Vacation time - Skiing in Austria

I will be of to Austria early Saturday morning. Looking forward to lovely Austria, some excellte skiing, afterskiing, wellness and a bit of relaxing.

I wish you a profitable trading and take care out there...

Long term picture for USD

My EUR/USD chart only goes back to 1986, so I have looked at USD/CHF (the upper chart) as a good proxy and the USD-Index to get a longer term view of the USD.
Breaking down to a new all time low in USD/CHF doesn't fit my else slightly positive USD-view.
Therefore I took a new at the long term picture.

As can be seen above we have entered wave 5 down, after the breakdown from a big triangle, that had formed since 2005. The target for this thrust out of the triangle is at least the 76-77 area.

If we take a look at the decline since March 1985 we can count a five wave decline from 1985 down to January 1988 (3 year decline), which I have labled as wave A the following sideways consolidation (Double zig-zag) is wave B and we are now in wave C down. When wave C finally finds its bottom there is a clear risk that we still need a wave D (sideways) and a final drop in wave E in an ending diagonal.

Looking at the USD-Index the picture is pretty much the same. The difference is, that we haven't broken out of the triangle-consolidation yet, but the USD/CHF picture is more "clean" than the USD-Index and tends to lead the way. That does mean, that we should soon see the thrust out of the triangle-consolidation for a decline towards at least the 62 - 63 area.

The possible Ending Diagonal possibility doesn't seem as possible here, but it can't be excluded.

EUR/USD - The Bullish picture won

I barely had my post out yesterday, before we saw the break above 137.31, which determined that the bullish count was the right one. We are currently back-testing the neckline, but we should soon see the next rally higher. We are close to see red wave iii of black wave (iii) of iii, which should be very powerful and reactions will most likely tend to be small or even sub-normal the target for this wave iii is most likely close to 139.23, where it will be 1.618 time wave i.

Wave ii was deep and powerful, which should make wave iv a shallow, but complex, correction drawn out in time.

Copper vs. S&P 500 - Confirming the possible top

Copper lead this rally and the correlations between Copper and S&P 500 has been very high. The possible top in copper at 462.55 adds to the possibility of a top in the S&P 500. We still need the final confirmation that copper has peaked, but a break below 421.25 would be the confirmation we are seeking for a decline to at least the 366 - 367 area.

S&P 500 - Top in place?

We saw a big sellof in stocks yesterday. Not just in the U.S., but around the world. Could this finally be the top? The simpel answer is YES! We still need some confirmation. The first being a breal below the 1,308.77 - 1,311.96 area. The next seriouse indication being a break below 1,275.23 and the final confirmation will be a break below 1,255.25, which will make the decline the biggest since June 2010.

As you can see on the chart I have labeled the rise from 1 to 5, which is normally used for impulsive counts, but there is nothing impulsive over this rise. It is most likely a series of zig-zag's (Triple zig-zag). So when the final zig-zag is done the is no more upside, as a triple zig-zag is the most we can get.

We are very closer to the two year anniversary from the March 6 - 2009 bottom, which also adds to the possibility of a possible top being in place or very close at hand.

EUR/USD - Made it first time but...

The above bearish count is the only possible count, if the picture is still bearish for EUR/USD. It the very difficulte to maintaine the bearish count as wave (ii) (black) became way to high and now red wave (ii) has retaced almost all of red wave (i). This is allowed under the EWP and is why I will keep the bearish count as slightly favored and look for a break below 136.81 and more importantly 136.32 to ´confirm this count. But a break above 137.31 and the bearish count is buried instantly and the bullish count (see below) becomes the favorite count.

Also notice the Invers Shoulder/Head/Shoulder bottom formed since early February, which will be triggered if 137.31 is broken. The target for this formation will be 140.37.

EUR/USD - Make it or break it time...

The rally from 134.29 has extented to 137.31, which is of concern. The most bullish case we can make is that the rally from 134.29 is a wave (ii) of iii. If this scenario has any value we must not break 137.32 at any point, but should soon see a break below 136.07 and more importantly 135.33 which will confirm this as being a wave (ii).


If resistance at 137.31 breaks the decline from 138.61 clearly becomes a three wave decline opening up for a new test of 138.61 soon and continuation towards the 140 area and problably higher towards the 143-144 area, before wave D is finally done (see below)

Silver - New high

Silver broke into new highs yesterday, which keeps the uptrend firm in place. The new high has opened up the the possibility for a move higher to 33.00 as the next target, but the rally from 26.38 lookes like a finished five wave rally, which should call for at least a correction towards the 29.66 - 29.82 area soon. At the same time silver is seriouse overbought at this point, which could turn us lower anytime now, but only a break below 28.50 and more importantly 26.38 will confirm, that an important top is in place.

EUR/USD - Wave (ii) target fulfiled

Wave (ii) target is now fulfiled with the 136.28 test overnight. A brrak below 135.75 would be first signal that the top is in place, while a break below 135.33 will confirm a new test of the important support at 134.58, which needs to be broken to confirm that wave (iii) down towards 131.11 has begun.

A clear break above 136.28 would concern while a break above 136.77 will confirm a new test of 137.44 and call for a much higher rally.

EUR/USD - Wave (ii) still in progress

Support at 134.58 protected the downside yesterday and thereby told us, that wave (ii) wasn't over and possibly still need to rally towards important resistance at 136.24. We have seen 136.08 tested till now and as long as 135.34 and more importantly 135.16 protects the downside we might still see a fullscale test of resistance at 136.24.

A break below 135.16 would be a signal that wave (ii) is over, but still we need a break below 134.38 to confirm that wave (iii) is in work.

EUR/USD - Still in wave (ii)

We are still clearly in wave (ii). The rise from 134.26 has no impulse characteristics, which adds creedence to the count that we are in wave (ii) of iii down see my post from yesterday (http://theelliottwavesufer.blogspot.com/2011/02/eurusd-in-wave-iii-down_15.html) for the possible alternate counts.

We could still see a move higher towards 136.24, as long as at 134.95 and more importantly 134.58 isn't broken to the downside. A break below 134.58 confirms, that wave (iii) down is under way.

Resistance at 136.24 should protect the upside. If however 136.24 is broken, that would concern and a break above 136.76 call for a new test of 137.44 and the a-b-c alternate count from 138.61 will be the preferred one.

S&P 500 - Closing in on it's target

S&P 500 is closing in on it's target area (purple) between 1,350-1,390. Before reaching this area a minor resistance point is found at 1,333.84, which is two times the March 6. 2009 bottom (666.92). It shouldn't have to much impact, but this uptrend is stretch to a degree we seldom see.
A break below 1,311.79 would be the first signal that a top is in place, but a break below 1,275.23 to confirm the top.

EUR/USD - In wave iii down?

The most obviouse count currently is, that we are in wave iii down. If red wave ii just ended? It fits the picture of red wave iii of (iii) of iii down as corrections tend to become small. One can easily make the case, that we have just seen red wave a of red wave ii, but for now lets keep it as simple as possible, as we are looking at the micro count, where options are multiple.



Brearish alternate count
The decline to 134.26 could also be wave (i) of iii down, which would call for a more time consuming wave (ii) and most likely also a move higher towards at least 134.90 and possibly even 136.24, before wave (iii) of iii down sets in.

The bullish alternate count

Is that wave D up isn't over jet, and the decline from 138.61 is only a correction. Looking at the two legs lower. The second leg was almost exactly the same length as the first leg lower at 134.26 (c=a at 134.24). That would make it a perfect zig-zag correction. This is not the favorit count, but an option we have to consider.

S&P 500 - Is an Expanding triangle top forming?

After the break above 1,312.82 the ideal target-area for wave 5 is the 1,360 - 1,380 area (closer to 1,360 than 1,380). Looking at the latest price-action an Expanded triangle could well be forming calling for a possible top soon. It's not unusual the see the triangle resistance-line broken before exhaustion finally sets in. A break below 1,311.79 would be the first real sign of exhaustion, but a break below the triangle support-line at 1,285 is needed to turn the trend around.

EUR/USD - In wave iii down?

Looking at the decline since the top at 138.61 does clearly look impulsive. Looking at wave i down it has distinctive impulsive characters, where wave (iii) was almost vertical and clearly the longest. Wave ii corrected an almost exact 61.8% of wave i, which adds confidence in the impulsive count. If the decline from 138.61 is only a zig-zag correction we should still see a decline where wave c will be equal to wave a at 134.21.

However if we take a look at the USD-Index we see a clear inverse S/H/S bottom, which calls for a rally towards 79.79. We have one big hurdle though. Resistance at 78.81 is pretty strong, but if it break there should be little doubt that we will see 79.79 tested and a continuation higher towards the 81.44 top. Failure before 78.81 would add pressure to the downside, but at this point it's not the favored picture.

Polish WIG 20 - Topping?

The uptrend since mid February 2009 is showing the first serious signs of collapsing. At the same time a minor Shoulder/Head/Shoulder top might be building. To activate the top-formation we need a break below the neck-line at 46,643. If the neck-line breaks we might "just" see a decline to 45,167, from where an other right shoulder could form, but longer term the decline should be much deeper = 37,815 (at least).

Prague SE Index - Topping?

The Prague SE index has since 3. quarter 2009 traced out a major Shoulder/Head/Shoulder top. The right shoulder is just about to end. The interesting thing is, that the right shoulder is possibly ending with a minor S/H/S-top too. A breake below 1,212.19 (minor neck-line) will confirm the top for a decline towards the long term neck-line at 1,081.92. A break below 1,081.92 will activate the big S/H/S top for a decline towards 850.79.

EUR/USD - The correction from 135.41 is clearly over

The Expanded flat correction from 135.41 is clearly over. The correction fund it's top in the 137.35 - 137.50 range and we should see a decline below 136.06, which confirms that the next impulsive leg lower is in motion.

I do expect a small consolidation, which could take us up to the 136.80-136.95 area, before the final break below 136.06 will be seen, but we don't have to see it, so be aware that a break below 136.06 could accelerate the move to the downside for a decline towards 132.16.

EUR/USD - Up but topping

Wave (c) of the Expanded flat should soon hit the 137.35-137.50 area where a top is expected for the next decline though 136.06 confirming the top and a continuations towards at least 132.26 in wave iii.

Only a break above 137.91 would cause concern.

Silver - Possible top building

We are currently testing the possible channel-top again. Every time this resistance has been tested a set-back has been seen.

Zooming in on the long term picture to the last part of the rise (see the chart below). We can now see a possible "Shoulder/Head/Shoulder" top. This formation will only be activated by a break below the neck-line at 26.65. If this possible top-formation proves to be valid a break below 26.65 will mean a decline towards 21.27-21.50 area.
A break above 31.22 will invalidate the possible top-formation.

S&P 500 - Next target-area near 1,360 - 1,380

The break above 1,312.71 yesterday has opened up for a continuation towards the 1,360 - 1,380 area. Support is now found at 1,308 and more importantly 1,295.20 would be a seriouse warning that a top is in place for a decline lower towards important support at 1,276.40 and a break below here confirms the top.

As we are in the later part of wave 5 it's not the time to become overly bullish, but we do have to respect the trend, which is still clearly up.

Crude Oil - Topping or topped ?

Yesterday the latest rally had lasted for 54 days. The prior two rallies last for 52 days and 54 days. That means a possible top could be in place, but we need confirmation. A break below 85.11 will be first warning that a top might be in place, but only a break below the uptrend since early 2009 at 81.59 confirms the top for a decline towards the 62.80-64.24 area.

EUR/USD - Wave ii or b is an Expanded flat

We are currently tracing out a minor Expanded flat correction as wave ii or b. Wave i or a ended at 135.41 and since the Expanded flat has been developing. The ideal target for this correction is at 136.57 where wave (c) will be 1.618 times longer than wave (a), but it could continue towards the 137.35-137.45 area, where wave (c) will be 2.618 times longer than wave (a), but at the same time 61.8% of wave i will be retraced.

If we see wave (c) reaching the 137.35-137.45 area it should be a low-risk selling area.

EUR/USD - A top in place at 138.61

The break below 135,68 friday was the final nail in conclueding, that the rally from 128.63 ended at 138.61 and the decline from 138.61 has been a five wave decline, which at least tells us, that the short term if not longer term trend now has change to down again.

Wave i or a ended at 135.41 and we should now see wave ii or b moving up towards at least 136.78 and more likely into the 137.38-137.60 area, from where wave iii or c should kick in.

Selling EUR in the 137.38-137.60 area should be a low-risk selling oppotunity.

EUR/USD - Is a "Bullish slingshot" setting up?

The break above 137,85 opened for a move higher towards 140.50 near term. The current decline is most likely a minor wave iv. If we stay above support at 135.68 and the StochS indicator crosses over towards the upside we have a "Bullish slingshot" (A Bullish slingshot is when the StochS. Indicatore makes a new low in a uptrend, which the priceaction doesn't confirm). That type of signal is often followed by a quick and powerfull move (in this case to the upside).

A break below 135.68 would give the impression of a finished wave C and call for further downside pressure.

Global Dow and DJI vs. DJT - Topping?

First let take a look at the Global Dow index. It's close to the 61.8% retracement of the decline from 2,877.52 to 1,139.90, which is also where trendline resistance from the top is fund. Finally the EW-count shows, that wave A down was a nice five wave decline. Wave B, which is still ongoing, should be near it termination point in the area from 2,214 - 2,251.

If we take a look at the Dow Jones Industrial (red) vs. the Dow Jones Trasportation (black), we can see a very clear non-confimation. This is a classic Dow Theory warning signal, that an important top could be close. A break below 4,988.67 in the DJT will confirm the non-confirmation signal and call for a top in the DJI soon.

EUR/USD - 140,50 the next target

We have had lots of warnings that a move towards the 140.50 area was in the cards, but the break above 137.85 was the final clue.

So it should no longer be a question if we see 140.50, but what happens if we break above that level too. A clear break above 140.50 would leave the 142.82 open for testing, but the Invers Should/Head/Shoulde bottom will leave us with a possible target near 148.50.

Support is now seen at the 137.57 area and strong support again at 135.67.

S&P 500 - Did I get it wrong - OH YES!

Boy did I get this one wrong... Before I go kill myself, I will draw you attention towards my post from January 29.

http://theelliottwavesufer.blogspot.com/2011/01/s-500-wave-2-top-or-just-wave-1-of-c.html


Where I said, that if the decline from 1,302.40 was a C-wave then we should soon see a break back above 1,297.03.


It's okay to get it wrong, if you just know when you are wrong and where to place your stop. This was one of those times.


What can be expected from here? As you can see resistance is tough in this area, but a continuation higher towards the 78.6% retracement of the decline from 1,576.05 to 666.92, which comes in at 1,381.50, if we clear 1,312.71. Maybe the count below is the right one? It certainly is gaining credence as the S&P 500 keep on rallying.



At this point only a break below 1,275.23 will indicate a top and trendchange.