USD/CAD - Alternate long term count in motion

 

USD/CAD - Alternate long term count in motion

USD/CAD alternate long term count in motion

On July 12 I showed you the possible long term alternate count, which would be put into motion if we saw a break above 1.0809, well we did see a break above that resistance yesterday, which shifts the odds to this long term alternate count. If we are expecting a much stronger USD it will make sense if CAD became weaker.

What should be expected from this alternate count? First of all, we can conclude, that wave C of the corrective rally from 0.9406 still is developing and we are in the early parts of wave 5 higher. The ideal target for this wave 5 will be in the 1.1639 - 1.1666 area, where we will find the 61.8% corrective target of the decline from the Marts 2009 high at 1.3063 to the July 2011 low at 0.9406, but wave 5 will also be 61.8% of the distance travelled from the bottom of wave 1 at 0.9633 to the top of wave 3 at 1.1278.

We will find some resistance at the 50% target of the distance travelled from the bottom of wave 1 to the top of wave 3 at 1.1441, but the target in the area between 1.1639 - 1.1666 seems more attractive.

Short term look for support at 1.0749 to protect the downside for the next rally higher.

NZD/USD - The support-line near 0.8558 is under fire

NZD/USD support-line near 0.8557 under fire...

After having pin-pointed the top to 0.8836 we have been looking for a strong decline. We saw the first five wave decline from 0.8836 to 0.8646, which was followed by a running flat correction and we should now expect extension in wave 3 lower. The minimum target for wave 3 is at 0.8411, but I think wave 3 will extend even further towards the 361.8% extension-target of wave 1 at 0.8030. Longer term we should ultimatly see a break below the November 25- 2011 low at 0.7369.

Short term Resistance is found at 0.8597, which will ideally protect the upside for a continuation lower, but only a break above 0.8708 will invalidate the bearish long term count.

EUR/USD - Break below the long term trend-line support seen

EUR/USD break below the long term trend-line support seen

We have seen the first daily close below the long term trend-line support, which indicates much more downside to come. We already had an impulsive count towards the downside, so the break below the trend-line support is no surprise and just confirms, what we already was looking for.

Short term we will be looking for a decline to 1.3444 as long as minor resistance at 1.3478 protects the upside, but the short term downside pressure is maturing fast and from 1.3444 or upon a break above 1.3478 look for a correction towards 1.3500 and likely even 1.3528 before lower again.

Remember that corrections during thrid waves tend to small or even sub-normal.  

Coffee - Gained 5.22% Friday

Coffee gained 5.22% Friday

Coffee has more or less behaved like an Elliott Wave textbook chart since late April, but something out of the ordinary happened Friday last week. We saw a major gain of 5.22% and that was not what the textbook normally would have us to expect, so maybe something else than first expected is going on here.

Instead of blue wave (ii) being over at 185 in late June, it could be that it was only wave a of blue wave (ii) and the decline from 185 to 159 was b of blue wave (ii) and now we should be looking for wave c of blue wave (ii). If this is the case, then we should first of all see a break above 175, which would call for wave c higher to 191 to end blue wave (ii) and set the stages for blue wave (iii) lower to 103.

However, if resistance at 175 protects the upside for a break below support at 163, then look for a strong decline 97 in blue wave (iii).

For now we will have to stay flexible and let the market tell us, which count is correct.   

DJI and S&P 500 - Non confirming top

DJI and S&P 500 non confirming top

Yesterday we saw another new all-time high for the DJI index and once Again the S&P 500 index did not confirm the top. We have now seen four new all-time high days in the DJI, which has not been confirmed by the S&P 500. Non Confirmation is an old but quite reliable signal.

However, trusting this signal alone is not advisable, therefore I would like to see a break below the ending diagonal support-line near 16,915 and more importantly a break below support at 16,805.38 in the DJI as Confirmation, that a top is in place here.

For the S&P 500 index I would like to see a break below support at 1,952.86 and more importantly a break below support 1,944.69, which will indicate that a top is in place.

Once the tops are confirmed, that should terminate the rallies from March 2009 and we should be looking for major declines.

 

EUR/GBP - At its target, bottom should be seen soon

EUR/GBP at its long term target, bottom should be seen soon

With a low printed at 0.7887, we are just 4 pips above the target-area between 0.7868 - 0.7883. Whether we will see a perfect test of the target-area or not is not important to me, what's important is, that a long term bottom should be expected soon for a major rally.

The first strong indication of a bottom being in place, will be a break above minor resistance at 0.7920 and more importantly a break above resistance at 0.7980, which will confirm that a bottom is in place for a rally to at least 0.8155 on the way higher to 0.8467 and higher.

You might wonder, why I expect a long term bottom in the 0.7868 - 0.7883 area?

The first reason is, that at 0.7883 wave 2 will have corrected 88.6% of wave 1. Second waves area allowed to correct 100% of wave 1, but a bottom will often be found near the 90% corrective target. 

The second reason is, that red wave v will be 38.2% of the distance travelled from the top of red wave i to the bottom of red wave iii subtracted from the top of red wave iv at 0.7868.

The third reason is, that we can see a clear divergence between price (making new lows) and the indicators (not making new lows). This is a sign of loss of momentum and tells us, that a bottom could be seen soon.

All together indication of a possible bottom being in place soon. Only a break below the starting point of wave 1 at 0.7763 will invalidate the long term bullish count. 

Nifty 50 - Long term top in place?

Nifty 50 why a long term top could be in place at 7,808.85?

I have been looking for a long term top for the last couple of months now. So I think it would be appropriate to show, why I think that a long term top could be in place, with the test of 7,808.85.

The upper chart shows the price action back to 1998. As you can see I have counted the rally from the low of 804.30 to 7,808.85 as a complete five wave rally.

Wave 1 rallied from 804.30 to 1,818.15

Wave 2 decline from 1,818.15 to 849.95 - This decline corrected 95% of wave 1

Wave 3 rallied from 849.95 to 6,357.10 - A very power and extended rally where wave 3 became 538.1% larger than wave 1

Wave 4 decline from 6,357.10 to 2,252.75 - Another very deep correction of slightly more than 70.7% of wave 3

Wave 5 rallied from 2,252.75 to 7,808.75 -  This rally became almost exactly 100% the length of the distance travelled in 1 - 3.

Wave 5 would have been exactly 100% of the distance travelled from the beginning of wave 1 to the end of wave 3 added to the bottom of wave 4 at 7,805.55, that is just 3.20 points off.

If we zoom in on the final part of wave 5 and look at the sub waves, we can see that red wave i and iv overlaps, that leave us with only one possible formation the expanding ending diagonal. Looking at the internal relationships between these waves, at 7,815.81 red wave v would be 161.8% of the distance travelled from the start of red wave i at 4,531.15 to the end of red wave iii at 6,198.00, just 7.06 points of the final high seen till now.

To sum it up, then we have seen a top at 7,808.75 within the possible target-area between 7,805.55 - 7,815.81.

Looking at the lower chart, we can see, that last week produced a bearish engulfing candle. The last time we saw a bearish engulfing candle was at the wave iii top in November 2011, which produced a correction in wave iv of more than a year. I'm actually looking for a bigger correction as I think we are about to correct the entire rally from 1998, but even if this turns out to be wrong, we should at least expect a correction of a year or more, if the bearish engulfing is confirmed by yet another bearish candle this week.      

Nifty 50 - Weekly bearish engulfing see last week

Brent Crude Oil - Triangle support about to be broken

Brent Crude Oil triangle support about to be broken

Brent crude oil has been locked within a triangle consolidation since the mid-2012, but it should just be a matter of time before the triangle support is broken and the next decline towards 81.56 is seen. A break below the triangle support-line at 106.27 will call for a decline to 103.95 and 96.75 as the next targets on the way lower to 81.56.

If the triangle support-line is able to cause a correction more, then expect resistance at 107.76 to protect the upside for the next attempt to break below the triangle support-line.

USD-Index - Has broken above the resistance-line and a small invers S/H/S bottom has been activated

USD-Index has broken above resistance and a minor invers S/H/S formation has been triggered

After a nice 61.8% correction of red wave i to 79.75, we have following seen a break above the resistance-line from the 81.02 high and at the same time a small invers S/H/S formation has been triggered, this tells me that red wave ii is over and red wave iii is developing.

Third waves is normally the strongest of the impulsive waves and therefore I would always expect extension to happen during the third wave. Extensions can also be seen in the first and the fifth wave, Just look a little to the left, and you will see that during red wave i it was the first of the sub-waves (blue wave i) that extended. The minimum extension I would look for is the 161.8% extension of wave one. It can be discussed whether this represents a real extension, but this is the most common extension you would see. If this target is broken clearly the next real extension target is the 261.8%, but you should always calculate the 200% extension target too.

If we calculate the 161.8% extension target of red wave i that would give us a target of 83.17, but as you can see red wave iii is already being sub-divided into smaller waves and we already have blue wave i and ii in place, which means, we can calculate the extension targets for blue wave iii and the first extension target is at 80.97, where blue wave iii will be 161.8% of blue wave i. As I said above, blue wave iii could easily extend further, but there is no way to tell how far it will extend, so all we can do, is keep a close eye of the structure of this rally.

As said before, not only has the resistance-line been broken, but a small invers S/H/S bottom-formation was trigger yesterday, which also is a very strong indication of a change of the smaller degree of trend from down to up. That said, an even bigger invers S/H/S bottom could be developing and a break above the neckline near 80.30 will activate this formation for an even bigger rally.

This is as bullish a configuration that you can get and expect a strong rally higher soon.   

NZD/USD - Top final in place?NZD/USD - Finally at the top?

NZD/USD Finally at the top?

First looking at the daily chart we are just a few pips away from the August 2011 high at 0.8843. If we then zoom in on the price action since February 2014 we can see a clear five wave rally is wave C of Y. If we measure the distance from the bottom of wave 1 to the top of wave 3 and calculates 61.8% of that distance and add this to the bottom of wave 4 then we get a target of 0.8836 (just below the August 2011 high). This cluster of targets should be able to protect the upside, but then I would like to see some evidence of a possible top and the first thing would be a strong reversal lower through support at 0.8775 and more importantly below support at 0.8708 confirm that a top is in place.

By the way, the 61.8% target was tested in early trading today, so keep a close eye on this cross for signs that a top might be in place.  

Nifty 50 - Top in place at 7,807.50

Nifty 50 top in place at 7,807.50

The rally over the last week just took a few hours to wipe away, this is a classic sign of a trend reversal. The critical level at 7,661.40 was broken as was it made up of hot butter and the next support at 7.577 has been penetrated, but really broken yet. However, I do think it will be a matter of time before this support will be broken too for a continuation lower to 7,441.65 and break below this support will firmly confirm the top.

I think that we have seen a long term top at 7,807.50 ending not only the rally from August 2013 at 5,118.65, but also the larger rally from October 2008 at 2,252.75 and that a correction to at least 6,360 should be seen. A break below this strong support will call for a much deeper correction.

Short term I will be looking for resistance at 7,464.05, which ideally will protect the upside for the next decline.

DJI - The ideal target of 17,094 is still in sightDJI - Target at 17,094 still in sight

Dow Jones Industrial Index - Target at 17,094 still in sight

Turned down from 17,074.65, but as long as support at 16,871 protects the downside the ideal target at 17.094 still is in sight. That said, we have to be aware, that all requirements now have been fulfilled and a top could be found at any time now, but to indicate that a top is in place a break below support at 16,746 is needed. Only a break below this support, will be the first indication that not alone the rally from early October 2011 is over, but the entire rally from early March 2009 has come to an end.

I'm still regarding the rally from 6,470.11 in early March 2009 till now as wave D of an expanded triangle (megaphone pattern) and wave E of this pattern is still missing. This means, that once wave D finally is over we should expect a powerful decline in wave E lower. This expected E wave could make it all the way down to 5.600 by late 2016, but we might not need a decline as deep as that, but only time will tell.

For now we should still focus our attention towards the upside, but the top is getting pretty close at hand now.

 

 

USD/CHF - Expect acceleration higher soonUSD/CHF - Expect acceleration higher soon

USD/CHF expect acceleration higher soon

We have seen a nice five wave rally of the 0.8858 low and after a minor correction to 0.8925, which ideally will protect the downside for the next rally higher to 0.9037 on the way higher towards 0.9400 and 0.9839 as the next major upside targets.

Should the minor support at 0.8925 be broken, when expect only slightly more downside price-action closer to 0.8894 before renewed upside pressure takes over again.

Only an unexpected break below 0.8858 will delay the expected upside for a move slightly lower to 0.8829 before higher again. 

GBP/JPY - Top in place at 175.39?GBP/JPY - Top in place at 175.39?

GBP/JPY top in place at 175.39?

All requirements for a top being in place at 175.39 has been fulfilled, all we need now is a break below support at 174.42, to give us the first strong indication, that the top is in place at 175.39.

That said, we have to respect the uptrend as long as support at 174.42 protects the downside. But even if support at 174.42 will be able to protect the downside for a new high above 175.39, the possible rally should be very limited.

My preferred count is that we already has seen the high for wave B of the flat correction and wave C is about to develop, but we need some hard evidence that the top is in fact in place. Once the top of wave B is confirmed look for a powerful decline in wave C to below 163.82.  

USD/JPY - Wave E of the triangle is almost over

USD/JPY wave E of the triangle is almost over

Well the expectation of a bigger triangle unfolding has well founded and we are now well into the target-area between 101.81 - 102.20. As long as minor support at 101.70 protects the downside, we could still see a move closer to 102.20, but we are very close to a top now and should not expect to much more in regards to the upside.

Once wave E of the triangle is over we should see renewed downside pressure for a thrust out of the triangle towards the downside for a decline to at least 98.38.

USD/INR - Testing support, ready for the next rally

USD/INR testing support, ready for the next rally?

Since the 58.20 low this cross has tested the support-line multiple times and every time the support-line has protected the downside for the next move higher. I do think this will be the case this time too. but we need a break above minor resistance at 60.42 to accelerate prices higher in wave (iii) to 62.47 and possibly even higher to 64.15.

Only an unexpected break below 59.74 will delay the immediate upside pressure for a decline closer to 59.62 before a new push higher could be expected.

Gold - In its final stages higher

Gold in its final stages higher

Gold is in its final stages higher both price and time wise.

I will be looking for a continuation higher to 1,345.56 to end wave v price-wise, but from the time analysis we knew that this week ideally should terminate wave v too, so it all seems to come together perfectly.

Short term we ideally will see support at 1,322.26 protect the downside for the final rally closer to 1,345.56.