Sunday, March 8, 2015

DJI - Has the long term picture changed?


DJI has the long term picture changed? 
For years I looked for wave D higher in the expanding triangle. I will admit, that I was looking for a wave D top ultimo 2013 near 16,450 (see my blog post from March 26 -2012 here). Well here we are at 17.857, with a peak at 18,288 more than a year after the expected top, so it would be obvious to ask, if the long term picture has changed?
I don't think that things has changed and I still expect the rally from the March 2009 low at 6,470 as being wave D of an expanded triangle. The rally from 2009 has been kept artificially alive by the Central Bank's pumping billions of USD into the market, but if we look at the RSI indicator, we can see that it has made no new high. Actually it has respected the down trend-line nicely, but it have not yet given a sell signal either.
For a sell signal to be triggered a break below support at 15,855 is needed. The crowed has once again become complacent as the VIX shows 


but do they have any reason to be complacent at this point in time? I would not be complacent at this point in time. I think, that at minimum a major correction is long overdue and if my expanded triangle count is correct, the decline will break below the March 2009 low too.
If we look at the margin debt, which has proved to be a very reliable long term indicator (the chart below is by courtesy from Doug Short). We can see that the margin debt peaked already in February 2014 and has since then moved sideways, but a break below the April/May 2014 lows will trigger a major sell signal as it did in December 2007 and as it did in September 2000, so there is all the reason in the world to pay close attention to this indicator.

Finally I think it's worth paying attention to the US 10Y yields as they have staged a huge rally the last couple of weeks (see the chart below). Will the funds move into the stock market? well it's possible, but I'm not convinced that this is the first place they will go. I think it's more likely that they will move to the currency market and push the USD even lower along side JPY. As the debt needs to be paid back the currency that normally is used for borrowing, will become much stronger as investors cover their debt. 


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Friday, November 7, 2014

Elliott wave analysis of S&P 500 - The S&P 500 is headed for 2,081.85

S&P 500 is headed for 2,081.85 as the first possible upside target 
The rally of the 1,818.90 is clearly impulsive and we can already count five wave up from 1,818.90, but is the top in place? Not likely, when we have the first four waves in place, we can calculate the possible targets for the fifth wave. The first target to plot is where wave five will be equal in length to wave one and red wave (v) will be equal in length to red wave (i) at 2,131.42. 
The next two target to calculate is where wave five will be either 38.2% or 61.8% the distance traveled from the bottom of wave one to the top of wave three and add those two calculations to the bottom of wave four. In this case, that will give us the 38.2% target at 2,081.85 while the 61.8% target comes in at 2,130.73.
So the first target, that we should aim for is at 2,081.85, this could be the final top for red wave (v), but only time will show. If however we break clearly above the 2,081.85 target, then our focus should turn towards the 2,130.73 - 2,131.42 area as the next possible top for red wave (v).
At this point, only an unexpected break below support at 2,002.20 will indicate that the top of red wave (v) already is in place and shift the focus to the downside.  

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Friday, October 24, 2014

Elliott wave analysis of EUR/JPY - Wave B over at 137.01 or not?

EUR/JPY correction over at 137.01 or not? 
The rally from 135.21 has been stronger than anticipated, but the origin of wave i at 137.01 is still unbroken. Under the Elliott Wave Principle second waves are allowed to correct 100% of the first wave, this is especially common in the currency market.
So at this point we are left undecided, whether wave B is in place at 137.01 or wave B still needs a rally higher to the 137.82 - 137.94 area in wave c of B. I slightly prefer the count, where wave B is in place at 137.01, but to prove this count, we need a break below support at 136.52 and more importantly a break below support at 136.04, that will call for the next impulsive decline to at least 134.09 and possibly even lower to 133.40 in wave iii.

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Thursday, October 23, 2014

Elliott wave analysis of AUD/USD - Time to break out of the Diamond formation?

AUD/USD time to break out of the Diamond formation? 
The Diamond formation we have been tracking lately is getting close to its termination. I'm still looking for this Diamond to be a continuation formation, which means a break towards the downside for a decline to the long term target at 0.7384. 
That said, we have to be aware, that Diamond formations also can be reversal formation and if this is the case a break above 0.8833 will be the first warning, while a break above 0.8860 will confirm the formation has been a reversal formation and call for a rally higher to 0.9112. 
As said my preferred count is, that we should soon see a break lower, which would make this Diamond formation a continuation pattern, but we know the risk, this pattern carries. 

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Tuesday, October 14, 2014

Elliott wave analysis - USD/JPY wave iv ended at 106.76. Look for a rally to 111.25

USD/JPY wave iv ended at 106.76. Look for a rally to 111.25 
With an almost perfect test of the 38.2% corrective target of wave iii at 106.81 and the bottom of blue wave iv of one lessor degree, the odds for wave iv being over are very higher and I will now be looking for a break above 107.50 to confirm the bottom of wave iv for a rally to at least 111.25 in wave v and possibly even higher to 112.31.
Short term only a break below 106.76 will delay the expected upside rally in wave v.

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Monday, October 13, 2014

Elliott wave analysis - Ending diagonal support-line broken

Dow Jones Industrial - The ending diagonal support-line has been broken 
The ending diagonal support-line was broken at Fridays close and that calls for a decline to at least the origin of the ending diagonal at 14,719, but I will be looking for a much larger decline as wave E of  the expanded triangle should move below the March 2009 low at 6,470.11.
See my long term count from March 2012 here this count has served me well and kept me on the right track.
I have added the Detrend Oscillator as the support-line here broke to for the first time since the March 2009 low also confirming a long term change in the trend. 
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Tuesday, October 7, 2014

Elliott wave analysis of USD/INR - Inverse S/H/S bottom is building

USD/INR an Inverse S/H/S bottom is building 
I'm still looking for acceleration higher towards 63.49 and higher to 65.17, but we need to allow for the right shoulder to finish completely before the expected acceleration higher will take place.
From an Elliott Wave perspective, the rally since the late May low at 58.22 has developed nicely into a series of waves one's and two's. Once this phase of one's and two's is over, we should see a strong impulsive rally in wave three, with the first upside target being 63.49, but longer term even the August 2013 top at 69.22 should be exceeded.
Short term support will be found at 63.14, which ideally will protect the downside for the rally above the neckline resistance at 62.01, but only a break below support at 60.64 will be of concern.  

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