down is under way

The wave 2 correction stopped just below the 1,151.37 target and wave 3 of 5 down is under way. I do expect wave 3 to reach the 1,054 area, before some kind of flat or triangle correction sets in.

The Naked short selling ban from Germany has caused a lot of positions in Emergin Markets, high yelding countries and commodities to be sold of and the negative mood sould hit the US-market too.

AUD/USD - Is the first wave down coming to and end?

The break below 85.76 today has triggered a double top with a target in the 77 area, whats more important to me is, that we now have a clear five wave decline from 93.82 telling us that more downside pressure will be seen.

Looking at the short term picture (se the chart below) we can se a clear five wave decline followed by minor divergence on the RSI, which could indicate that a correction will soon be seen. If a correction is nearby we should see a move towards 87.73 and possibily even the 90 area (less likely thus) after which a new powerfull decline should be seen.

S&P 500 - In wave 2 of 5 down

On Friday I showed that we needed one more decline to finish wave 1 of 5. We saw that decline today with the fall to 1,115.90 and we are currently tracing out wave two, which will encounter resistance at 1,141.74 (the top of wave iv of one lessor degree), but we can't exclude a move higher towards 1,151.56 before wave 2 ends and wave 3 down can begin. Wave 3 should reach at least the 1,057 area.

Shanghai Composit - Breaking down alongside commodities

The Shanghai Composit is breaking down and today broke below is September 2009 bottom. According to the Dow theory the break below the September bottom was a bearish signal, as we now have lower tops and bottoms.

From and Elliott Wave Principle view my preferred count is that we a in wave iii down from the August 2009 top and should have no trouble breaking below support at 2,525.50. A break below that level will eliminate the possible A-B-C count from the August 2009 top.

In my view the current decline does look very impulsive and not as the end point of a correction.

China has been buying commodities as there was no tomorrow stockpiling especially base-metals like copper, lead, nickle etc., but seem to come to an end too.

Looking at the CRB chart below, there was a very nice symmetry between wave [A] and [B] where wave [A] took 34 week whereas wave [B] took 47 weeks (34 x 1.382). The break below 256.80 marked the the real onset of wave iii down.

Taking a closer look at the final part of the correction in the CRB-Index a very nice Diamond top has formed calling for a decline to at least 242 area.

Finally looking at copper we can see it breaking down too, but a break below 285.40 would mark the ending to the [B] wave rise from 124.75 calling for a decline below 124.75 in wave [C] As can be seen in the chart below wave [B] stopped at exactly the 78.2 % retracement point of wave [A].

The above charts all indicates one thing, that China is headed for an economic slowdown. It has never been my view that China was able to lead the global economy, but China did help along side the US, UK, Japan and Europe to make the [B] wave or wave 2 rally bigger than most of us expected, but the odds favor that it's all over.

AUD/USD - Decline to 85.60 area in progress

My preferred wave count still is, that wave 5 of [B] became a truncated 5, as it didn't exceed the top of wave 3. If my count is correct we a only in the very beginning of wave [C] down, which should ultimately break below the end of wave [A] at 60.08.

In the short term we need a break below 85.76 to confirm the wave 5 of [B] became truncated. We will most likely see a move to just above or just below 85.76 before a wave 2 correction higher towards 89.76 and maybe 90.73 sets in.

AORD - wave ii correction in progress

Wave [B] corrected 50% of the decline of wave [A] and my preferred wave count is shown on the chart above. I see the decline form 5,048.60 to 4,450.20 as wave i and we are currently in a wave ii correction, which ideally will take us to the 4,751 - 4,823 area, before wave iii down will take over, breaking below 4,450.20 for a move down to at least 4,251.59, but more likely below the 4,000 mark for a decline closer to 3,881 area.

One could easily argue, that a expanding triangle is building, but looking at the Shanghai Composit and the the other major indices I don't find that count very trustworthy at this point and it will only come into play if we see a deceive break above the 4,823 area.

EUR/USD - My target area has been hit, but....

My target area between 123.28-124 has been hit, but the bigger picture is beginning to look like a possible acceleration to the downside could send EUR/USD down to 116.43 where wave [C] will equal wave [A] in length. As can be seen a very big Shoulder/Head/Shoulder formation could be building, which would call for a decline all the way to 88.35. The neckline of the S/H/S formation has been broken and thereby activated the formation, but I would like to see the bottom of the left shoulder broken, which in this case means a break below 116.38, just below the point where wave [C] and wave [A] is equal in length. If 116.38 is broken the next important point will be the 1.618 times the length of wave [A], which comes in at 91.63 just above the S/H/S target.



Even though the EUR/USD is becoming oversold and there is only about 2 percent bulls back i do think we will see 123.28 broken for a run closer towards the 116.38-116.43 area. If the possible fractals shown below is correct we should see a bigger rally before a pull back is seen.
Notice that the possible Shoulder/Head/Shoulder formation in the USD-Index hasn't been activated yet.

S&P 500 - More downside to come

The ideal target zone for wave 4 between 1,170 and 1,176 contained the correction (wave 4) for the last leg down in wave 1 down. As wave 4 broke outside the wave 1-3 channel we should expect a break outside the wave 2-4 channel too, that means that the ideal red box I have drawn near 1,030 should be broken to the downside too.

Takeing a closer look at wave 1 of 5 down, I do think a small triangle is forming af wave iv calling for a decline closer to 1,100 before wave 2 of 5 begins.

S&P 500 - The correction is now in the ideal target zone

The failure to break below 1,1147.24 has given us one more spike into the ideal target zone, which should halt the ongoing correction for a new attemt to break below important support at 1,147.24. When that support breaks we should see a new decline to a new low below 1,065.79.

Short term we should see one more slight new high above 1,172.86 before the ending Diagonal is finished.

If the shown count is the rigth one, we can't go above 1,181.80. A break above that level will leave us with a overlap between wave 4 and wave 1, which is not allowed and will change the count to a finished wave 5 decline at 1,065.79 as wave 1 and the ongoing correction will then be wave 2.

Gold - Breaks above the 2009 peak

With the break abover to 2009 peak at 1,226.10 the uptrend is still very much in place. Due to my fractal count (see the chart below), which have called for a correction lower, but the break above the 1,226.10 peak has cancellet my fractal count ( i'm a bit sad about that, as it was a fine roadmap, but not anymore).

What to expect now? If we can close above the resistanceline (grey on the chart) in May we could see gold accellerate higher towards 1,774. If this is the case, we can expect more trouble in the global economy soon.

From a Elliott Wave perspective we have seen a series of wave one's and two's and is now in wave 3 of 3 of iii, which should be the most powerfull of the waves.

Only a break below 1,168 would alter the positive outlook for now and cause a decline to at least 1,120.

S&P 500 - A perfect tuchdown...

With a high at 1,170.50 the ideal retracement area reached. Whats needed now is a break below 1,147.30 to confirm the next leg lower has begun.

Expect the area between 1,164 - 1,165 to protect the upside for a break below 1,147.30 for a decline to at least 1,129.87.

S&P 500 - The correction from 1,065.79 is almost done

We are almost within striking distance of the ideal correction target area set yesterday.

So just lets get up to the 1,170 - 1,175 area (maybe slightly above), and the hard down in wave 5.

The moves from the ECB, EU and IMF is good for the Moral Hazard among the South European members of the EUR, but not for stocks in the longer term.

Moody's today said that they most likely will downgrade Greece and Portugal soon. No news in that, but it would and should be a wake-up call to the European politicians that they haven't fixed the problem. They have bought them self some time and thats all....

S&P 500 - Is was a Triangle, but it was a B-wave Triangle

My Triangle call from yesterday was not a wave 4 Triangle, but a B-wave Triangle within a big Zig-zag, which is currently ongoing. I expect wace C to reach the 1,170 - 1,175 area before turning down in wave 5.

Because of the spike down Thursday last week, we could see a truncated wave 5, but it's way to early to say anything concrete yet.

EUR/USD - Ready for one more low below 125.21

The Zig-zag correction overshoot my ideal target area near 130.50 slightly making a high at 130.93. Now I would like to see a break below support at 127.95 indicating that we a ready to take on the 125.21 low for a move closer to the 123.23 to 123.48 area.

EUR/USD - Does not look finished to the downside

When this correction is finished we should see more downside. The decline from December 2009 doesn't look finished yet. I would expect the 130.50 area to hold for a decline closer to the 123.28 area before the first wave down is done.

S&P 500 - Building a Triangle

As expected we saw a down day Friday, ending down 16.16 points or about 1.45 pct. I do think that a Triangle is building and if so, we still need to finish the e-leg before wave v down below the wave iii low at 1,065.79. Ideally we should see a move closer to the 1,045.

I wouldn't be surprised to see the Asian and European markets trading higher on Monday, as the Euro-countries have granted Greece a loan of EUR 110 billion. As I'm writing this the EU Finance ministers is talking about some kind of EU-Fund, which will be able to loan or guarantee a EU-country which gets financial trouble with up to EUR 60 billion. Considering that Greece alone needs EUR 110 billion (which most likely isn't enough) then EUR 60 billion is just a laugh. Also considering that all EU-countries is paying even Denmark, Poland, Czech, Hungary, Sweden, UK etc. all countries that is not part of the EUR. That is just crazy, why would they or should they loan Greece, Portugal or Spain anything. These countries has had a ball the last 10 years and now the bill will have to be paid and they will not do it them self. Shame on them!

Even worse is that the EU politicians blame the financial markets for their mistakes and saying, that it's the financial markets that are causing this financial risk. They did it them self and the financial markets is just showing them, that they have chosen a very wrong path. Blame others for their mistakes. Shame on them!

VIX - Entered "Fear" territory, but not extrem fear...

Sorry for not updating my blog yesterday, but I was really really busy all day and evening. I will try to update today or during the weekend.

Just a short note about the VIX-Index, as scary as the 98.79 points drop was yesterday the VIX-Index reached "Fear" territory, but we where nowhere near extrem fear...

Having heard and read about the causes for the collaps yesterday, I don't belive the "Fat finger" story or the broken machins story. Sell volum was huge and the buy-side simply just dissapered and that caused the collaps. We should see more selling pressure today.

S&P 500 - Just a quick update

Gold - A Expanded Flat correction has just ended

The Expanded flat that has been ongoing since late December 2009 ended yesterday with the small break above the Ending Diagonal resistance line. Wave C down is now in motion, this should be a sharpe decline towards the 950 area.

The 5 minute chart above shows a clear five wave decline adding confidence in the call for a finished Expanding flat correction. Wave 1 and 2 is finished or very close to finish for the start of wave 3 of C down. Wave 3 should decline to at least 1,141, but a more likely target will be the 1,131 area.

I have shown my Fractal count in Gold a couple of times. Fractal count 5 ended later than first anticipated as wave B turned into an expanded Flat correction, but Fractal count 6 should be under way for a decline towards the 950 area, before a move higher in Fractal count 7 is seen.