Euro bullish weekly reversal outside warrants action

US equity indexes continue to chop up participants (see explanation from 2 weeks ago on the purpose this serves) as the SPY is at its highest since 5/3. In fact, the S&P 500 (SPY ETF shown) has closed the gap at 138.99 (not shown on this chart which was taken earlier). However, the Russell 2000 (IWM ETF) is well below its July high and closing in on its short term trendline. In other words, the broad index of small cap stocks is not confirming the new high in the narrow index of the 500 largest companies.

US Dollar Index (ICE) Continuous Contract Weekly


Prepared by Jamie Saettele, CMT

I’m still following the 1995/96 USD model. IF the current market follows the 1995/96 model then expect weakness into mid-August below 8139. 8082 is former resistance and now potential support. Allow for strength early next week above 8307. The 1995/96 market endured a deep retracement (in late July and early August of 1996) that nearly touched the previous swing low (February 1996 low). If that happens this time around, then weakness would extend below 80 but a bottom would form before the February low of 7899.
US Dollar Index (ICE) Continuous Contract Daily


Prepared by Jamie Saettele, CMT

“The relationship between the US Dollar Index in 1995-1996 and now was pointed out to me by ElliottWave-Forecast. The charts tell the story and it’s uncanny. Not only do the patterns show remarkable similarity in form, but also in time and amplitude. The first number denotes the number of days that the specific leg consumed. The second number in parentheses denotes the number of days since the start of the pattern. The numbers with decimal points are percentage and measure the change from low to high of each leg in the pattern with the number after the slash measuring the net change from the start of the pattern. If the pattern continues (and there is no guarantee that it will of course), then the USD would trade sideways to down throughout July and August before bottoming just above the March low. This should be interesting to follow.”

Prepared by Jamie Saettele, CMT

Dow Jones FXCM Dollar Index (Ticker: USDOLLAR)
Weekly


Prepared by Jamie Saettele, CMT

Jamie – The Dow Jones FXCM Dollar Index (Ticker: USDOLLAR) has traded to its lowest since 5/11 and the index may slip lower still next week. Focus is a short term internal downward sloping channel and 100% extension of the decline from the July high at 9986. The trendline that extends off of the 2012 lows is at about 9970 next week. A deeper decline into mid-August (as per the 199/96 model) could reach the 100% extension of the decline from the June high at 9940. Allow for corrective strength above 10060 but look lower over the coming weeks.
Euro / US Dollar


Prepared by Jamie Saettele, CMT

Jamie –The anticipated reversal has materialized in the EURUSD and we can now focus on how far the rally is likely to extend. Elliott wave guidelines state that wave 4 often alternates with wave 2 of the same degree with respect to character. In other words, if wave 2 is sharp and simple then expect wave 4 to be shallow and complex. Wave 2 (13003-13384) was sharp (retracing 78.6% of wave 1) and simple (3 wave zigzag) thus we should expect wave 4 to be shallow and complex. Shallow means a 38.2% retracement of wave 3, which comes in at 12554. The former 4th wave of one less degree is also of interest at 12746. The bullish wave count (for at least a few weeks) is bolstered by this week’s key AND outside reversal. This is the first such reversal since the second week of 2011. Near term, I favor buying on a dip early next week between 12175 and 12215.
British Pound / US Dollar
Weekly


Prepared by Jamie Saettele, CMT

Jamie –15900 remains a level of interest. To review, “15900 is the 100% extension of the rally from 15267 and 61.8% retracement of the decline from 16300.” After Thursday’s surge, a tag of 15900 may be in the cards earlier than thought. The level intersects channel resistance on Tuesday. An aggressive target of 16105, the 161.8% extension of the rally from 15392 (beginning of wave c?), must also be considered in light of the EURUSD bullish implications. 15550 and 15610 are supports.
Australian Dollar / US Dollar
Weekly

Prepared by Jamie Saettele, CMT

Jamie – The swings since the 2011 high compose a triangle. The NZDUSD pattern makes it more likely though that the triangle is not bullish but rather forming from the October 2011 low as wave B within an A-B-C decline from the 2011 high. Without getting into the nitty-gritty of wave structure within the advance from the 6/1 low, levels to consider for a top are 10475 (4/27 high), the line that extends off of the 7/5 and 7/19 highs and 10600 (extensions and 2/23 low). The 10600+ idea makes the most sense given the 1995/1996 USD model and EURUSD wave count. Support is 10345/85.
US Dollar / Japanese Yen
Daily Bars 



Prepared by Jamie Saettele, CMT

Jamie – Quite simply, the 3 wave rally from 7765 leaves 7765 vulnerable. The decline from 8061 appears to be unfolding in an impulsive manner (wave 3 extended). As such, strength should prove corrective and give way to new lows. Resistance is clustered between 7868/80 (former pivots and 38.2% retracement). The bottom of this zone was reached today so it’s time to start looking lower again. Bigger picture, notice that the rally from the 2011 low is also in 3 waves. The implications are for an eventual drop to another all-time low (3 wave moves can also start larger corrections such as triangles, flats, and complex patterns however).
Gold (spot)
Daily Bars


Prepared by Jamie Saettele, CMT

Jamie – Gold has cleanly broken through its triangle pattern. I had pegged the action in recent months as a bearish triangle but was proven wrong today with the move above the resistance line and 7/3 high. One must respect the bullish break and respect potential for a move back towards (not necessarily above) the 2012 high of 1790.55. The February low is of interest just above 1700.

Japanese Yen reversal shape in the middle of divergence in policy Outlook on

Grundsätzliche Prognose für japanische Yen: Baisse
Der japanische Yen gegenüber dem U.S.-Gegenstück inmitten der stärker als erwartete BIP Bericht aus der weltweit größten Volkswirtschaft geschwächt, und die USDJPY kann weiterhin den Ausverkauf von Anfang dieses Monats nachvollziehen, wie die Federal Reserve Weg von seiner Lockerung Zyklus bewegt. Obwohl das FOMC allgemein erwartet, beizubehalten, daß ihre aktuelle Politik im August, die frische Charge der Zentralbank Rhetorik sein könnte, sollten die Spiel-Wechsler für die Dollar-Yen weiter der Ausschuss sich Spekulationen für eine neue Runde der quantitativen Lockerung zu sprechen.
Wie der Vorbericht 2Q BIP für die USA, die Aussichten für Wachstum und Inflation löst, die Fed weiterhin seine Tauben Ton für die Geldpolitik zu mildern und die Zentralbank kann über den Rest des Jahres ein Wait-and-See-Konzept unterstützen, wie politische Entscheidungsträger ein gedeckten Risiko für einen Double-Dip Rezession sehen. Im Gegensatz dazu, es scheint, als ob die Bank of Japan weiterhin auf seine Lockerung Zyklus als neues Vorstandsmitglied zu beginnen, die Takahide Kiuchi verpflichtet sich wird, neue Formen der monetären Unterstützung betrachten und die größere Abweichung in der Politik-Outlook kann eine Hausse Bewegung in die USDJPY Sporn, wie die US-Notenbank besser positionierten normalisieren Geldpolitik vor die BoJ bleibt. Jenseits der Zinssatz Entscheidung der mit Spannung erwartete US Non-Farm Payrolls-Bericht wird voraussichtlich Beschäftigung erhöht ein weiteres 100 K im Juli die 80 K-Expansion nach vorheriger Monat zeigen, und die schnellere Wachstumsrate Stelle kann letztlich eine sinnvolle Bewegung nach oben für die USDJPY produzieren, wie es Erwartungen für QE3 dämpft. Obwohl wir noch sehen verlaufenden Kanals nach unten in die USDJPY gerade, scheint die Baisse Dynamik als die relative Stärke Index Rebounds vor überverkauft Territorium spitz zulaufenden werden deaktiviert. Als Ergebnis der Dollar-Yen könnte setzen in einem kurzfristigen Boden wie wir in den letzten Tagen des Juli fahren, und das Paar für eine Hausse Breakout grundiert, sieht als die Fed bereitet wechseln Getriebe. -DS
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$ USD Bullish Trend Ahead Of EU Summit, Reversal JPY Carving On Tap

26 June 2012 15:55 GMT


Although the Dow Jones-FXCM U.S. Dollar Index (Ticker: USDollar) is 0.17 percent lower from the open, we’re seeing the index bounce off of former support around 10,134, and the greenback may continue to retrace the decline from earlier this month as it breaks out of the bearish trend. Indeed, an inverse head-and-shoulders appears to be taking shape on the 30-minute chart, but we will need a move above the 10,200 figure for the reversal pattern to pan out. As the EU Summit in Brussels takes center stage, the headlines coming out of the euro-area is likely to drive market volatility over the remainder of the week, but the meeting may do little to restore investor confidence as the group struggles to meet on common ground.
Although the EU is making a greater push for fiscal integration, German policy makers continued to strike down the idea of sharing all liabilities across the region, and we may see a growing rift within the group as the governments operating the fixed-exchange rate system continue to move in their own interest. As a result, dismal developments coming out of Brussels may spark another flight to safety, and we may see the USDOLLAR make another run at the 10,300 as it carves out a higher low in June. As the relative strength index breaks out of the downward trend carried over from May, we should see the ascending channel from earlier this year continue to take shape, and we may see the greenback mark fresh 2012 highs in the coming days as it benefits from safe-haven flows.

Three of the four components rallied against the greenback, led by a 0.25 percent advance in the Japanese Yen, and the low-yielding currency may continue to appreciate against its U.S. counterpart as the government increases its effort to balance its public finances. Indeed, Japanese Prime Minister Yoshihiko Noda is pushing for a sales-tax increase for the first time in 15-years, and the move certainly increases the appeal of the Yen as the debt crisis continues to drag on investor confidence. However, the ongoing strength in the local currency may put increased pressure on the Bank of Japan to intervene in the foreign exchange market, and we should see the central bank continue to embark on its easing cycle as policy makers aim to encourage an export-led recovery. As the USDJPY breaks out of the downward trending channel from March, we should see the rebound from 77.65 gather pace, and the pair appears to be carving out a bullish trend amid the series of higher highs paired with higher lows.

Dollar Breaks Support as S&P 500 Builds on Bullish Reversal Setup

THE TAKEAWAY: The US Dollar broke below a significant support level, opening the door for further weakness, as the S&P 500 built upon a bullish reversal chart formation. S&P 500 – Prices are testing initial resistance at 1357.40 after completing a bullish inverse Head and Shoulders (H&S) pattern with a break above neckline resistance in the 1334.40-41.90 area. A break above this level exposes 1392.10. Broadly speaking, the H&S setup implies a measured objective at 1419.90, conveniently at the year-to-date closing high. The 1334.40-41.90 region has been recast as support.

 Daily Chart - Created Using FXCM Marketscope 2.0
CRUDE OIL – Prices continue to tread water between the 23.6% Fibonacci expansionat 81.07 and the June 7 high at the 87.00 figure. A break higher initially exposes 90.14. Alternatively, a push through support targets the 38.2% expansion at 77.34.
Daily Chart - Created Using FXCM Marketscope 2.0
GOLD – Prices pulled back to retest the 61.8%Fibonacci retracementat 1616.23, a barrier reinforced by former resistance at a falling trend line set from early March. A break below here exposes the 1600/oz figure. Near-term resistance remains at 1637.35, the 76.4%Fibonacci retracement, with a break above that exposing the May 1 high at 1671.49.
Daily Chart - Created Using FXCM Marketscope 2.0
US DOLLAR – Prices broke support in the 10066-70 area marked by a confluence of the 50% Fibonacci retracement and the 38.2% expansion to expose the 61.8% level at 10010. A push through this level targets the 76.4% retracement at 9936. The 10066-70 region has been recast as near-term resistance.
 
Daily Chart - Created Using FXCM Marketscope 2.0

$$EURUSD Short Term Reversal at Technical Confluence

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"The market (S)" alias "RISK" SNAPSHOT - closes 60 minutes

Prepared by Jamie Saettele, CMT
"Gold has been a leader in recent weeks, with in background on 30 May and reached on 6 June." The decline of 6 June is 5 waves and the subsequent rally was executed in resistance and appears to be completed a 3 wave correction near current levels.
SPX 500 (fair value) – 60 minutes Bars

Prepared by Jamie Saettele, CMT
To update yesterday noted that "the resistance for the next few days in the S & P are approximately 133 (SPY), 1323 (e-mini futures) and 1325 (index). The area around the lower 5/18 are supported. "SPY hit 132.99 before the close of yesterday, the index reached 1324.30 before closing yesterday and the e-mini achieved 1320.75 European trade today. We are the resistance, which puts in place for a decline Wednesday.
AUDUSD - bar of 60 minutes

Prepared by Jamie Saettele, CMT
"I always play the waves through the AUDUSD risk on / off.." I am Rally but less weakness etc and more than force and on. Trade with the greatest trend but decrease size weakness to support and increase the size on the strength of resistance. If the high Sunday night do not have, then I would be not involved in the short side. Focus would move to resistance between 10085 and 10140. »
At the current junction, consider an upward triangle the high 6/7. Even in this scenario, the AUDUSD would trade lower in 9880-9915 to find support.
EURUSD - bar of 60 minutes

Prepared by Jamie Saettele, CMT
I launched a short EURUSD this morning to 12540 (according to Twitter @ JamieSaettele). Resistance in the short term also extends in 12590 but pop on retail sales in traffic and 50% decline of 12667 allows was enough to make me short. A loose target for the EURUSD is 12385-12410.

£ GBPUSD: Rising Wedge Setup Warns of Reversal

Strategy: Flat
GBPUSD is testing the top of a Rising Wedge chart formation, a barrier reinforced by the 61.8% Fibonacci expansion at 1.6087. The overall setup is broadly indicative of bullish exhaustion ahead of a turn lower but confirmation remains absent and we will remain on the sidelines for now. A break higher exposes the 76.4% Fib at 1.6156. Near-term support lines up at 1.6033, the 50% expansion.