Happy New Year and a prosperous 2011

DAX Index - Topping?

The German DAX-Index could be topping. On the weekly chart above the Stochastic indicator is rolling over in overbought territory. The long term Rate of Change indicator is still bullish, but this indicator is a lagging indicator, and it will never catch a top or bottom.

Looking at the rally since March 2009 bottom at 3,588.89 to the top last week at 7,087.84, there is some very interesting relationships. First the rally from 4,524.01(point "B") to 7,084,84 is almost 1,618 times longer than the rally from 3,588.89 to 5,177.59 (the exact point is 7,094.53).
Time wise the rally from point "B" to the end of this week has taken 76 weeks, which is 4.236 times longer than the rally from the beginning at point [A] to point B, which took 18 weeks.

A break below 6,657.98 is needed to confirm the top, but the evidence of a possible top is compelling.

Crude oil - A top now or just half way?

The weekly chart above shows the correction since the low in late January 2009. The last part of the correction since the low at 64.24 (late May 2010), does display some very interesting relationships.

The daily chart below show us, that the rally from 64.24 to 82.97 took 52 days the following correction corrected just above 61.8% of the rally. The next rally from 70.76 to 88.63 took 54 days and came close to the 50% retracement of the major decline from 147.27 to 32.40 (89.93).
The correction from 88.63 corrected 50% of the rally from 70.76 to 88.63 and we are looking at the third rally from 80.06, which has now reached the mid-point time wise as it has taken 27 days.
Could the rally be over? Yes it's a possibility, but it would at least take a decline beneath 86.83 to imply that. It's more likely we will see a continuation higher towards the 96.60 - 97.00 area over the next 26-27 days before ending the entire rally from 64.24. But stay alert if 86.83 gives away.

EUR/USD - Still working on the correction

There isn't really much to add here. The correction that started at 129.64 is still ongoing. The "X" wave became a little deeper, which could mean that we will see a top near 135.27.

The most important question is still if the decline from 142.81 was just an A-B-C correction or an impulse, where we currently is working on wave 4. that will be decided if we see a close above 135.72, as a close above here will leave us with an overlap between wave 1 and 4, which is not allowed.

Shanghai Composite - Wave 3 down?

I still regard the decline since early August 2009 as wave [C]. If this count is the right one, then we have just started wave (iii) of 3 of 3, which should be the most powerful of the declines in the [C] leg down.

A break below 2,687 will confirm the rally since June 2010 was corrective and should confirm a decline below the June 2010 bottom at 2,320 soon. Wave (iii) should ideally decline to 1,510.

S&P 500 - More upside to come

Having broken clearly above 1.247,00 odds favors S&P 500 continuing higher towards at least the 1.289 - 1.290 area.

The clear break above the 61.8% retracement target for the decline from 1.576.06 to 666,92 has moved focus towards the 78.6% correction target near 1.382,91 and then close to the 1999 and 2007 tops in the 1.553 - 1.576 area (likely slightly above - See the chart below).

Looking at the internals of the current rise from 1.011,52 in early June we should see a minor top in the 1.289 - 1.290 area calling for a correction towards 1.172 - 1.173 area before the next rally.

A top near 1.290 followed by a decline to 1,172 would also fit the Armstrong & Brenner cycles, which are calling for a top in 2010 followed by a bottom in April - June 2011.

EUR/USD - Not much going on here

No much happening here! We could still see wave "Y" in some kinde of double correction (micro count), which should hear for 135.60 area or wave 4 down from 142.82 could be done and a new low below 129,62 should soon be seen.

I prefere the correction count for now and a break above 131.70 would be first small indication, that this count is the right one, while a break above 132.02 should more or less confirm that count.

Stay flexible thus!

EUR/CHF - working it's way to the bottom

Couldn't clear resistance at 128.68, which has keept the downtrend intact for now, but the next very serious support is just below at 124.78.
I'm still looking for a bottom soon. The sentiment towards CHF is way to bullish at this point and I hear, that a lot of loans in CHF is being closed in Easten Europe. They been very big in borrowing in CHF in Poland, Hungary and Czech and are being forced out. When the majority is out of the CHF-loans (should be very soon), then the bottom should be in.

EUR/USD - Correction since 129.64 ongoing

Not much has happened in this pair the last couple of days. The best count I think is, that the correction since 129.64 is ongoing. The "X" wave from 134.36 was a expanded flat and we should see a rally higher towards 135.65 going into the end of the year.

I'm still very undecided about the main count down from 142.81. It could be an A-B-C correction or it could be wave 1-2-3 and wave 4 is ongoing. If it's a wave 4 the 135.72 can't be broken to the upside, as the would leave us with a overlap between wave 1 and 4, which is not allowed.

Bovespa - Top in place

The uptrend since late October 2008 is collapsing. We should soon see the broken trendline tested from beneath, this test should provide an excellente oppotunity to exit the Brazilian stockmarket and the aggresive trade could even short the market at that point.

EUR/CHF - The bottom!

An important bottom could be in place. Looking at the longer term picture (the upper chart) we are close to ending either major wave C or 3 and can at least expect a correction higher towards 138.34.

A break above 127.78 would be first minor confirmation that the bottom is in place, while a break above 128.68 confirms the bottom for the rally towards 138.34.

GBP/USD (Cable) - Trend is collapsing

I have no EW-count on this chart, but wanted to alert you on the collasing of the minor rising trend back from May 2010. Expect the 156.40-156.74 area to protect the upside for a break below 155.29 and to accelerate the decline lower.

EUR/CHF - Top in place?

With the test of 127.56 yesterday EUR/CHF has made a new low for the decline since the 168.28 top in October 2007. The decline from 138.34 to 127.56 is clearly a five wave decline and with a slight new low below the September low at 127.63 the entire decline since 163.73 could be over or very close to it's final bottom.

There is ofcause a possiblity that the decline fronm 138.34 is only wave one, but I regard this option as slim at this point.

If we have seen an important bottom at 127.56 or is close to, then a rally higher towards 138.34 should be seen. A break above minor resistance at 129.20 will be the first warning, while a break above 131 will confirm the bottom.

EUR/USD - Was the rally to 134.94 wave 4?

The picture hasn't become any cleare since yesterday. As long as 131.63 isn't broken to the downside my call for wave c higher towards 134.94 and possibly higher can't be exclude, but if 131.63 is broken then odds will favor Infinitus ( http://singulorum001.blogspot.com/2010/12/depending-on-how-high-this-developing-y.html ) preferred wave 4 count and the rise from 129.64 to 134.94 should be counted as a A-B-C zig-zag rally.

If this is wave 4, then wave 3 is just a little longer than wave 1, which then favor that wave 5 will be extended, calling for wave 5 down to at least 125.89.

Stay flexible.

NZD/USD - Top in place

We have seen a very nice Shoulder/Head/Shoulder top and the break and close below the neckline at 73.97 yesterday has activated the top-formation for a decline towards its objective at 68.21.
Yesterday also saw a clear trend collapse from the minor trend etablised since May/June 2010. A very clear break below the trendline is a very bearish set-up.

Looking at the longer term view we saw a top formed below the long term uptrendline formed since 2001, that was broken in early September 2008. We also saw a top formed below the uptrendline in late September 2009 too.

S&P 500 - Top in place?

The inverted Shoulder-Head-Shoulder objectiv has been fullfilled with the high at 1,246.70. We can count a five wave rise from 1,040.40 (not the the most beautiful) and it does fit into the the longer term view as a complet A-B-C rally from 1,011.52 (see the chart below).

It also fit into the Brenner and Amrstrong cycles (see my November post here http://theelliottwavesufer.blogspot.com/2010/11/armstrong-and-brenner-cycles.html)

Calling for a top in 2010 for a decline into April.

Ofcause we need to break som support levels before we confirm the top. A break below minor support at 1,216.89 would confirm at least a minor top, while a break below 1,173.11 would confirm a much more serious top.

The short term picture hasn't cleared up. My best assumtion of the micro count is, that a double zig-zag is building. The first zig-zag went from 129.64 to 134.36 followed by a wedge shaped 'X' wave down to 131.36 and we have now seen wave A up in the second zig-zag. The rally from 131.36 to 134.98 is clearly a five wave rally, which calls for an minor a-b-c correction followed by a new five wave rally, which should at least reach the 136.06 - 136.37 area, where c=a at 136.06 and at 136.37 the second zig-zag will equal the first zig-zag in length.

EUR/USD - What is this?

The break above 133.22 has confused the picture. I have to adobt the alternate count, that the decline from 142.81 is and A-B-C decline, but the minor rally from 129.64 does not look impulsive either, which leaves us with and A-B and C currently ongoing rally. Could the A-B-C from 129.64 be a wave 4? Yes it coulde be (see Infinitus count http://singulorum001.blogspot.com/2010/12/sorry-for-updating-my-charts-so.html, it's not my preferred count, but I'll leave the option open for now). If we are in wave 4, then the bottom of wave 1 at 135.71 can't be broken (overlap between wave 1 and 4 is not allowed under the Elliott wave priciple).

As long as the pink line, which I have drawn from the minor bottom at 131.82 is not broken I will be looking for a continuation higher towards 136.31, where wave C=A. From 136.31 or if the pink dotted line is broken to the downside, i'll shift fokus to the downside again.



My long term count is still bearish for the EUR (see the long term count below)

EUR/USD - Impatiently waiting for a breakout

I'm impatiently wait for the breakout to the downside. I'm very much in doubt regarding my micro count, but if it holds true, then we can expect a powerfull decline when the serie of wave three's really taks hold.
I would still like to see a break below 131.63 soon. A break below that support should open up the downside for at least a decline towards 129.64.

A break above 132.85 on the other hand will be of concern, but only a break above 133.22 would force me to reconsider my entire count.

EUR/USD - One more wave one and two?

We saw a small break below 131.77 yesterday, but the break wasn't

maintained, which does cause some concern, but as long as 132.84 and more impotantly 133.22 protects the upside, I will count this as one more wave i and ii. That means that I'm still looking for wave iii to accelerate to the down side soon. I still looking for a test of the support near 129.64 soon.

Only a break above 133.22 will kill my count and make the alternate A-B-C count the obvious one.

S&P 500 - Has the roof been hit?

I still don't see the rally from early March 2009 to late April 2010 as a five wave rally. Yes you can count five leg, but looking at the internals between the legs, none of them look impulsive (at least not to me). The first rally went from 666.92 to 956.16 (289.24 points) and it's impossible to count a clear five wave rally. The first rally was followed by a minor decline to 869.52, correcting less than 10% of the first rally. The second rally went from 869,52 to 1,150.50 (280.98 points) again it's impossible to count a clear five wave rally and this rally is barely as long as the first rally. The correction from 1,150.50 finally corrected a fibonacci 38.2% of the rally from 869.52 to 1,150.50 ending at 1,056.59. The final rally from 1,056.59 went to 1,219.61 (163.02 points).

Therefore the above count is my best count (A double combination). Looking at the second part of the correction (the best fit is a Zig-Zag) wave C = 1.618*A at 1,232.53 (with a high at 1,234.95), this is an almost perfect hit. This could end the entire rally from 666.92, but the first demand would be a decline below 1,173.11.

What if we break clearly above 1,234.95 (say 1,247)? Then odds shifts towards a continuation higher to the 2007 top and slightly above (the second A-B-C will equal the first), in what might be a expanding triangle (see below).

Robert Prechter writes the folloing about "D" waves:

"D" waves — "D" waves in all but expanding triangles are often accompanied by increased volume. This is true probably because "D" waves in non-expanding triangles are hybrids, part corrective, yet having some characteristics of first waves since they follow "C" waves and are not fully retraced. "D" waves, being advances within corrective waves, are as phony as "B" waves. The rise from 1970 to 1973 was wave [D] within the large wave IV of Cycle degree. The "one-decision" complacency that characterized the attitude of the average institutional fund manager at the time is well documented. The area of participation again was narrow, this time the "nifty fifty" growth and glamour issues. Breadth, as well as the Transportation Average, topped early, in 1972, and refused to confirm the extremely high multiples bestowed upon the favorite fifty. Washington was inflating at full steam to sustain the illusory prosperity during the entire advance in preparation for the election. As with the preceding wave [B], "phony" was an apt description

As Prechter describes above. As then Washington is currently "inflating" at full steam, but this time thru Quantitative Easing.

EUR/USD - A serie of one's and two's ?

The price action in EUR/USD is really pressuring the limits of my preferred count.
If my count is valid, then we are seeing a serie of waves one's and two's of wave iii down.
As long as 133.56 isn't broken to the upside, my count stays valid for a break below 132.10 and more importantly 131.77, which will open up the downside for a decline towards 129.64.

A break above 133.56 and more importantly 134.00 will kill my count and make the alternate A-B-C count the most obvious count.

EUR/USD - My preferred count barely survived yesterday

The wave ii correction pressured it's absolut maximum target at 133.95. Actually it broke it slightly and tested 134.00, before turning down in wave iii. Thereby my preferred count only barely survived.

We should now see a decline down to at least 130.85. I would find it a bit suspect if 132.06 protects the down side for a correction higher, as that would leave wave i and (i) of iii equal in length. Ideally 132.77 will protect the upside, but only a break above 133.56

would frustate the picture.

EUR/USD - Impulsive wave iii to begin soon or...

At first glance wave i down from 134.36 wasn't very convincing. There was a clear overlap between wave (i) and (iv), which is not allow expect for one count and that is if an Leading Diagonal accounts for wave i. Looking at the micro count (see below) we could make the case, that an Expanding Leading Diagonal made it up for wave i down, but if this is the case, we should see an very impulsive decline in wave iii down.

If the nex decline becomes a weak decline too, the alternate A-B-C count gathers strengh and should be taken seriouse. If the A-B-C count is the right one, then we will not see a break below 129.64 again any time soon. A break above 133.95 will be the first signal that the A-B-C alternate count has preferrence.

EUR/USD - Wave ii done or is one more high needed?

After an almost perfect hit of my target area between 133.75 - 134.10 (the high set was 134.36). This could well be the final spike high, which a break below 133.18 will confirm, but as long as 133.18 protects the downside the is a small possibility that one more new high is needed to end wave ii.

A break below 133.18 will confirm the top for a new decline to at least 126.16, where wave iii = i.
On the way down support will be found at 131.63 and 129.64.

EUR/USD - Slight change in my count

The break above 132.20 yesterday was the trigger for a change of my count. The decline from 137.85 to 129.64 is only wave 1 of 3 and wave 2 of 3 is ongoing. The frist possible target for wave 2 is 132.75, where wave c = a, but it's more likely that wave c of 2 will extend towards the 133.75-134.10 area where wave c will be 1.618 times wave a. It's the top of wave iv of one lessor degree and finally it will mark the 38.2% retracement of wave 1 down.

The alternate count would see the decline from 142.81 to 129.64 as a A-B-C decline, where wave C=A.

EUR/USD - Wave ii could be over

With an almost perfect hit at 132.20 (the high was 132.17) wave ii of 3 could be over. I would like to see a break below 131.51 and more importantly 131.11, which will confirm the top and that wave iii of 3 have begun.

EUR/USD - The wave ii correction turned out to be more complex

The wave ii correction has become more complex. The micro count (see the chart below) has wave ii ending near 132.20, which is just above the 61.8% retracement of the decline from 133.45 to 129.64.

If 132.20 is clearly broken to the upside I might have to change my count and make the entire decline from 137.85 to 129.64 wave i of 3. If that becomes the case we should see a continuation of the wave ii correction towards the 133.74 - 134.21 area.

As we are in a correction be flexible, but a brealk below 130.85 and more importantly 130.46, will tell us, that the correction is over.

EUR/USD - The long term picture

It's time to look at the long term picture again.

November turned the uptrend since June around and turned the trend down again. The big Shoulder/Head/Shoulder top could still be the dominating formation. I would like to see a break below the 125.84 - 126.42 area to confirm a new test of the S/H/S neckline. Until the break below 125.84 we should not see a move above 137.69 at any time.

EUR/USD - Wave ii of 3 is done

Wave ii of 3 is done with the test of 131.36, which was the bottom of the extension area.
We should now see the next powerful downswing, which should take out 129.46 without much trouble and head for the next target area near 126-127.

EUR/USD - Triangle thrust up to 131.07

My very short term count suggest, that wave (iv) also turned into a triangle, calling for one final thrust up to 131.07, which should mark the top of wave ii and setting the stages for wave iii down.

Ofcause something more complex could emerge, but for now this is the best count available.

EUR/USD - Wave ii of 3 ongoing

My preferred count still seems to be on track. Yesterday I wrote, that I was looking for one last decline below 129.80 to end wave i of 3. We later saw one more low at 129.64 and has since seen a rally higher in wave ii. Wave ii is best described as a flat correction, where wave c ideally will end near 131.07 (see the chart 5 minute below), but is could extend higher closer to the top of wave (iv) of one lessor degree near the 131.36 - 131.49 area.

When wave ii is done we should see wave iii down to at least 127.80 and maybe even 125.37.

Let's see what will happen.