SPX Daily Count

Apologies for my lack of posts lately. I have been extremely tied up with work and haven't had time to trade, let alone do up charts. I hope you all have been having some luck trading these markets. My risk averse bias as shown in my last several posts has proven to be incorrect as risk appetite has been increasing for far longer than I predicted. I still remain bearish on equities however and sentiment is once again reaching an extreme (see Prechter's latest interview here). In the SPX price is coming up against solid trend and shoulder line resistance, and I do not foresee a push up through the May 13 retracement at 1177 before a reversal. We may have already turned but if not I believe we are very close. I have just taken a short postiton at 1138 with a stop at 1180.

AUD/JPY Triange

The Aussie/Yen looks to have almost complete a huge triangle that began back in May this year. I think we are nearing a point of reversal from where we will head sharply lower which is the norm on completion of a triangle. For this count to remain valid 79.50 needs to hold. There is a fairly good risk to reward trade that can be make from current levels with a stop at 79.50. If this count is correct price should break back down through 72 over the coming months and will likely head much lower into the end of the year.

EUR/USD 4 Hour Chart

Just a quick one today as I don't have much time through the week anymore. Here is a EUR/USD 4 hour chart with a fairly obvious 5 wave move down from the recent high. I think we will continue to push higher in the final sharp leg of a correction before reversing near the 50% Fib level. This move will correlate with a push higher in risk across the board but will reverse sharply in a downward thrusting 3rd wave possibly around NFPs. Expect volumes and volatility to drop as we push closer to Friday's release.

Bearish SPX Hourly Chart

My daily count seems to be holding up well and I think we are ready to drop. Momentum so far hasn't been strong, but I am still confident that we are heading lower, and have just taken another short position based on this count. As you can see, the move I have labeled and red wave 2 is a flat, and retraced less than 50% of the preceding wave 1. This signifies weakness, which has also been shown through the minimal retracements in the last few weeks when other risky markets bounced much harder. I am moving my stop loss on my previous short to 1064 because if this is a 3rd of a 3rd of a 3rd we should start to gain momentum very soon and since this wave is expected to extend a long way, it is unlikely we will retrace much from here. If we do push back up above 1064 I will have to review my count.

NZD/USD Daily Charts

Here are two daily chart possibilities for the NZD/USD. This first one is my primary count, based solely on the Diagonal pictures counting better as a Leading Diagonal (5-3-5-3-5) rather than as an Ending Diagonal (3-3-3-3-3) as per the chart below. It is also possible that the LD wave 1 is an A, the 2 is a B of a more complex double or triple 3 correction, and we will continue to hold the daily range for some time to come. This alternate to my chart does not sit well with my fundamental based expectations for a large decline in the US economy coming into 2011 however, so I do not believe it is likely. I expect the relationship between the US and it's "safe haven" status will continue to deteriorate into the coming months and years, and we will see a decline in the US Dollar as the next wave of global economic decline sweeps across the globe.

Here is my other count for the NZD/USD. If this count is correct it is likely we will retrace the entire length of the Ending Diagonal C of X all the way back to 0.66. This downside move will likely take up a bit more time than the correlatory one in the chart above, however in a similar way I expect that once it reverses to the upside it will do so sharply and impulsively. In both of these two counts, expect the coming move to the downside to be choppy in nature as the moves are both corrective and not impulsive. I think selling this pair in the short term is a possible option but would not suggest getting short unless prices were to retrace to the 0.715 level. In my opinion there are better trading opportunities around at the moment.

SPX Ending Diagonal Possibilities

Here is my bearish SPX Ending Diagonal count. In this count the market has already topped out and completed green wave 2 (see my last post for a daily chart of my longer term count). Although it is hard to make out on a 4 hour chart, there is a possible Leading Diagonal down from last weeks top, and we have reversed sharply in a wave 2 which is a common occurrence after an LD. We will know very early in the week whether or not this count is correct, and while I am hopeful it is, I think it is more likely we push up one more time before reversing as per my next count.

Here is my other Ending Diagonal count, which is bullish in the short term. As you can see price bounced hard off the lower trend line support during Fridays session, and we may see some follow through on Monday in the form of a throw-over fifth wave. If this is the case I would suggest taking short positions from the 1140 level which should offer strong resistance. I do not expect price to break much above 1150 however if it does I will have to revise my longer term count as this will most likely invalidate my ED counts.

SPX Looks close to Topping

This is my current favoured SPX count showing an Ending Diagonal nearing completion. I am expecting price to rollover on a spike up above 1120 from where it will drop sharply in a wave 3. 1035 which has held price in the past should do so once again, although I will be placing my stop at 1180 to be safe. As I have mentioned several times in the past I am very bearish on the US economy and expect the bear trend to continue very soon. I have attempted unsuccessfully to get short with a small stop several times over the last month in anticipation of top, however we have now retraced to a level where I think it is worthwhile taking a short with a larger stop. I agree with the longer term views of Prechter and Gerald Celente and believe we very near to a wave 2 top.

As you can see on the chart to the left (showing a 4 hour zoom of the C wave ED from the chart above) there is clear divergence in the RSI, and price is once again nearing overbought levels. I expect this final thrust up in price (whether it makes a new high or fails) will not make a new high in the RSI showing more bearish divergence. I will be looking to short at 1125 with a 1180 stop. If price fails before reaching that point I will take a short on a break through the bottom upward trending ED support line. As I have mentioned in the past, this is a medium to long term hold position with a great risk to reward. Price is expected to fall beneath 670 in the long term.

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.