Technical analysis of the US 10Y - US 2Y Yield vs. S&P 500

 

US 10Y - US 2Y Yield vs. S&P 500

The chart above show the US 10Y - US 2Y yield (the red line) and the black line is the S&P 500 index. 

When the US 10Y - US 2Y yield returns above the zero mark. After having inverted, been below zero percent. We see a larger reaction to the downside in the S&P 500 index. We have seen the US 10Y-2Y yield cross below zero in 1989, 2000, 2006 and in 2022-2024. From the cycles we can see the the inversion bottomed exactly as expected in June 2023 and the inversion between the US 10Y and US 2Y yield has become less deep, but it still hasn't broken back above the zero mark indicating a return to the 2.64% mark, which has been the minimum seen after each normalization from an inversion. 

Once the zero mark is regained we should also expect a larger correction in the S&P 500 to be seen. 

We are not quite there yet, but it will not take much to force a break back above the zero mark indicating a larger correction in the S&P 500 taking place and a return to the 2.64% mark for the US 10Y - US 2Y yield.  

Elliott Wave Analysis of EUR/USD - Wave (2) Is Headed For Support at 1,0724

 

EUR/USD - Wave (2) is headed for support at 1,0724

The zig-zag correction from 1,1139 continues to follow the expected path towards support at 1,0724 where I expect wave (2) to complete and wave (3) to take over for a strong rally towards the 1,2800 - 1,2860 area. 

Resistance is now seen at 1,0916 and a break above here will indicate that wave (2) completed early and wave (3) already is unfolding. 

Elliott Wave Analysis of EUR/USD - More downside pressure to 1.0724

 

Elliott Wave Analysis of EUR/USD - More downside pressure to 1.0724

In my January 2 post I called for a temporary consolidation before renewed downside pressure. This outlook remains firmly in place. 

The expected consolidation has likely completed and renewed downside pressure should be expected in the weeks ahead towards the ideal target at 1.0724 from where I expect the next impulsive rally to take hold. 

The USD is normally firm in January, which once again has proven to be the case in January 2024, but this should just be a temporary thing and ultimately EUR/USD is expected to rally towards at least 1.2800 in circle wave 3. 

Elliott Wave Analysis of USD/JPY - Flat Correction Unfolding

Elliott Wave Analysis of USD/JPY - Flat Correction Unfolding

USD/JPY saw the completion of an A-B-C rally up from the 2011 low at 75.56 with wave A completing at 125.85 in June 2015. 

Wave B was a triangle that completed at 103.52 in January 2015 and finally wave C rally higher to test the equality target between wave A and C at 151.43 in October 2022. 

Since the 151.43 test we have seen wave A and B of a flat correction wave C is now unfolding. We need a break below support at 140.98 to confirm that wave C is unfolding, but it should only be a matter of time before this support breaks and USD/JPY continues lower towards support at 126.19 and maybe even slightly lower. 

Once wave C is complete This will likely be an X-wave, but only time will tell. 

JPY should be once of the best performing currencies in Q1-2024.  

Elliott Wave Analysis of The Shanghai Composite

Elliott Wave Analysis of The Shanghai Composite

The Shanghai Composite have been developing a triangle since the peak at 6,124 in 2007. 

The final wave - Wave E - is currently developing and should ideally see a decline to test support near 2,642 before the next strong impulsive rally in wave (C). 

The first strong indication that wave E has completed will be upon a break above resistance at 3,242 that would call for a rally firmly above the 2007 peak at 6,124. 

As long as resistance at 3,086 is able to cap the upside, the pressure will remain towards the downside and a likely decline towards 2,642. 

Elliott Wave Analysis of EUR/USD

Elliott Wave Analysis of EUR/USD

HAPPY NEW YEAR 2024!

EUR/USD is now in circle wave 3 higher. After an expanded flat circle wave 2 we should expect an extended rally in circle wave 3, which means a rally to at least 1.2962, where circle wave 3 will be 161.8% the length of circle wave 1. That said, I would not be surprised to see circle wave 3 extend further towards the 261.8% extension target at 1.4516. 

Short-term I will be looking for a minor correction in wave (2) towards support at 1.0724 before the next strong push higher in wave (3) towards 1.3555. 

Just a side note. The USD tend to be towards its strong side in the month of January, which also favor a temporary correction in EUR/USD towards 1.0724 before higher again.