Elliott wave analysis on EUR/USD; S&P 500; Gold and Crude Oil

I will be on vacation the next 14 days (I will not update during this periode).
The destination this time is the Philippines (my first time there). Therefore I will update my longer term view below.

EUR/USD - I'm very suprised to see resistance at 140.74 broken without any difficulty at all. That does raise focus to the last lines, which is the red upper pitchfork line and the blue former support-line (now turned into resístance), which is at 143.70 today (falling by 5 pips a day). As long as these lines of defense protects the upside, I will be looking for a break below 139.48 and more importantly 137.96, which will confirm that a top is in place.

If however they are broken too, the next target will be 147.55 and maybe even 149.36.

S&P 500 - Here too we just keep marching on higher, but strong resistance will be found in the 1,311.00 - 1,331 area. If we see a top in this area (as I expect) we could be building a big Shoulder/Head/Shoulder top calling for a much deeper decline in 2012 but remember, that this top-fomations only will be activated, if the neck-line currently at 1,076 is broken.

An unexpected break above 1,331.00 will call for a continuation higher towards 1,356.00 and maybe even 1,371.00

Gold - The long term uptrend since 1999 is still very much intact as long as support at 1,530 holds firm and call for one more rally higher towards 2,036.

However a break below 1,530 will clearly weaken the uptrend and call for a decline towards important support at 1,478 and mayby even a deeper decline towards the 1,279 area.

Crude Oil - The bigger picture is still best described as a A-B-C correction from the all-time high at 147.27. In my view we are currently in the early parts of wave [C] down, which should be a five wave decline from 114.83. We have tested the 50% retracement target of wave 1 of [C] at 94.85, which could be enough as wave 2, but that will only be confirmed if support at 88.82 is broken.

However if resistance at 94.85 is broken we will see a continuation higher towards 99.57 before wave 3 of [C] is taking over.

Take care out the. Speak to you all on November 13 again.

Elliott wave analysis on EUR/USD; S&P 500; Gold and Crude Oil

EUR/USD - Tried to break below support at 138.24, but without succes, which turned the EUR higher again and we are now in the proces of testing the 140 area (Ideally the 140.17 - 140.74 area). Only a break below 139.41 will ease the upside pressure, but we still need a clear break below 138.24 and more importantly 136.50 to confirm a top.

S&P 500 - It looks like we are in for a back test of the broken resistance-line back from October 12. I expect this test to be rejected for a break below 1,221 and more importantly 1,197, which should open up the downside for a decline to at least 1,150.

Only a clear break above resistance at 1,270 will call for a move higher towards the 1,307 - 1,314 area.

Gold - Should still be headed for resistance at 1,748. I don't see a break of this resistance at this point and find it more likely we will see a new deep decline close to the 1,530 area, before the possibility of a more sustained rally could be seen.

Crude Oil - Was rejected near the 50% retracement target at 94.85. I still think we will at least retest this resistance, but I wouldn't be surprised to see a break towards the 61.8% retracemnet target at 99.57. From here I do think risk again will be to the downside.

At this point only a break below 88.34 will relieve the upside pressure and call for a decline towards support at 84.10.

Brent Crude oil spread ag. Crude Oil collapsing

On September 25 I wrote a post regarding the spread between Brent Crude Oil and Crude oil (please see the post here:
http://theelliottwavesufer.blogspot.com/2011/09/brent-crude-oil-ag-crude-oil.html)

The spread between the two, at that point was at 31.62. The spread peaked at 31.64 and has more or less been declining ever since and is currently trading at 19.46. A decline of 38.45% in one month and one day - Not bad.

As I said then I'm still looking for a decline towards a spread of "only" USD 15.00 (still high...) and problably closer to a zero spread over time, but it took almost a year to rally from zero til 31.64 so to expect anything less, than half a year to revisit zero would be unwise...

Elliott wave analysis on EUR/USD; S&P 500; Gold and Crude Oil

EUR/USD - Are we making a small triangle again or are we in a topping mode? The MACD-indicator is in a neutral position but clearly displaying divergence, which could be a warning that we are closing in on a top. To confirm a top we need a break below 138.47 and more importantly 136.55.
As long as supports holds we could see a move deeper into the 140 area.

S&P 500 - The firm rejection from the 61.8% retracement target near 1,258, the odds is clearly in favor of a test of support near 1,207. A break below here will be first indication, that a top is in place, but we need a break below 1,197 is needed to confirm the top for a decline towards 1,150.

Gold - has cleared resistance at 1,702, which is somewhat a surprise. It does call for a test of next resistance at 1,748. If this resistance breaks too, we should be looking for a new high above the August 22 high at 1,911. I still have an ideal target at 2,036 as the top of wave 5.

If however resistance at 1,748 holds we could see one last decline towards important support near 1,530.

Crude Oil - Has had a perfekt test of the 50% retracement target at 94.85. Looking at the MACD it doesn't look like it's ready to roll over yet, which could mean, that we will see a full test of the 61.8% retracement target at 99.57.

Only a clear break below 88.74 will ease the upside pressure and call for a move lower towards support at 84.66.

Elliott wave analysis on EUR/USD; S&P 500; Gold and Crude Oil

EUR/USD - Not much to add here. We are still hoovering near resistance at 139.36. I still regards the rally as very weak and will continue to look for a break below 138.24 to confirm, that a top is in place. A break below 138.24, should open for a decline to important resistance at 136.55.

S&P 500 - After bearking above the 50% retracement target, we are now seeing a challenge of the 61.8% retracement target at 1,258. I'm still surprised to see the strength of the rally, but we will have to obey the Market and wait for a break below 1,226.42 and more importantly 1,197.34 to confirm, that a top is in place.

Gold - Is still in a weak consolidation, which should ultimatly resolve it self to the downside for a test of the important support near 1,530. A break below 1,634 should confirm a new test of support at 1,605 on the way to 1,530.

Crude Oil - Has once again surprised. Breaking above 90.05 has opened for a continuation higher towards the 50% retracement target at 94.84 and maybe even the 61.8% retracement target at 99.57. At this point only a break below 88.82 will ease the upsideside pressure.

Weekly outlook - Elliott wave analysis on EUR/USD; S&P 500; Gold and Crude Oil

EUR/USD - The rally has gained more power than first expected, due to hope that the Euro-crisis will soon be resolved... Not quite my view, but we must respect the market-action until we get signal, that the upmove since 131.44 is over.
Looking at the last part of the rally, it does look very weak, but we need a break below 138.21 and more importantly 137.03 to confirm that a top is in place.

S&P 500 - Here too the rally has proven stronger. We have exceeded the 50% retracement corrections-target, which means we could be headed towards the 61.8% corrections-target near 1,258, but already at 1,241 strong resistance will be seen. However we need a break below 1,197 to confirm that a top is in place for a decline towards 1,150.

Gold - The break above 1,634 has opened for a move higher towards 1,664, however I still think that a more definite test of strong support at 1,535 should be seen. Only a break above 1,695 will confirm, that we have already have seen a firm bottom for a new challenge of resistance near 1,761.

Crude Oil - Still hoovering just below the 38.2% correction target of wave 1 down at 90.00.

I'm still looking for a break below 84.10 to confirm that a top is in place for a decline towards 75 and lower. Longer term I'm looking for a continuation down towards the low 40's and ideally just below the low of wave [A] at 32.40.

Swaps might be the reason for EUR strength

The above two charts from the FED shows who has drawn on the swap-line at the FED and by how much. As can be seen the only centralbank that used its swap-line during the week ending on October 19 was ECB. The ECB borrowed USD 1,353 for 84 days at 1,09% (By the way, this is far far above the 3 M US Libor, which comes in around 0,4155%). I have no idea, which banks is the receiver of these USD, but they will take these USD to the market and swap them to EUR for the periode and this might be one of the reasons the EUR hasn't weakened more than it has during the last week.

Remember, that in mid-January this USD will have to be paid back to the FED., which will add pressure on the EUR and strengthen the USD.

Elliott wave analysis on EUR/USD; S&P 500; Gold and Crude Oil

EUR/USD - Tested support at 136.52 yesterday without the power to break through. On the other hand on the upside the upper red Pictfork resistance-line is respected too, so until we see a clear break we will more or less trade sideways.
I still prefer a break to the downside for a decline towards 133.50.

S&P 500 - Support 1,192.62 is still intact, which keeps the uptrend alive, but I still think that support at 1,192.62 should soon be tested and a clear break below this support will open up the downside for a decline towards the 1,150.50 - 1,153.85 area.
Resistance is now at 1,234.84.

Gold - Back testing the broken supportline near 1,634. Expect this former support now resistance to hold for a continued decline towards important support near the 1,530 area.

Crude Oil - The best short term count at this point is, that we had a five wave decline from 89.66 to 84.10 as wave i and now are in wave ii, which ideally should see us up to 87.44 - 87.60, before the next decline sets in. The is a small chance that we have already seen the top of wave ii, with the test of 86.81, but we need a dicret break below 85.04 to confirm that possibility.

AUD/USD - Is a big decline in the cards?

I'm quite puzzled with the lack of downward pressure in this cross. All evidence of a bigger decline is clearly there, but I'm pretty confident, that it's just a question of time before we will see AUD turn down big time.

From an Elliott wave perspective I regards the rally from late 2008 as a second zig-zag correction, which found its top at 110.80 (see the chart below) and I'm now looking for a decline towards the long term support line, which currently is located near 64.75.

Elliott wave analysis on EUR/USD; S&P 500; Gold and Crude Oil

EUR/USD - My expectations from yesterday, regarding a small overshoot of the red Pitchfork resistance-line was exactly what we saw and we are now headed for support in the 136.25 - 136.50 area. I still expect this area to be broken for a continuation towards 133.50.
Short term resistance is now at 137.28 and important short term resistance at 137.82, which should not be broken at any point to keep the pressure to the downside.

S&P 500 - My warning of a overdone rally was well placed yesterday. As long as support at 1,192.62 stays intact a new rally higher can't be excluded, but that outcome is not my favored scenario. I do look for a break below 1,162.92, which will call for a continuation towards important support in the 1,150.50 - 1,153.85 area.
The big question is wether we only have seen wave a of 2 or wave 2 ended at 1,232.84? I'm slightly in favor of the later, that wave 2 ended at 1,232.84, but time will show.

Gold - Broke below support at 1,629.06 to confirm a new decline towards important support at 1,530. I have changed my short term count so minor wave iii ended at 1,534.49 and wave iv ended at 1,649.30 and we should now be in wave v of C down. Longer term that means I'm still looking for one more new high before the entire rally from 1999 ends.

That said one could eaisly make a good case, that we saw the wave 5 peak at 1,911.46 and pressure is towards the downside for a decline towards 1,145. If this scenario is to gain the upper hand, will need to see a clear break below 1,530.

Crude Oil - There was no time for the minor decline towards 86.82 - 87.22 area before the last move higher twoards 90.05. As I said yesterday we could easily see a top just below of slightly above 90.05, which clearly have been the case. We saw a top at 89.50 (I know some have a top at 89.66). The following decline has clearly been in five waves, which points towards a firm top at 89.50. Short term expect a minor rise towards the 87.36 - 87.86 area, before the next decline towards next important short term support at 83.16.

The minor rally towards the 87.36 - 87.86 should provide a good selling oppotunity, with a stop just one tick above the top pick 89.67 here.

AUD/USD - Double top in place?

We might just have seen a minor double top. A formation that will be confirm upon a break below the 100.98 - 101.14 area. A break below 100.98 will trigger the double top for a decline towards strong support near 98.61, which is also where we find the mid-line of the Pitchfork.
As long as support at 100.98 isn't broken a new move higher towards 103.50 can't be excluded, but it's not my preferred scenario.

Elliott wave analysis on EUR/USD; S&P 500; Gold and Crude Oil

EUR/USD - Rally through all short term resistance point. I still expect we have seen a top at 139.14. The decline to 136.51 was wave i and if my count is correct we are working on wave ii. This wave ii should ideally meet strong short term resistance at the red Pitchfork near 138.45. Actrually wave ii normally overshoots the Pitchfork resistance line slightly, before turning down again. To confirm, that we have seen a peak in wave ii we need a break below 137.81. While support at 137.81 isn't broken to the downside, the risk is one more move towards the resistance-area between 139.14 - 139.30.

S&P 500 - Support at 1,190.80 was never broken, which keep the rally from 1,074.77 intact and reinforced the possibility of a move towards 1,231 (we saw a high of 1,232.84).

I do think the rally is overdone and caution is waranted towards the upside, but is't still only a break below support at 1,190.80, which confirms the top for a decline towards 1,167.50 and possibly even 1,149.80.

Gold - We have seen a clear break below 1,652.69, which should warant more downside to come. I'm now looking for a break below support at 1,629.06, which should open for further decline towards 1,589 and possibly even closer to 1,530, where we find strong support.

Crude Oil - The rally back above 88.17 has change the short term picture. We are now looking at an ending diagonal, which should see us down to the 86.82 - 87.22 area from where we should see one last rally higher closer to resistance at 90.05 (we might peak just below or slightly above the 90.05 resistance...) before down again.

AUD/USD - Short term top in place

Sunday I wrote, that AUD/USD was facing strong resistance at 103.80 (See the post here:
http://theelliottwavesufer.blogspot.com/2011/10/audusd-facing-strong-overhead.html)

Yesterday we saw a top just 9 small pips below, with the test of 103.71 and everything points towards a top, whats needed is a break below 100.98, which should turn us down towards 98.60. If suppot at 98.60 is broken too we could easily see a move down towards the 93.86 low again.

But for a break below 100.98 is needed.

Elliott wave analysis on EUR/USD; S&P 500; Gold and Crude Oil

EUR/USD - Made its top at 139.14 (just one lousy pip from the low end of my target-area between 139.15 - 139.30). We are now testing support at 136.83, but it should only provide minor support before the next decline towards more serious support near 136.18 and 134.34.
Minor resistance is now found at 137.50 and 137.85.

S&P 500 - Only made to 1,224.58 before tipping over to the downside. We will still need a break below 1,190.80 to confirm that we have a top in place for a decline towards 1,167.50 and 1,149.80.

Gold - Meet strong resistance at 1,695 and the rally from 1,534.49 does not display any impulsivness, which does turn focus towards more downside action. I'm now looking for a break below 1,652.69 to confirm new pressure towards 1,589 and possible a new challenge near 1,530.

Only an unexpected break above 1,695 will ease pressure towards the downside, but that is not expected after the latest price-action.

Crude oil - Seems to have top at 88.17, just before my target near 90. The minor break above the falling trendline since the 114.83 high does look like a failure break and adds pressure to the downside. However we need a break below 83.21 to confirm the top for a continuation towards 80.05 and possibly even lower.

As long as 83.21 hasn't been broken, we could still see a rally to 90, but it's not my preferred count at this point.

Dexia takeover weighing on France and Belgium

The upper chart is showing the spead between the 10 year Government bond in Germany and in France. As can be seen, it made new highs last week and are headed for first resistance at 1.02, but I will expect this resistance to be broken soon and next target will be 1.25.

The main reason for the widening of the spread is the very weak banking sector in France. The French Government has just taken over the French part of Dexia, but BNP Paribas, Credit Agricole and Societe General all is looking bad at this point.

One should expect a downgrade of France soon, which will weaken the Euro-zonens ability to deal with the debt troubles in South European countries.

The French Stock index CAC 40 is facing resistance at 3,258 just ahead, but the rising risk of a downgrade of the France debt should weigh on the French storcks too. Short term a break below 3,160 will turn the CAC 40 for a test of important support at 3,060.

The chart above is a chart of the spread between the 10 year German Government bond and the 10 year Belgium Government bond. As can be seen it has broken above the 1999 high at 2.15. We can see a big invers Shoulder/Head/Shoulder bottom calling for a rally higher towards at least 2.80.

If France is in trouble, then Belgium is in major trouble. The Belgium took over the Belgium part of Drexia for EUR 4.0 billion and the guarantees over the next decade extend EUR 90.0 billions.

That will be a major drag on the Belgium economy.

Belgium could be some kind of "Black swan" in the Euro-debt crisis, as focus is primarily on Greece, Italy and Spain, but a sudden collaps in Belgium could a wake-up call, that the debt problem is much bigger, than most expects.

AUD/USD - Facing strong overhead resistance

The rally from 93.86 has been stronger than first expected. That said AUD/USD is facing strong overhead resistance near 103.80. The powerful rally from 93.86 has pushed AUD into strongly overbought territory, which I expect will hold for a break below 102.26 and more importantly 100.98, which will confirm, that a top is in place for a decline to at least the 98.60 area. Longer term we need a break below the bottom at 93.86 to really turn us hard down.

Weekly view of EUR/USD; S&P 500; Gold and Crude Oil

EUR/USD - We are still working on wave 2. The strong rally from 131.44 is somewhat of a puzzle. That said we are close to strong overhead resistance in the 139.15 - 139.40 area, which is expect will hold for a break below 138.13, which will confirm, that a top is in place for a decline to at least 135.50 and more possible even 133.74.

S&P 500 - Here too the rally has been quite impressive. We haven't broken below important support at 1,084 yet. That said strong resistance is just above at 1,230, which I expect will hold for a break back below 1,211.85 and more importantly 1,191, which confirms that a top is in place for a decline towards at least the 1,150 - 1,152 area.

VIX-Index - The Fractal I have discussed earlier (see the links below:
http://theelliottwavesufer.blogspot.com/2011/08/s-500-time-to-take-breather.html and here

http://theelliottwavesufer.blogspot.com/2011/09/vix-index-next-move-into-extrem-fear.html)

has played out almost to perfection. We should see the end of wave h of the parent fractal. within a couple of weeks. That doesn't mean we need to see S&P 500 move much higher. it could just be a sideways consolidation before a break-down.

If this fractal is playing out as the child-fractal did we most likely will see most lower prices in the 1'st quarter of 2012

Gold - We are currently back-testing the upper channel resistance-line of the long term light green channel. As long as support at 1,530 isn't broken to the downside we still could see one more new rally towards a new high above 1,920 is red wave v, however a break below 1,530 will invalidate that possibility and call for a decline towards the 1,030 - 1,043 area.

Crude oil - Is facing strong overhead resistance here near the 87 handle. If this resistance holds for a break below 83.20 will can expect the next decline through support at 75.

However a break above 88 will open for a slightly higher rally towards the 90 area before down again.