Finally a decent 5 wave impulse lower!

 

After what seems like forever going up, the market has created a very clear impulse lower followed by a three wave rally. Assuming the recent top sticks this creates a (very lopsided) head and shoulders pattern with March 7th as the left shoulder. At a minimum we are heading to the sub 1800's, but I believe that is an extremely conservative estimate.

 

The NASDAQ 100 chart shows the Head and Shoulders pattern far more textbook than does the S&P. The dates are somewhat different but they appear to be aligning at the right shoulder for the time being.

While this chart is a couple of weeks old, it display how on a logarithmic basis the recent all time highs were bumping into the lower end of this channel. These lines have been defining many of the significant market tops and bottoms over the last 30+ years. The bottom line is I believe we are currently at the very beginning of a new bear market.

 

 

*On a personal note, the reason I have let this page fall into a state of disuse is due to my current job as a Platoon Leader in the US Army. I cannot trade with the same focus as I could when I was in college; my primary duty is to my Soldiers and country. The demands of trading weigh on my mind too heavily to be dual focused on trading and training Soldiers. They deserve my all. I will continue to update when I feel there is something significant in the works, but still infrequently until I complete my service.

 

US Equity Market Rolling Over?

It appears as though the S&P 500 may have finally completed the first of many (yet to come) impulses lower. The trend line shown is the last bastion of support which is why I believe that we will get a modest rally from here which should not take out the September 13th highs. Although this impulse lower appears as a leading diagonal, which it probably is, when viewed from the DJIA it appears as a normal impulse wave.

This chart offers a very simplistic view of why I believe the top is in. As far as I know, I am the only one who has been tracking this long term channel forming in the DJIA. The price action in the S&P 500 has not reached the upper boundary of the channel; however, aside from traders I believe the Dow Jones is more widely followed and therefore has more relevance.

EURGBP Bottom in place?

EURGBP appears to be creating a double bottom with it's mid-2010 low. I believe this level will serve as a launching point for a move which should exceed .908. This presents an excellent risk-reward ratio for this trade. If this chart is correct, it may make more sense to short GBPUSD instead of this pair as I expect EURUSD to remain weak for over the next few years.

AUDUSD Critical Juncture

AUDUSD remains at a decision point. It can either breakdown to new lows or begin a final impulse higher. This secondary support must not be breached significantly in order for this count to remain valid. Either way this breaks, I expect to see large moves.

GBPJPY D Wave Complete

There appears to be at least one three wave move lower in the GBPJPY before higher levels are seen. Usually a third test of a significant level of resistance gives way. However in this case, as Wave C Green did not register new lows, it is likely that the current thrust will not make new highs yet. With the invalidation point nearby, a short from current levels seems justified.

AUDUSD to rally past 1.085

AUDUSD appears set to rally higher in a final impulse in order to complete the larger degree correction from .9386. I would expect this to complete as a double top between 1.095 and 1.105 in order to create the relationships Wave 5 Green = 61.8% of Wave 3 Green and Wave C Red = Wave A Red, respectively. A more significant break below the trendline drawn (which connects the origins of Wave A Red and Wave C Red) would make this wave count extremely unlikely.

GBPJPY decline ahead?

GBPJPY appears to have completed either a Wave 3 Green impulse or a Wave C Green correction. In either case, the short term view appears to indicate lower prices. If prices breach the Wave 1/A high, it is likely that new lows will be made eventually.

GBPJPY Head and Shoulders topping pattern

The British Pound versus the Yen has created a significant Head and shoulders patter over the last few trading days and appears to be set to begin a fresh impulse to new lows. As the recent decline has penetrated the top of Wave A Green, it is unlikely that we are experiencing a Wave 4 Green Pullback. However, where we are in the larger time frame is still unclear to me.

AUDUSD impulsive decline on 1 minute charts

This displays a five wave decline in the AUDUSD, which has a very high correlation to the S&P 500. I believe that this is the very forefront of a much larger move lower in virtually every asset over the coming months. The most notable exceptions will likely be the US dollar and treasuries in a flight to liquidity.

NZDUSD potentially topping?

The NZDUSD may be forming an ending diagonal which has created new highs and also touched a key resistance line for this Wave 2 Red higher. In addition, Wave 5 Blue is 127.3% the length of Wave 1 Blue although not shown.

USDSEK Dual Support Convergence

USDSEK appears set to rally strongly given that it is sitting on significant monthly trendline support. If trendline support does not hold this count is not invalidated unless 6.30 is breached.

AUDUSD Detailed look at Wave 4 Red

The AUDUSD appears to be completing a Wave 4 Red. Waves A and C Green are almost at equality. Additionally, Wave 2 Red (shown in prior post) and Wave 4 Red have reached equality. The previous post has more info about where Wave 5 Red and more importantly, the next move, should lead.

AUDUSD long opportunity to set up amazing short entry

It seems we may be ready for one last thrust higher in the AUDUSD above the recent 1.084 barrier, but below the all time high of 1.108. This should present an incredible risk reward opportunity to enter into short positions. The resulting impulse should end around a conservative estimate of 2,500 pips lower.

Possible 5 waves lower in S&P 500

I usually don't post my short term wave counts. However if this labeling is correct, we may have already seen the very first leg down of a much larger decline in Wave 3 or Wave C. The point is to remain very cautious until the market provides more clarity.

S&P 500 corrective rally appears complete

With today's latest jobs report, the S&P 500 has completed it's minimum pattern for a Wave 5 Black to complete Wave 2 Green. This does not mean that this is the top, but it may be. Prices need to hold below the May 6th high for this count to remain valid. The main point is to remain very cautious as the downside risks are far larger than the upside left.

USDCAD Daily and Weekly Wave Counts

The USDCAD appears set to rally in a fifth wave higher. The breakout from this triangle projects a thrust to roughly the 1.11 level in a fifth wave. This setup offers an amazing risk to reward ratio trade with the invalidation point just below at 1.0050.

However when looking at the weekly chart it appears that the upcoming fifth wave will break significant trendline resistance. The last time this occurred (in 2008), prices fell back to the former resistance trendline before exploding higher in an extremely powerful 3rd Wave. I believe a similar situation will present itself relatively soon. Ultimately, prices need to return to 1.3000+ in order to complete this Red Wave C.

EURNZD - Possibly concluding 3 year impluse

The EURNZD appears to be terminating an impulse which began three years ago nearly 10,000 pips higher. The spike on this weeks bar could potentially be the end, however the subdivisions of the current Wave 5 Blue are not readily apparent. A 15 minute view displays an obvious impulse higher. It is possible this merely the beginning of a Wave 4 Black of this Wave 5 Blue. In either case the short term momentum is higher. Therefore, I will attempt to enter into long positions at 1.6100 and 1.6035, with a stop loss at 1.5920.

NZDUSD Wave 2 higher potentially complete

The New Zealand Dollar vs. the US$ appears to have completed a three wave correction higher off its November lows. This is likely a completed Wave 2 Green higher or perhaps only a three-wave correction in a Wave A Blue higher. In either case however, prices should move lower in the short term. Currently, Wave A Blue and Wave C Blue are roughly equal, and prices are just barely above channel resistance. As the subdivisions of Wave C Blue are labeled, Wave 2 Green cannot terminate above .8045.

EURUSD Trending Higher?

It appears that the EURUSD has completed five waves lower to complete a leading diagonal. This is the last leg of that diagonal. As long as prices do not significantly violate the trendline which has now become support, the EURUSD should shortly continue higher in a multi-month rally.

EURCHF low risk bullish setup

I think it's worth a shot at these levels. This should break to the upside and target around 1.27 given the measured move from a triangle break.