Election or not, cable is destined to fall!
Contributed by Enda Glynn, Bullwaves.org
EURUSD
30 min
4 Hours
Daily
My Bias: short in wave 3 blue. Wave Structure: downward impulse wave 1, 2 blue Long term wave count: lower in wave 3 blue Important risk events: EUR: N/A. USD: N/A.
Hello world!
Todays action in EURUSD has not cleared up the wave count just yet. The wave count called for the price to drop in wave '3' green today. Prices declined but; Todays action has not developed impulsively, the price has whipsawed too much so far to make any immediate sense from it! The price is now resting at support of 1.1205, I want to see a clear break of that level, and continued declines into 1.1109 to affirm that this market has finally topped out.
From a market internals point of view. The latest C.O.T data shows traders now hold the biggest NET long position since october 2011! EURUSD stood at 1.4600 at that point, and declined from there for a solid year to a low of 1.2200 before recovering. Thats a 2400 point decline, and I am expecting something similar this time around.
For the next few trading sessions, 1.1285 forms immediate resistance, prices should not rally above that level. A break of support at 1.1109 will switch the focus to the downside.
GBPUSD
30 min
4 Hours
Daily
My Bias: short below parity. Wave Structure: continuing impulsive structure to the downside in wave (5) Long term wave count: decline in wave (5) blue, below parity Important risk events: GBP: Parliamentary Election results, Manufacturing Production m/m, Goods Trade Balance. USD: N/A.
Cable declined off the trend channel today, in the initial declines of wave (iii) brown. This wave count calls for some pretty serious declines dead ahead.
The price has spent the last 6 weeks going absolutely nowhere. The topping process is sluggish but when cable does turn down again, it will do so with vengeance. All the while, the daily chart just registered a death cross of the moving averages. The general environment is turning ugly here for cable.
Todays high was 1.2976, this forms the first resistance level. The invalidation line for the immediately bearish wave count lies at 1.3047. Lets see how the reaction to the election results forms on the chart, A decline below 1.2851, the previous wave 'b' pink, will be a bearish signal.
USDJPY
30 min
4 Hours
Daily
My Bias: LONG Wave Structure: rally in wave [C] Long term wave count: wave [C] is underway, upside to above 136.00 Important risk events: JPY: N/A. USD: N/A.
I have labelled the short term chart with a bullish series of 1,2, waves to the upside tonight. The rally today looks very impulsive so far, And the decline this evening is in three waves and may have completed wave '2' pink. Todays low at 109.37 must hold in order for this bullish wave count to remain valid.
The price did briefly break resistance today, A further break of resistance at 110.30 will confirm wave '3' pink has begun. This wave should carry the market back above the previous declining trend channel and into resistance at 112.13. At that point the market will be well into its return to trend.
Todays rally brought the 4hr RSI ever so slightly above the centreline, not exactly an bullish upside break, but close!
For tomorrow and beyond, watch for wave '3' to drive the market higher. The extreme oversold levels of late may well trigger sharp swing higher soon. Time for the shorts to watch out.
DOW JONES INDUSTRIALS
30 min
4 Hours
Daily
My Bias: market topping process ongoing Wave Structure: Impulsive 5 wave structure, possibly topping in an all time high. Long term wave count: Topping in wave (5) Important risk events: USD: N/A.
Well, We got the new high we were expecting today, but the decline off that new all time high were very sudden and sharp. So it does beg the question whether wave '2' blue is yet complete.
Also, the rally out of that short term trend channel does not count well as an impulsive form. The short term wave count is still calling for another significant rise to complete wave (iii) grey.
On the 4hr chart, the projection for the high in wave (iii) are in the region of 21647. This is where wave (iii) grey will reach 161.8% the length of wave (i) grey. While the overall high is then projected to be at 21874 where wave [v] green reaches equality with wave [i] green.
So for the next few weeks we should see a large rally develop in stocks. The immediate hurdle is the current corrective phase. A break of 21229 again will signal the start of wave '3'.
GOLD
30 min
4 Hours
Daily
My Bias: Long towards 1550 Wave Structure: ZigZag correction to the upside. Long term wave count: Topping in wave (B) at 1550 Important risk events: USD: N/A.
GOLD sold off again today, and reached the lower trend line of the trend channel. The price seems to have found support so far at that level. The correction in wave '2' was steeper than I expected, and wave '3' pink is now overdue and should begin in earnest.
So far, in wave 'iii' brown, the price has rallied but without hitting an acceleration phase which is so desperately called for by the wave count. Critical support for the short term wave count lies at 1259. But I want to see todays low at 1271 hold fast. Wave '3' needs to break out of the trend channel and carry the price into that acceleration phase soon. Given the advanced stage of this wave count, a large move up needs to happen over the next week.
Read more by Enda Glynn
