GBP/USD Keeps Pushing Higher

Cable just keeps on going! Here is a 4 hour chart of the trend lines I've been watching. If price continues higher into the top resistance zone I think it will make a good short with a stop at 1.59. 1.58 has been important support and resistance several times in the past so it will make a good entry point.

I got out of my SPX short just now as the pattern down from the top looks corrective. I now think risk is likely to edge slowly higher for the remainder of the week until the US GDP data comes out on Friday, which I expect will be dismal.  I will be watching the markets closely then for a top out in equities and likely a turn in risk across the board.

SPX Could be Completing an Ending Diagonal

Here is a possible Ending Diagonal count for the SPX. I have put in a black count showing the ED pretty much complete as I write this, and a red count with another possible wave up to come before a reversal. Either way a break of the bottom trend line should offer a good signal to get short with a stop above the previous high. If this move down complete as an ED it will be the C wave of a large zig-zag from 1007.4, and I expect that price will reverse sharply from the high as it begins falling in a large 3 of 3. I have just taken a short from the top trend line in anticipation for a collapse. Anyone who follows me knows I have been trying to get on at the top of this move for some time. More conservative traders may want to wait for a confirmed break of the bottom trend line before getting short.

GBP/USD Support Channel Continues to Hold

There is a really apparent upward trending support zone on the 4 hour which has continued to hold up the Pound. One again price has reversed sharply pushing higher against the USD. As this entire move looks corrective I am expecting price to eventually break through the bottom of the channel and make a new low. Until then it is not safe to get short unless we move to near the top of the channel or if the support zone has been decisively breached to the downside. Expect resistance just above 1.55 as this has held price in the past.

SPX About to Plummet?

Here is my primary 15 minute SPX count. While the whole move from the high could be counted as a correction it is also possible that we have already topped out and are heading lower from here. As you can see there are some extremely bearish looking candles beginning to show and I think fundamentally it is more likely that we will hear negative news over the weekend. In my chart you can see in my chart we have just begun a third of a third of a third which would explain the sudden sharp drop off in price, and also means this momentum is likely to carry on for the remainder of the session and into next week. I have just taken a short position with a stop at 1090. The target remains open but the expected risk to reward on this trade is massive.

SPX Showing Signs of Weakness

Here is my irregular flat count for the S&P 500. The reason I favour this count is because the wave I have labeled as black wave B fits perfectly as a 3 wave move, and looks awkward when labeled as an impulse which ever way the sub-waves are labeled. Wave 2 retracements are normally deep and sharp however this shallow flat is a warning sign of impending weakness. I expect the final wave of this correction (black C) will likely be a failure as well (not reach the end of black wave A), which is also be a sign of weakness. Once this correction is complete I expect a very hard and fast fall straight through the 1000 level. This will likely occur as levels of negative press about the US and it's imploding economy increase. If there is one trade I want to be in for the rest of this year it is short US equities.

NZD/USD Hourly Chart

Here is my latest NZD/USD count with what I am expecting from this pair over the coming weeks. There appears to be a reasonably clear 5 waves down from the triple top at 0.7155 and it appears as thought the pair has almost completed a flat correction from the low. I expect that price will encounter strong resistance at around the 0.6980 level, which is strong technical resistance and also very near the 50% Fibonacci level. Look to sell from this zone with a stop above the triple top. While this stop is over 100 pips away, if this count is correct and we are about to fall in a third wave the target is well over 400 pips away giving us a great risk to reward ratio.

SPX Head & Shoulder Reversal Pattern Complete

The SPX H&S Pattern that many of have been watching for some time has completed and the neckline has been broken. Price may drop hard from current levels in a large wave 3. While it is possible price may rally from here in a 2 of 3, I think it is more likely that the neckline will hold as resistance and price will fall hard and fast from here after a negligible pullback. I have taken a short from the neckline break. The H&S target is 860 however I think we will go much lower than that. Keep stops at 1050. There is currently a nice 5 waves down from 1048 on the 5 minute so we may pull back to the 1030/38 area before continuing lower.

The upward trending support that I have been watching on the EUR/USD broke last night and the move from the top can be labeled as an impulse. I am going to take a short on a pullback to 1.2345, which could be a second 2 of a 1-2, 1-2. Stops will be kept tight at 1.2395. If the 1.24 level breaks however it is likely we will be moving higher still. There isn't too much else to report as market patterns haven't been very clear over the last week so I haven't been trading. Good luck.

SPX Video Analysis

Roy's latest video analysis of the SPX is out. His thought on equity markets echo my own exactly. I think we will see another small increase in risk appetite early in the week before a reversal. Check out the video by clicking on the link to the left of the page.

Some thoughts on EUR/USD

While the larger count for the EUR/USD pair is indeterminate due to the ambiguous nature of the sub-waves from the 1.5150 high, I have been focusing on shorter term patterns to decipher intra-day direction. For the past month the pair has been carving out a series of 3 wave patterns, which looks very much to me like it is all part of the same corrective move. Many people are calling for a medium term bottom in the EUR/USD and while sentiment is at an extreme which favours the bulls, I am highly dubious that this move down is yet complete. The move from 1.2670 (in red) is clearly a 3 wave move and thus cannot be the final move in an impulse, unless it is part of an ending diagonal, which is clearly not the case in this instance.

Another reason why I believe that this is not the bottom everyone is hoping for is the highly corrective nature of the move up from the 1.18765 low. If we are to see a significant retracement which relates to the entire move from the 1.5150 high, I would expect a much sharper rebound. To the left I have posted an ending diagonal count which is currently my favoured scenario from here. While it is possible that we are just in a corrective move as pictured above, I do not think the EUR/USD has much room left to fall before a larger retracement on the daily scale, and we will probably chop around in a further series of 3 wave moves for the next month or so before pushing higher. Both of these scenarios point to coming downside in the next few days, so I will look to enter short on a move above 1.25 with my stop above 1.27.