No change - except Euro break out

No real change
Market rally has continued now 4 days long
still no break of the  downtrend (October - December)

if this is correction of that down trend and the trend is STILL down - could be close to finishing this move up - and next leg down

Small short probes on strength

No news on Trump trade deal - well actual definitive news - however the "positive" spin has contributed to the rally  - and markets are discounting mechanisms so a "Trade deal " news would more than likely boost prices but likelihood is a "pop n drop"  - keep cool!

Euro breaking out targeting 1.18 - 1.20
this is saucer formation
already broken out

DOW 4  hour chart

Looks like CLASSIC bearish wedge
Resistance at 24300
Could overshoot on a "trade deal"
A break down of the wedge - new lows ahead - 20k? possible 18500

Part I second week 2013

After a strong (short) first week, week 2 finds markets consolidating and despite the strong rally last week, so far have not given back much.  

All markets are consolidating

AAPL drags on NDX (but did rally 10 % last week)

FTSE broke to new highs on Friday.

DAX continues consolidation.

Dollar rallied hard on FOMC minutes but this week giving back some of gains : ready for a FALL?

obviously EURO and POUND vs dollar fell after reaching obvious resistance at 1.33 and 1.63 respectively, now is the fall a correction and ready to go higher?

YEN remains weak

CHARTS

FTSE daily

Can see a break above descending trendline @ 5904/5910  then a classic pull back to retest that level, and then rallied towards the next resistance at 6100/6120

So we should have solid support at 5900, and resistance at 6100. Shorter tern 6000 looks like psychological support,

BUY support and sell resistance, BE WARY of sustained break above 6120 market will then be in position to attack the highs (minor resistance at 6500) 

Also a decline below 5900 may call into question new high scenario

DAX daily

DAX has had a large rally off the November 2011 low.  Despite being overbought has not retraced mush, so could be in a sideways consolidation.  Another push up to around 8,000 possible before larger retrace.

EURO daily

Euro attacked 1.33 resistance level, but was overbought.  The fall to 1.30 has reset the O/B conditions quickly.

A fall below 1.2950 signals deeper correction

Sentiment seems bearish with talk of Double and Triple top at 1.33

expecting another go at 1.33 which succeeds and euro rallies to test 1,35 on way to 1.40

Markets at crucial levels

DAX

bumping against resistance, 7440.7480 key levels.  A break above that opens way for much higher prices.
Pluses for the rally scenario
1. For the last 3.5 weeks the market has been consolidating the gains since breaking through key resistance at 7170, no real selling BUT the sentiment at these levels turned decidedly bearish, with many looking for a top.
2. The market is not overbought
3. Daily indicators in process of turning up

Possible that we rally and fail at 7500, that would make for a more bearish case, but we would need to see a break below key levels below 7170.

Likelihood is a rally to test 7500 and then a retrace; BUY the dip (If nimble enough trade the short side but beware of sustained move higher)

FTSE

similar to DAX

First chart shows declining trend line resistance 2007, 2011, 2012 tops

second chart shows daily closer up.

EURUSD

on the weekly chart we may have completed a bull flag, in which case measured target is around 1.40 !

AAPL

major market mover, may have bottomed at 623.  If not possible test lower at 600 or at the 200 dma currently 580

EURUSD long term chart

Monthly chart

So far the rally off the recent low doesn't "look" complete.  Not to say we don't have a couple of red candles, nothing goes up in a straight line, BUT the declining trend line resistance seems a reasonable HIGH target, (1.40) or lower target 1.34

EURO

EURO weekly

recent action shows similar pattern to that between April and August 2011.  Will it resolve in same way?  I.e. DOWN?

The daily chart shows what appears to be a TRIANGLE or Head and Shoulders formation

Upper boundary around 1.3270

Lower boundary 1.30 (neckline, base triangle)

EURO support test and PASS!

The €/$ tested support at 1.30 yesterday and passed with "flying" colours...now it has to overcome the next test to the upside at around the 1.32 level...and then the declining trend line at 1.3370 for a real push higher towards 1.37/1.40

A failure here could see another push down, below 1.30 next stop 1.26

EURO

Rally from 1.26 to 1.33 has stalled.  Is that it?

Despite today's downgrades form Moody's the euro recovered after an initial sell off. making recent action more likely to be a CONSOLIDATION of the move up, rather than TOPPING.

Key level, 1.30 (a break below there would change scenario to bearish and at least a retest of the lows at 1.26)


Otherwise, above that level, suggests a continuation of the rally to min 1.35 and possible 1.40 as shown in the chart below.  Sentiment is quick to turn bearish, and short positioning still relatively large.

Fake out to the downside Crude and Euro

Crude oil managed to spook yesterday with a nice fake out to the downside, and probably encouraged some short selling and/or triggered stop losses for longs...before reversing sharply higher...

30 min chart below..

So still in the potential BULL FLAG.. and now more likely to see a break above 101 (after a bit of time to digest yesterday's gains) 

The daily chart shows the FLAG

MACD looks to turn up

Upside target if it breaks North could be as high as 121

The €/$ also did a similar move, not quite as dramatic but tested the 1.3030 level, before reversing sharply higher and breaking resistance at 1.3225

Same as for oil, expect some back filling but should head to 1.35 minimum, and after hearing CNBC commentators yesteray advising selling into strength this may go as high as 1,40!! (good contrarian indicator)

New YEAR !! 2012 rally...!

Will it be the "end of the world as we know it?" ..

Probably not !

DAX and FTSE are breaking our of downtrends /triangle formations..Copper close to breaking out of a triangle as well..

DAX has some tough resistance between 6170 and 6400 above 6400 and clear skies above...target 7200

Also Euro pairs look like finding support and with HUGE short positions a rally above key levels may initiate some short covering.  EURJPY looks like a FALLING WEDGE...

So if we get follow through the rally may be LARGE

Waiting for Godot...

Markets marking time especially currency markets...
waiting for the BIG news out of the EU summit..

both charts show the tight range we have eben in since the day the world's Central Banks announced tehir concerted action, resulting in the big spike on November 30th.

Nothing to do but wait !

The AUDUSD looks like it wants to break higher through the 1.029 /1.02 level.
EURO looks like it has found support at 1.33


EURO 30 minutes

AUDUSD 30 mins

Equities also pretty subdued at their highs, DAX is the underperformer, vs DOW and FTSE

EURO DOLLAR falling wedge (bullish)

Additional notes after re-reading my Edwards and Magee "Technical Analysis of Stock Trends"...unlike a Rising Wedge ("When prices break out of a Rising Wedge they usually fall away rapidly"), in a Falling Wedge "they are more apt to drift sidewise or in a dull "saucering-around" movement before they begin to rise"

May not be applicable to FX ..but worth watching..

DAX daily update

Well the fall out of the chop was a little deeper than expected..BUT we are still in a channel and now approaching a key level 5785.. a break above that and the rally is back on...otherwise we may just trade in the channel.

Things to note..

1. Despite all the negative news markets have not "fallen out of bed" ie they have only given up between 50 - 70 % of the rally from October lows
2.  The media are extremely negative on everything.
3. Despite all the negativity surrounding the EURO €, also has held up relatively well
4.  Likelihood is that the money is all betting on demise of Euro and Europe...

Looking at the EURO chart
Looks like we could be in falling wedge patterns
If we break out to upside (expected move) then in theory the entire falling wedge will be retraced..
(similar patterns also in AUDUSD and GBPUSD)

EURO L O N G T E R M

Monthly chart of EURO  are we heading for 1.14?  Which also coincides roughly with 61.8 % retracement of the rally from November 2000...


Then it may be the turn of the US dollar to collapse....

Euro daily basing or consolidating?

Couple of possible scenarios.  For now looks like we will get a choppy rally up in  wave iv  before a wave v down..

IF the move down has finished we should see some good mini rallies to signal a change in trend

EURGBP

Well this went further than I thought..BUT like the AUDUSD chart from 23/02/10 AUDUSD  the negative divergence set up is looking better with a new high and RSI flat.  And the STOP for a short is close by so RISK/REWARD  looks good as well.

GBPUSD looks like it is close to target so with Greece and other countries weighing on the €, maybe £ will start to outperform again vs Euro.

EURUSD...3rd wave?

The EURUSD move down has certainly been relentless and now looks like we have 2 legs down.  The 2nd leg is just a little longer than the 1st leg so likely that it is a 3rd wave down BUT has it finished?  A break above that descending trend line may be first warning that choppy trading lies ahead if we go into a wave 4.

BUT also wave 3 may extend down a 1.618 x wave 1 would bring us to 13074 approx.  Could be, especially if sentiment at the moment is looking for a bottom in the EURO and ALSO equity mkts.  A continued fall would tie in with some more equity weakness before a more pronounced bounce.

EURO 4 hr chart

Look at yesterday's post for cable chart , if it breaks down likelihood is that Euro will also go down

Euro v pound sterling

With a Greece bail out looming and the "burden" on the bigger EU countries, plus the prospect of further help for others like Spain, Portugal and Ireland MAYBE the pound is set for relative strength against the €..

look at the chart

Look at daily...

AND the weekly ..

THEN probably coinciding with new weakness in the USD expect cable to go to new lows vs Euro possibly attempt at parity?

Euro getting near short level?

Euro looks to be nearing a SHORT level...each corrective move up in this down trend has reached the previous reaction low (horizontal lines/arrows)..looks like 1.3850 is a good level..
barring any more "GREEK" news...if it breaks above this looking at 1.3925 as next short level.

Some targets...

Some targets looking to cover shorts and maybe go long...depends on market action !  (If not going long will wait for a bounce to re/short)

DAX: looking for 5350 as a target chart here DAX chart

FTSE 4950, initial target...BUT a break below here will see 4650

 

Silver  looks to have broken the up trend line, and maybe the head and shoulders target at 14 is the one to look for. 
 

EURO   starting to look like nearing the end of a 1st wave down...looking for some capitulation 

Currencies crucial levels..

Cable

Aussie dollar

Euro chart from October 09  click to see where we were..

and where we are now.  Euro looks like headed to 1.3760 support...but the major trend is now down after the break from the wedge.  If Cable breaks down through 1.57, it may be worth buying euro vs cable..