Elliott Wave Analysis of the USD Index - Will resistance here at 103.32 hold?

The Rate of Change -30 months

USD Index with the 30 month ROC

USD Index - Will resistance here at 103.32 hold?

I "bumped" into the Rate of Change (ROC) chart last night. The text in blue didn't really matter to me, but I noticed two things.

1. The ROC is at levels, only seen a 30-40 years.
2. When the ROC peaked at 42 in 1983 the decline in the ROC bottomed at -41.5 and the same relation was seen in 2001 to 2004.

So when the USD index finally peaks we should be looking at for the ROC to decline to the negative opposite number of the peak. That said, it's important to remember that just because, we are at extreme levels for the ROC it does't mean the top is in place, but that we should be aware that the rally from 2011 is an elite move. 

From an Elliott wave point of view wave 3 is currently testing the 161.8% extension target of wave 1 at 103.32. If a clear break above here is seen, then we should look for a continuation higher to the 200% extension target seen at 110.55. The minor count shows that we are in wave iii of [5] of 3, so after a correction in wave iv more upside towards 110.55 is likely in wave v of [5] of 3.

A continuation higher to 110.55 would fit the EUR/USD count nice as more downside is expected here towards 0.9580. 

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Elliott Wave Analysis of EUR/GBP - Wave 4 completed at 0.8303 wave 5 towards at least 0.9452 is now unfolding

EUR/GBP - Daily 

EUR/GBP - 4 Hourly 

EUR/GBP - Wave 4 completed at 0.8303 wave 5 towards at least 0.9452 is now unfolding

The decline in wave 4 spiked the 38.2% corrective target at 0.8396 and moved lower to test the low of wave [4] of one lessor degree to complete the correction in wave 4. 

With the low of wave 4 in place, we should be looking for wave 5 higher to above 0.9270 with the first target for wave 5 seen at 0.9452, but I would not be surprised to see a continuation higher to the 0.9723 target. 

Short-term, I expect support at 0.8484 max. 0.8404 to protect the downside for the break above minor resistance at at 0.8551 for a rally towards 0.8707 on the way higher. 

Only a break below 0.8404 will invalidate this count. 

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"DOW 50,000" a Wall Street legend predicts - Time to be a contrarian?

    Sentiment in excessive optimism territory

    NYSE Margin Debt close to all-time high levels

    The Buffet Indicator is at excessive levels

    DJI - An ending diagonal is close to completion

    DJI - One could make the case that the rally from 1932 is completing

"DOW 50,000" a Wall Street legend predicts - Time to be a contrarian?

I saw this headline yesterday and quickly found the article (you can read that article by clicking here). It immediately reminded my of the 1999 book that predicted would rally to DOW 36,000. You can buy that book at Amazon for USD 0.01 (The DOW 36,000 book for USD 0.01 then click here). James Glassman co. author to that book, actually repeated that prediction  in March 2013 (you can see the new prediction from March 2013 by clicking here). The funny thing is, just two years earlier James Glassman made commentary in the Wall Street Journal under the headline "Why I Was Wrong About DOW 36,000" (you can see that article by clicking here). In that article Glassman says, that the first major change was a slower US economy - Has that fact changed in 2016?

The second big change was risk, he says - Has the "new" type of risks decreased in 2016?

I don't think they have. Everyone of the risks he mentions is the same and then we have to add one more risk, which is the current rally from the March 2009 low at 6,470 now has lasted 7½ years one of the longest bull markets in history (the third longest I think).

The Margin Debt is close to its all-time high levels from April 2015, when the margin debt hit 400%, which by the way is 33% above the March 2000 margin debt top and 23% above the July 2007 margin debt top.

Finally, I think it would be appropriate to bring the Buffett indicator into play too. This indicator gained fame back in December 2001 when Warren Buffett in a interview with Fortune Magazine said "it is probably the best single measure of where valuations stand at any given moment."  

Back in 2000 this indicator peaked at 151.3%. The same indicator peaked at 115% in 2007 and now it's hovering near 125%. I'm not the inventor of this indicator, so Buffett might read it different than I do, but I don't think it's a good sign. Also taking into consideration that Berkshire's cash holdings currently is at USD 85 Billion (see this article from CNBC by clicking here). 

I think investors is "play with fire" as Buffett said in that article. But then, what do I know? 

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Elliott Wave Analysis of EUR/USD - Bottom expected in the 1.0486 - 1.0489 area

EUR/USD - Hourly 

EUR/USD - 4 Hourly 

EUR/USD - Weekly 

EUR/USD - Bottom expected in the 1.0486 - 1.0489 area

I have been looking for a bottom near 1.0488 for quite a while now and here we are at the doorstep to this target. Short-term, I think we might see a little more sideways price-action before the final spike lower to the 1.0486 - 1.0489 area to complete the five wave decline from 1.1300. A break above minor resistance at 1.0598 will be the first strong indication that the decline from 1.1300 is complete. 

Once this target-area has been reached a rally should be expected. Taking my previous post regarding Gann's 30 year cycle into consideration (you can see that post by clicking here). This could turn out to be much more than a corrective rally.

If a long term low is seen here, how could than be explained from an Elliott Wave Principle point of view? The only way that would be acceptable for for the EWP is that this low is, that a fifth wave failure has been seen in wave (v) of (C) that completes wave [B]. 

If a long-term low is seen in the 1.0486 - 1.0489 area and strong rally should be expected into late 2017 according to Gann. 

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Elliott Wave Analysis of Gold and Silver - Could trade sideways for a long term to come

Gold - Weekly

Silver - 2 Weeks 

Gold and Silver -  Could trade sideways for a long term to come 

Both gold and silver seems to be locked inside a long term support-line and a long term resistance-line. This tug of war between the bulls and the bears could go on for a lot longer, before the next legs lower towards 680 for gold and 7.00 for silver.

Gold has already corrected 38.2% of the decline from 1,290 to 1,046, but seen from a time perspective this correction has been very short, which makes the case for the possible triangle consolidation an even better.

Silver on the other side hasn't even managed to correct to the 23.6% corrective target for the decline from 49.80 to 13.64, but a triangle consolidation could be the answer for that. Instead of using up price to correct this decline, silver is using up time.

If these possible scenarios play out as described above, that will make it very hard for the bulls to continue to like gold and silver (to a lessor degree), which will make gold the perfect long term buying opportunity once we get close to 680 and for silver close to 7.00.

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Elliott Wave Analysis of DJI - Ending diagonal close to completion

DJI - Quarterly 

DJI - Weekly 

DJI - Ending diagonal close to completion

While the S&P 500 hasn't made a new all-time high yet, the DJI has set a new all-time high after the Trump election victory. This new all-time is very close to completing an ending diagonal that has been developing since the August 15,370 corrective low.

The high has been seen at 18,873, but after a minor consolidation one more high just above this high is expected to complete wave v and turn prices strongly lower. The first downside target to look for is the origin of the ending diagonal at 15,370, but as the entire rally from 2009 and possibly even back from 1932 is near completion, we should be looking for a serious correction unfolding.  

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Elliott Wave Analysis of AUD/USD - A break above 0.7732 will call for 0.8165 before down again

AUD/USD - Weekly 

 AUD/USD - A break above 0.7732 will call for 0.8165 before down again.

A break firm above 0.7732 will make the above count the preferred top-count. This count for now remain the alternate count, but look only at the RSI-indicator, points to a break above 0.7732 for a continuation higher in wave C of [4] to 0.8165 before renewed downside pressure is seen in wave [5] for the final impulsive decline towards the long-term target near 0.6000.

What will ease the current upside pressure? First a break below minor support at 0.7647 and secondly a break below 0.7608 will again call for a new test of the important support at 0.7502. Only below this later support will confirm that wave [4] completed with the test of 0.7835 and wave [5] lower already is developing.

Go with the break either above 0.7732 or below 0.7502 as that will set the direction for the next big move of at least 400 pips.

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Elliott Wave Analysis of Facebook - Break below 125.75 confirmed wave [3] peaked at 133.50

Facebook -Weekly 

Elliott Wave Analysis of Facebook - Break below 125.75 confirmed wave [3] peaked at 133.50

On June 15 I called for a possible top in FB at 120.77 (you can see that post by clicking here), Well it turned out that FB had a little more staying power and continued higher to peak at 133.50, but yesterday's break below 125.75 and more importantly below the ending diagonal support-line near 123.50 confirmed that wave [3] completed with the test of 133.50 and a return to the origin of the ending diagonal at 72.00 is developing. 

When an ending diagonal is complete the return to the origin, should be see within half the time it took the formation to build, which in this case means a return close to 72.00 no later than mid-June 2017. 

Once the correction in wave [4] is complete close to 72.00 it should provide an excellent buying opportunity. I will keep you posted when that time comes. 

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FTSE 100 Rule of 4 in play here?

FTSE 100 - Monthly

FTSE 100 - Weekly 

FTSE 100 Rule of 4 in play here?

The UK FTSE 100 has tested resistance at 6,951 four time without being able to clear this resistance, which indicates that the "Rule of 4" is in play here.

The "Rule of 4" states that, when a price breaks or fails to break a resistance or support levels on the fourth attempt, the outcome will be significant, and a big move should be expected. 

The FTSE 100 has failed to break above 6,951 on its fourth attempt, which could be a warning that a big decline is in the making. This is also supported by my Elliott Wave Count, which indicate that wave [C] to below 3,728 ultimately should be seen.

Short-term a break below minor support at 6,646 will be the first strong indication that the rule of 4 is in work here, while a break below support at 6,433 will confirm the failure and the expected big decline in wave [C] to below 3,728.

That said, I have to be fair and say. that a clear break above 6,951 will be equal important and call for much more upside in years to come.

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Dow Jones Industrial - Flash crash time again?

Dow Jones Industrial - Flash crash time again?

Is the flash crash top playing out again? We saw a flash crash top after the May 2015 peak at 18,351 and we saw an almost identical flash crash top after the November 2015 peak at 17,977 and the same set-up seems to be playing out again after the August 2016 peak at 18,668.

The trigger for a crash could be a break below support see at 17,960. The set-up is clearly there, but only time will show if a new flash crash is seen. 

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Elliott wave analasis on USD/CHF - Break above 0.9950 will confirm a more bullish mood and a rally to 1.0545

USD/CHF - Daily 

USD/CHF - 4 Hourly 

USD/CHF - Break above 0.9950 will confirm a more bullish mood and a rally to 1.0545

The resistance ceiling at 0.9950 has capped the upside since mid March, but this is about to change. A break above this resistance seems imminent and a break above here will confirm more upside towards 1.0545 in wave 5 of [C]. 

Short term, support is seen at 0.9842 and should protect the downside for the break above 0.9950 for a rally to 100.40 and after a minor correction, that most likely will find support at the former resistance at 0.9950 more upside towards 1.0545 should be expected. 

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Elliott Wave Aanalysis of AUD/USD - The failure to sustain the break above 0.7710 is suspicious

AUD/USD - 4 Hourly

AUD/USD - 15 Minutes 

AUD/USD - The failure to sustain the break above 0.7710 is suspicious

Well this cross has tested our patience in every way possible the last couple of months. Yesterday's break above 0.7710 was no exception. The break indicated that more upside towards 0.8138 should be expected, but the rally only made it to 0.7729 before turning strongly lower. This is not the way a breakout should behave and looks very suspicious = Failure break.

Zooming in on the rally from 0.7502 it's clear in three waves only. wave c = wave a in length, which is the most common relationship within a zig.zag correction. Looking at Red wave [v] it took 66 5-minute periods to rally from 0.7659 to 0.7729, but the decline from 0.7729 back to 0.7659 has only taken 1/3 of that time or 22 5-minute periods. Strongly indicating that the rally from 0.7502 to 0.7729 only was corrective and the real trend still points lower.

That said, we still need prof that it's right to expect more downside pressure. a clear break below support at 0.7659 and more importantly a break below support at 0.7577 will confirm a retest of the 0.7507 low and likely a clear break below support at 0.7502 this time.

Only a break above 0.7729 will indicate that the larger corrective rally from 0.6825 is incomplete and call for the alternate count that sees a rally closer to 0.8138 before wave [4] finally is complete and wave [5] lower to 0.6000 finally takes over. 

This situation both calls for calls for flexibility. Yes we saw a break above 0.7710, but the failure to follow-through on that break indicates that it wasn't nothing more than a failure break. 

Elliott Wave Analysis of AUD/USD - Testing important resistance at 0.7710

AUD/USD - If 0.7710 holds

AUD/USD - If 0.7710 breaks

AUD/USD - Testing important resistance at 0.7710 

AUD/USD is currently testing important resistance near 0.7710, what happens at this resistance will determine whether a direct decline towards 0.6100 is seen or a detour past 0.8138 is needed first.

If important resistance at 0.7710 is able to cap the upside for a break below 0.7502, then a direct decline to 0.6100 should be expected. This count remains slightly preferred.

If, however a clear break above 0.7710 is seen, then the alternate count calling for a detour to 0.8138 before lower to 0.6100 will take the place as the preferred count.

No matter, whether important resistance at 0.7710 is able to cap the upside or not, the final outcome will be the same. It's just a question, whether we will move directly lower to 0.6100 or not.

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Elliott wave analysis of AUD/CHF - Break above the neckline resistance at 0.7570 calls for rally to 0.8783

AUD/CHF - Break above the neckline resistance at 0.7570 calls for rally to 0.8783 

I don't normally follow this cross (the last time I made an analysis on AUD/CHF you can see by clicking here), but was asked to look at it and thought it could be a nice challenge. 

When I did my last analysis way back in early August 2013, I labeled the decline to 0.8260 wave 3. This was a pretty accurate and, we have since seen both wave 4 and 5 develop to complete wave C at 0.6533. The rally of the 0.6533 low does look constructive and when (not if) the neckline resistance (the red line) breaks, that would call for a rally to the top of wave 4 at 0.8740. This also marks the point where wave 3 will be 200% the length of wave 1. 

Short term, support at 0.7486 likely will act as a floor for the break above the neckline resistance, but only a break below support at 0.7383 will delay the expected rally for a move closer to 0.7240 and the up again. The odds for break below 0.7486 is very slim, but can't be excluded yet. 

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Elliott wave analysis of XIV - Headed for 5.85 means the S&P 500 is headed for 1,149

XIV - Weekly

S&P 500 - Weekly

S&P 500 - Daily 

XIV - Headed for 5.85 means the S&P 500 is headed for 1,149  

The XIV is headed for 5.85, but what is the XIV? (What is the XIV and how does it work. Click here to find out). 

XIV or as the full name is: VelocityShares Daily Inverse VIX Short-Term ETN trades like a stock tracking the VIX index just inversly. That means every time the VIX declines (less volatility = higher S&P 500) the XIV goes up and visa versa. Unless you are a options dealer trading volatility you can't trade the VIX, but by turning the VIX into a stock XIV, that suddenly allows everybody to trade the VIX-index. But it also allow us to look at the XIV from an Elliott Wave point of view and that is my mission here. 

The XIV clearly completed a five wave rally in late June 2015 and has since been in a major correction. We saw a five decline from the 50.10 high to 15.36 in early August 2016 and the XIV has since traded higher in a correction. This correction completed with the test of 40.59 in early September 2016 and a new impulsive decline is currently unfolding. If the ongoing wave C is equal in length to wave A, then a decline to 5.85 should be expected. A equality relationship between wave A and C is the most common relationship, making that target the first expectation. 

What does that tell us about the S&P 500, which the VIX tracks from a volatility point of view and thereby the XIV. A decline in the XIV to 5.85 is equal to the September 2011 low and if the S&P 500 will mirror that decline it calls for a decline to 1,149 or a decline of 45.85% from the current level at 2,123. 

Talking about the current level of the S&P 500, we can see a clear break below the support-line from 1,808 indicating that the correction in wave B is complete and a new impulsive decline in wave C now should be expected. The preferred Elliott Wave Count currently calls for wave [3] lower towards at least 2,047, which a break below 2,108 will confirm. So be careful as the financial news soon could have "the S&P 500 in a flash crash" written all over the place.

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Elliott wave analysis of EUR/USD - Triangle support-line broken

EUR/USD - Daily 

EUR/USD - Daily 

EUR/USD - Triangle support-line broken

Yesterday we saw a break below the triangle support-line at 1.1104. This break indicates that the downside thrust out of the triangle has begun for a decline towards at least 0.9850 and more likely closer to 0.9666 and possibly even closer to 0.8613 if wave (v) lower extends. 

From a classic point of view a 10 months S/H/S top has building and a break below the neckline support near 1.1040 will activate the top-formation for a decline to 1.0276. 

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Elliott wave analysis of EUR/GBP - Headed for 1.1049

EUR/GBP - Monthly 

EUR/GBP - Weekly 

EUR/GBP - Daily 

EUR/GBP - 4 Hourly 

EUR/GBP - Headed for 1.1049 

EUR/GBP has been trading within a rising channel since late 1995. An important low was found in May 2000 with the test of 0.5683. The rally of the 0.5683 low to December 2008 high at 0.9803 was in five waves, while the decline from 0.9803 into the July 2015 low of 0.6933 was in three waves.

This calls for a continuation higher in the months ahead, with the next major upside target to look for seen at 1.1049. At 1.1049 the rally from 0.6933 will be equal in length to the 2000 – 2008 rally from 0.5683 – 0.9803.

Short term, I’m looking for a little more sideways consolidation in wave (iv) before the next impulsive rally higher to the ideal target in the 0.9401 – 0.9410 area to complete wave (v) and [3].

After a correction in wave [4] towards 0.9000 the next impulsive rally higher towards 0.9835 and the ideal long term target near 1.1049 will be expected. 

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Elliott wave analysis of EUR/CAD - New impulsive decline towards at 1.3000 about to develop

EUR/CAD - New impulsive decline towards at 1.3000 about to develop 

After a nice corrective rally in wave 2 back to the 38.2% corrective target at 1.4917 the next impulsive decline in wave 3 is now developing.

A break below support at 1.4600 will be the first strong indication that wave 3 lower is developing, while a break below the minor support-line near 1.4435 will confirm the next impulsive decline towards at least 1.3000. As third waves often extends, we should expect an extension here too, which will call for a decline closer to 1.1820 before wave 3 likely is complete.

So look for a break below short term important support at 1.4600 as the trigger for downside acceleration.

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Elliott wave analysis of AUD/NZD - The first impulsive rally from 1.0231 is nearing its completion

AUD/NZD Weekly

AUD/NZD - 4 Hourly 

AUD/NZD - The first impulsive rally from 1.0231 is nearing its completion 

The first impulsive rally in wave i is nearing its completion. Ideally wave i will complete at 1.0663 for a correction back to at least 1.0469 and maybe even closer to 1.0333 as second waves often a quite deep, but they can never ever break below the starting point of the first impulsive wave, which in this case means that no break below 1.0231 can be allowed. 

Longer term, I'm looking for much more upside progress for this cross, with the next larger target seen near 1.1330 (the Inverse S/H/S neckline) on the way higher to at least 1.1924 and more likely even closer to 1.2958. 

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Elliott wave analysis of Natural Gas - Expected to complete the first impulsive rally near 3.22

Natural Gas - Expected to complete the first impulsive rally near 3.22

On March 14 - 2016 I posted the above article to the Elliott Wave Surfer Service At the point in time NG was trading at 1.80 now 7 months later and after a 68% gain the first impulsive rally from 1.61 is about to complete near 3.22.

From the expected high of 3.22 a correction towards at least 2,52 should be expected, before the next impulsive rally towards 7.09 will be seen.

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The tidal wave is again turning for the JPY renewed weakness expected

The tidal wave is again turning for the JPY renewed weakness expected 

After more than 30 years of general JPY-strength the major tidal wave turned in late 2011 for GBP/JPY and a bit later for USD/JPY and EUR/JPY, as both of these pairs turned in early 2012. The weakening of the JPY got a helping hand from Prime Minister Abe.

We saw a serious weakening of the JPY into August 2014 for EUR/JPY, while the weakness continued into June 2015 for both USD/JPY and GBP/JPY.

EUR/JPY rallied from 94.10 on July 23 - 2012 to a peak of 149.55 on August 12 - 2014 and has since the peak at 149.55 corrected lower in a very complex zig-zag correction. This correction has shaved more than 70% of the 94.10 to 149.55 rally, but it finally looks as this corrective decline has come to an end and a new impulsive rally to above 149.55 is about to develop.

                                          EUR/JPY - Daily 

USD/JPY rallied from an all-time low of 76.02 in early February 2012 to a peak of 125.86 in early june 2015, before being cut in half over the last 16 months. Here to we are finally seeing some serious signs of the next impulsive rally to above 125.86 developing. 

                                          USD/JPY - Daily

GBP/JPY rallied from an all-time low of 116.82 in mid-September 2011 to a high of 195.88 in late June 2015 before a very large and complex correction took over. The correction from 195.88 has shaved 85% of the rally from 116.82 to 195.88 and we can not say for sure that the corrective decline from 195.88 is complete. 

As long as resistance at 132.44 and more importantly resistance at 133.26 is able to cap the upside, we could still see one more wave lower towards the 122.63 - 123.45 area before the long term corrective decline from 195.88 finally completes and a new impulsive rally to above 195.88 can take hold. 

As both the GBP and the JPY is among the weakest of the major currencies at the moment and we are near completion of the corrective decline from 195.88 the volatility will rise and the intra-day swings will be very hard to predict, so be careful and be flexible with this cross. It should however, just be a matter of time before the next impulsive rally takes over here too. 

                                          GBP/JPY - Daily - Bear count

                                          GBP/JPY - Daily - Bull count

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USD O/N Deposit Rates Indicates USD-Liquidity Squeeze

                                            USD O/N deposit rates has exploded higher

                                          EUR/USD - Triangle consolidation to end soon

                                          GBP/USD - Downside thrust out of a triangle

The USD O/N deposit rates has exploded and is currently near 1.90%, which indicates a major USD-liqudity squeeze going on. This should benefit the USD against all the major currencies. 

Looking at just EUR/USD, a major triangle consolidation has been unfolding since March 2015, but it looks as it's coming to an end very soon. The first indication that the triangle consolidation finally is complete, will be seen upon a break below minor support at 1.1120, while a break below important support at 1.0911 will confirm a downside thrust towards at least 0.9850 and possibly even lower. 

The UK Pound is currently the weakest of the major currencies and has already trusted out of its triangle consolidation indicating a decline towards 1.1793 to complete its wave 3. 

The long term picture calls for even more downside pressure. 

However, the downside thrust in Cable (GBP/USD) is the first good indication that a stronger USD should be expected near term. 

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