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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