Dollar Index and Gold Update

DXY and Gold now appear to be in wave 4 and I reckon that 1200 is an area to watch for Gold to turn and make its last leg down. As I mentioned earlier, personally I'm not going to trade this because I'm trying to catch that supposed Dollar top. Exciting times are coming.

AUD/NZD and EUR/GBP Update

AUD/NZD made a move up, appeared initially to break the trendline, but came down again. So I had to change my count and I figure that we will get a last leg down. Still believe I'm right on the larger picture as long as 1.0237 holds and this move down is clearly corrective.

EUR/GBP went up 300 pips which is a lot during these dull trading days, but it just marginally broke that 0.8571 high, and didn't reach the 1.618 extension of wave 1. So there is a good chance this was corrective, but it can also be a leading diagonal in progress or a wave 1 and 2 followed by wave 1 and 2 of larger wave 3 (alt in red). Many options, I wouldn't trade this if I wasn't already in and up on this one.

Gold in similar structure as the Dollar Index

The yellow bricks made an impulsive move up from 1046 (December 2015), topped at 1375 (July 2016) and is now in a C-wave to complete larger wave 2.

What's interesting is that Gold is imo in the same phase as the Dollar Index. Although it's not that surprising because Gold tells you particulary a lot about the state of the Dollar and fiat.

Gold is at the late stages of wave 3 of larger wave C.

DXY is also at the late stages of wave 3 of larger wave 5 (of wave C). See my DXY chart in the previous post.

So both DXY and Gold need a wave 4 and a wave 5 after which the Dollar should take a proper hit. 

Euro Index vs Dollar Index (DXY)

The Dollar Index (DXY) is in wave 5 of larger wave C so we can assume that the dollar rally which started in 2008 is in its late stages and a dollar sell off is around the corner( in a few months).

At the same time the Euro Index is ready for a last plunge which corresponds well with the EUR/USD picture I got in mind.

So regardless what the media tells you about rising rates in the US and years of USD gains, stick to Elliott and watch this rally fizzle out soon. I'm going to update these charts every 2 weeks or so, I don't know what you people are going to do but I'm going to catch a major top.😎

BTW If it plays out this way, the Euro will gain but there are probably better options like commodities or commodity currencies (AUD/NZD/CAD).

AUDNZD - Ready for the launch ?

I'm touting about this trade for a long time now in anticipation of a big third wave up which I don't want to miss. I have already multiple long positions but this seems another nice opportunity to add on to the trade.

The move down from 1.0725 is clearly corrective and this wave 2 might already be over. But this correction can still go lower as long as 1.0237 holds. 

On the 15min we need a new high to complete a 5-wave structure, in that case this should be minor wave 1 (which is part of a larger third wave) and we'll take off soon.

Daily chart:

240min chart:

15min chart:

EUR/GBP - Looks ready for wave 5 while above 83.04

EUR/GBP is at the 0.382 fib of wave 3 which is roughly a probable target for wave 4 to end (matches my count as well). I think it will resume the trend from here and make new highs in a wave 5. Minor wave 1 is already done (240 min chart). Parity here we come ! 😊

Daily chart:

240min chart:

WTI looks like it's in a flat

The rally from 26.03 looks like a leading diagonal. Crude went down from 51.64 in 3 waves (wave A) followed by a 3-wave rally back slightly beyond the start of wave A in a B-wave.

This suggests a flat in progress, so I believe 51.91 is the top of wave B and from here 5 waves down can be expected in a wave C. On the faster charts the first 5 minor waves seem to be almost complete (larger wave 1).

USD/TRY Should Resume Move Higher Soon

As mentioned here the USD/TRY broke in July out of a wave 4 triangle in and then retraced to 2.9133 where wave 3 (of larger wave 3) took off.

The pair is now in a minor wave 4 and has some more corrective movement to do before the rally resumes. Should not trade below 2.9932.

GBP/USD Long Term View

Cable has some more falling to do. I'm gunning for 0.96, the length of "W" (weekly chart) but there are more possibilities for this pair. The good news is that they all point south, the only question is how much will it go up before it plunges again. I belief we will see a move higher before we're going down again but I'm staying in because this is in my view a nice long-term trade.

Daily chart:

Weekly chart:

EUR/CAD - To X or not to X

EUR/CAD made a lovely move down and broke the diagonal. We're going vertical at the moment which suggest we are in a wave 3. Pairs like USD/CAD and NZD/CAD are also doing a good job looking bearish.

But the pair could be near the first bump on the road, that trendline on the daily chart could result in a 3-wave rally back up. In that case we are still in wave 2 and this move down is a X-wave.

However, I think - regarding the time consumed in corrective movement- the most likely option is that wave 2 is complete, break the trendline and this is already wave 3. 

Daily:

240min:

NZD/USD - Follow up

Kiwi broke the diagonal as I hoped for here and the fast move down suggests a wave 3 is unfolding. I expect a larger decline for this pair but I could see AUD/NZD struggling from here and develop a wave 2. This might slow down Kiwi's decline but so far so good.

NZD/USD:

AUD/NZD:

EUR/AUD - Follow up

EUR/AUD followed the Elliott path and as mentioned here a drop followed after a small rally. So I expect more from this pair but I got this one already at break-even. 

At this point 1.4779 would invalidate the count.

EUR/USD - Dull pair might first move up before completing D-wave

After Friday's strong rally the triangle (on the 60m/240m chart) doesn't look that good anymore. Since it traded slightly below 1.1122, broke the triangle and subsequently rallied hard makes it imo more likely that we will see more upside first before the next decline starts.

Personally I think the best option is probably not to trade this bore at all for now, we're right in the middle of a larger correction. 

EUR/GBP Update

EUR/GBP looks like it is in the process of making an expanded flat which is corrective so I bailed out of this trade. If this is indeed an expanded flat it will drop back to 0.8775 and probably slightly beyond this level and then rally back up and extend.

I hope I'm right on this one otherwise I probably gave up on a great short. 

EUR/GBP - Has some falling to do

EUR/GBP's fifth wave (of the rally from 69.30) seems to be complete so now it would be nice to see something convincing on the 15min. I wouldn't rule out a marginal new high but I reckon a big drop is around the corner.

For now we got only 3 waves on the 15min so I'm not totally convinced yet, but you could count this as a wave 1 and wave 2, followed by minor wave 1 and minor wave 2 of wave 3. Well, a chart tells a thousand words.

240min:

15min:

EUR/CHF - Follow up

I think it's interesting to take a look at a trade that didn't follow the (in my view) most likely scenario and what to watch for to limit any losses.

In my last post about this pair here I stated that the most likely scenario is that a wave 3 would follow, but unfortunately it didn't play out this way. EUR/CHF dropped 120 pips and then rallied back up.

Personally I gave a lot of pips back but that doesn't mean you have to lose money when this happens (providing you have a proper entry).

There are 2 big clue's that the decline wasn't a wave 3.

1. The assumed wave 3 didn't hit the 1.618 extension of wave 1.

2. After a 5-wave decline it rallied quickly back in wave 1 territory when price traded above 1,0887 (overlap !). So the decline from 1.10 is likely a X-wave.

So you know exactly where your count is wrong which is in my view the number one gift of the Elliott Wave Principle.

EUR/AUD - Follow up

As mentioned here another drop could be expected. The decline from 1.4781 unfolded in 5 waves so the most likely scenario is that this is wave 1 of larger wave 3. We've already seen a rally followed by a  3-wave decline so I reckon a 3-wave rally (wave Y of larger wave 2) is in the cards now. 

When you count this as a flat we should see 5 waves up in a C-wave, either way it should sail back towards 1.4743 for me to be interested to add on to the trade.

Above 1.4781 would invalide this count.

Silver - Set to extend decline before a decent rally

After 3 waves down from 21.11 the shiny stuff was stuck in a triangle for the last 6 weeks. And because the move started with 3 waves we now can assume that the (not yet complete) full decline from 21.11  is corrective and that we will see higher prices later on. 

A drop below 18.90 would confirm that the triangle is complete and that we will see a new 3-wave decline from here. 

HEI - Heico under pressure

The plunge from 75.01 is impulsive and the bounce at 67.42 was followed by sideways action. Elliott Wave Theory tells us that - even if this count is completely rubbish - we can at least expect another impulsive move down.

There is a possibility that this goes down in 3 waves, double or triple "zig-zagging" in a larger degree wave 4. In that case this correction is a smaller wave B.

Key is 75.01, this level should hold before the next leg down. Personally I would like this stock to go somewhat higher towards 75.01 before it drops from a r/r perspective.

KO - Coke doesn't look that safe anymore

Coca Cola is typically seen as a safe haven stock and it's allegedly even Warren Buffett's favorite stock but a glance on the chart suggests that a top is near. Now, picking the top of a 50 year plus up-trend is challenging to say the least but a smaller degree impulsive move down preferably breaking the trendline and a correction up would be very telling and a nice short opportunity in my view.

It looks like Coke is nicely following the Elliott Wave textbook, wave 3 is a large spike followed by a slow motion move down (wave 4) and we are now in a slow but impulsive rally (relatively to wave 3). Within this larger degree wave 5 there are 5 smaller degree waves but the stock can extend from here and in that case the move from 36.56 is just a smaller degree wave 1. Put this one on your watchlist.

AUD/NZD - Appears to have turned for real

For months now I've been talking about this trade which has in my always humble:) opinion excellent potential. Yes I was a bit early but this is a long term trade so "early" is relative within this context. At this point it seems likely larger degree wave 2 completed at 1.0237 and that we are now in the process of developing a smaller degree wave 1.

I have already a relatively large position in this trade but I usually ad on to trades but not at this level. I stay away from giving trading advice but personally I would wait for this smaller degree wave 1 to be complete (probably around 1.0760, start of previous wave 4) and then try to catch the end of the C-wave of wave 2 which is basically my edge within the Elliott Wave framework.

Daily chart:

240min chart:

EUR/AUD - Might recover a bit, but then ...?

EUR/AUD made an nice move down last week and bounced from 1.4632 but it looks more like a dead cat bounce for now. I believe there is more downside to come but I would like to see a larger correction higher before the next decline takes place.

Wave 1 of larger wave C seems to be complete at 1.4632 and personally I'm looking to short this pair, not at current levels but higher, preferably around 1.4916 while 1.5069 holds.

BTW: The count in the weekly chart is the least bearish count, a bearisher count could be that larger degree wave B is already complete since we already have seen 3 waves up which would mean the Euro will fall from a cliff straight away.


Weekly:

240min:

ABBV - AbbVie points south

AbbVie made a top in July 2015 at 71.51 and broke quickly to the downside in 5 waves to 45.45. Then, from Oktober 2015 until August 2016 the stock was clearly in a correction and 71.51 was never threatened. 

Later Abbvie turned south at 68.12 and made another (smaller degree) 5-wave decline to 63.06 and we are now correcting this impulsive move down.

According to the Elliott Wave Principle we can now expect that the stock will turn and make another leg down before it reaches 68.12, If we end up above this level this count is invalid. 

About that WTI short

I got a lot of feedback on WTI - Set up to move lower before new highs and questions about what is going to happen next with oil. I hate to disappoint you but the truth is I don't know ! :)

There are multiple options from here, the most likely scenario's are imo that it could be a triangle in progress but then 39.17 should hold. Or it's indeed a WXY like I pointed out in my previous post and in that case you would expect that it will trade below 39.17.

This trade is well in de money so I moved my stop to breakeven (above 47.72)  which is by the way what I always do by taking half of my position out and let the remainder run "risk free".

Bottomline: Personally I wouldn't chase this trade because it looks like we're in de middle of a correction. On wednesday there is a FOMC event which will probably lead to wild swings and you don't want to be stuck in de middle of it with a poor entry. Just my 2 cents.

NZD/USD - Nine month long ending diagonal could break soon

Since January Kiwi appears to be in an ending diagonal which is not uncommon for a C wave. This pattern looks like a wedge and consists of 5 waves and it looks like the fifth wave could be complete at 0.7485. 

From 0.7485 a 5-wave decline followed to 0.7234 after which 3 waves up were seen which suggests minor wave 1 is complete and wave 2 could be complete. But this 3-wave rally is very small and last friday's decline could be a X wave which would point to a double zigzag and 3 more waves up before a 3th wave down starts. An alternative scenario could be that it breaks down straight away because we have already 3 waves up even though they are relatively small. 

Above 0.7485 invalidates all of this.

EUR/CHF - Early stages of wave Y lower

After the SNB shocked global markets by abandoning its long-standing cap against the euro EUR/CHF dropped to 9651. Then the pair rallied and reached nearly 1.12 in February 2016. The subsequent move down from 1.12 seems to be unfolding as a WXY combination and I believe we're at the early stages of wave Y.

The decline from 1.10 unfolded in 5 waves which suggests minor wave 1 is complete. Minor wave 2 is complete or we will see 3 waves up and in that case wave 2 will unfold as a smaller WXY pattern (see ALT in red). This ALT scenario is not unlikely because the move down from 1.0984 unfolded in 3 waves so this wave could be an X wave.

Long story short: I'm bearish as long as 1.10 holds.

WTI - Set up to move lower before new highs

The move higher from 43.02 seems to have unfolded in 3 waves so another leg down is likely before WTI will make more gains. Above 47.72 would invalidate this count.

GBP/USD - Moving up in a corrective fashion

As expected the move higher from 1.2865 doesn't move in an impulsive fashion. The current structure suggests that we could see first a move down in a B-wave followed by a last push up to complete wave Y before resuming the down trend. I believe 1.3465 is a viable minimum target (C=A). Below 1.3059 would invalidate this count.

Silver - One move down before a rally

Silver appears to be in a triangle wave 4. This would suggest one move lower to complete wave C, larger wave Y and the whole correction from 21.

NZD/USD - First impuls down complete

Kiwi made a strong move down and broke the smaller degree bullish structure. It will be hard to break 0.7380 since the move down to 0.7210 was impulsive. So I see this upwards movement on the fast charts as a wave 2 and believe more declines are around the corner when this correction has fizzled out.

AUD/NZD - Could have bottomed at 1.0393

A ton of divergence and an impulsive bounce of channel support could indicate that 1.0393 is a bottom and could have turned already. Watch how minor wave 2 comes down for a potential trade north. Personally I would buy the break of this minor wave 2.

Kiwi about to turn soon

Like EUR/NZD is set to make more gains (as I mentioned here) NZD/USD is near the topline of a ending diagonal which also suggests a turn south is coming up.

AUD/NZD is at the bottom of a corrective channel and roughly retraced the length of wave W.

So I expect Kiwi weakness will kick in soon.

AUD/USD and Gold going down in a correction fashion

A few weeks ago AUD/USD appeared to be breaking out of  an ending diagonal which made me think that wave C of wave 4 (daily chart) was complete. Aussi  is now roughly 100 down from that level but crucially in a clear corrective structure. In my view there is no way that this price action can be seen as impulsive movement.

However, AUD/USD has still room to go down a lot more and probably will initially go south from here but it is not the impulsive wave 1 (of larger wave 5) that I had in mind when the ending diagonal appeared to be complete.

Gold's movement  is also corrective (and looks also set up to go south in a wave C).

EUR/USD - Wave C of wave Y in progress

As I mentioned in my previous post here the break of 1.1160 invalidated my bearish count. The pair went up and it appears EUR/USD is now in the C-wave of larger degree wave Y.

I'll watch closely what happens at 1.1318, it could be a target for wave Y to be complete (C=A).

Large picture here

GBP/USD - Could go higher

This is a tricky one, but aren't they all tricky ? Cable is nicely contained in a month-long corrective channel and is now at the bottom. At the end of this C-wave (of wave B) there is a small ending diagonal and a break north  would send Cable likely higher.

A break south from here would probably result in a massive downmove because it's rare that a corrective channel breaks on the "wrong" side but  "rare" doesn't  mean "impossible".

Long-term I think this pair will get hit much harder, but I could see a move higher from here.

NZD/USD - Ending diagonal, but a bigger one

Remember this chart of  NZD/USD. The pair initially went down but then rallied in 3 waves to 0.7338. It appears that that smaller ending diagonal turned into a larger ending diagonal. Although I believe that the smaller diagonal satisfied all requirements of an ending diagonal I think that the fifth wave was relatively small and out of proportion. So recent price action demonstrates once again that proportions matter when it comes to Elliott Wave analysis.

Last thursday NZD/USD traded a few pips above 0.7324 and met the minimum requirements for an ending diagonal. However, it would be more convincing if Kiwi reached the upper line of the supposed ending diagonal.