Time to take some profits?

Posted bellow are a quick view of my counts, the evidence supports a weaker dollar in the short term, but soon we'll resume the risk off trend all over a gain. Take a look.

NZDUSD: It seems evident that we are in wave 4 higher at this point, similar to the counts we have on the USDCAD, EURUSD & USDCHF.

USDCAD:Based on alternation the wave iv that is yet to unfold could be a flat/a triangle, in either case I'd expect at least a 23.6-38.2% retracement of wave 3. 

 This is the USDCHF posted above.

EURUSD: Wave 4 limit: 1.2800

GBPUSD

I will proceed by scaling out some profits from the USD longs in anticipation of a wave iv & 4 which would reflect short-term USD weakness.

Regards,
Ahmed Farghaly

GBPUSD & USDCAD update

 

It seems interesting that these two pairs share the same sequence of waves, we are currently set to fall on the GBPUSD to 1.5570 and rally on the USDCAD to 1.0350.

Regards,
Ahmed Farghaly

NASDAQ 100 update

It seems evident that the third wave lower from the top is complete, achieving the 1.618x target of wave 1 and we are currently rallying in a wave iv higher towards the 2574-2610 I wouldn't put too much wieght on this rally guys.

Regards,
Ahmed Farghaly

GBPUSD count

The Sterling is setting stage for a move towards the 1.5880-5900 in its wave iv higher. We'll read into the structure once we get there.
The ALT count is : still in wave b down.

Regards,
Ahmed Farghaly

EURUSD potential wave counts

If my outlook on the the GBPUSD USDCAD & NZDUSD shall prove accurate then this is most likely the count on the EUR. From an elliott wave perspective, considering that the wave ii(blue retraced) more than 61.8% of wave i (blue) we can expect wave 4 to retrace 38.2% or less of wave iii which gives us a ceiling of 1.2890. Prices then should decline towards or bellow the 1.25 handle.

As defined by Edwards & Magee a descending triangle has bearish implications from a classical technical analysis point of view, this pattern's measurment implications suggest a move towards the 1.2500 mark which hasent been met as of yet.

Notice the moving average compression that suggested that the market has been in a contraction phase for sometime and is bound for an expansion. Also notice that we are bouncing off the lower end of the bollinger band which suggests an extreme hence the assumption that wave iv(blue) higher is under way.

Above is a valid alternate count.

Regards,
Ahmed Farghaly

GBP/USD 2 hr chart

It seems to be presenting a good short opportunity soon, watch for the 1.5900 handle it looks like prices would struggle at that area and decline for a fifth wave lower.

Another point to add is that the thrust measurement of the ascending triangle & the 0.618x the inverse head and shoulders measurment is at 1.5900

This is another potential count that suggests that the wave iv is over, but ofcourse it is well bellow the previous fourth wave of lesser degree which is where you'd expect this wave iv correction to terminate take a look.

Regards,
Ahmed Farghaly

NASDAQ 100

This could be the last rally of intermediate degree seen for at least 2 years.I'll let you guess what such a count means for the Apples and the Facebooks.

Regards,
Ahmed Farghaly

R.N. Elliott, Make it or break it?

Ralph Nelson Elliott (28 July 1871–15 January 1948)

Regards,
Ahmed Farghaly

Elliott wave weekend update II

The chart above is of CRUDE OIL futures, it seems evident that we are back in a bearish impulse since the 2011 high as with many commodities, notice the divergence on the RSI as prices where rallying into the 2011 high, we have tested the 0-B trendline and currently are coming off of it, ig you look closely you'll also notice that we have a potential head and shoulders top analgous to the one on the USD/CAD in early May,

The head and shoulders chart is reposted here again in order to illustrate the resemblence.

Above is an updated chart of the USD/CAD the latest bounce broke through the most conservative trendline drawn on this chart whcih supports the idea of an intermediate wave (2) bottom in place, targets are well above the 2011 high, as the wave structure unfolds and perhaps breaks the neckline on the head and shoulders pattern posted above we'll obtain more accurate targets.

Posted above is the CAD futures COT data, during early May sentiment reached an extreme with CAD bulls exceeding the 80% mark as highlighted above and the commercials reached a bearish extreme as highlighted above. I would also like to point out that sentiment reached an even greater extreme at the 2011 low on the USD/CAD the greatest in over 10 years which suggests that the 2011 bottom is of great significance.

The USDCAD still has some legs to the upside before completing minor wave 1 which is why I would suggests holding to the longs suggested a day or two from the low on this blog.

The longer term picture on CABLE is quite clear, as illustrated on a previous post on this blog we have a very significant Fibonnaci time cluster at 2012 which suggests that a significant high will occur this year, I believe it has already occured and the wave (4) triangle is complete a thrust to the downside with a target bellow the 1.35 handle is unfolding.

On a shorter time scale, the GBP/USD has completed minute wave iii and shall witness further lows next week, based on alternation the wave ii unfolded into a zigzag hence we should have some sort of sideways price action before falling into a new low for wave v of minute degree all of which will form wave 1 of minor degree.

I have changed my preferred count on the USD/JPY for several reasons, the first one being that in the diagonal count proposed earlier we have no overlap between wave 1 and 4 which contradicts the weakness that the pattern is suppose to reflect, Another reason for the change in outlook is the extreme bullishness of commercials on the JPY as visible on the COT table bellow.

Now lets looks at some commodity currencies,

The NZDUSD continued its decent as anticipated (Early april was the first post building the bearish case). We are now flirting with the neckline of the head and shoulders pattern talked about in the previous weekend update. The wave strucuture still has some legs before putting in a minor low as illustrated on the short term chart bellow.

Notice the oversold figure on the RSI right as we are testing the neckline I have two counts on this shorter term chart my preffered is the one presented above my alternate is that the wave iii(blue) is complete as of last weeks low, in either case a bounce is expected early next week which shall lead into a sell off that would penetrate the neckline of the head and shoulders talked about on May 6th.

One of my most exciting calls this year was the one on the USDRUB. Contrary to what is usually the case this pattern is as clear as the skys of july. Infact the very first post on this blog was about the RUB and the Russian stock market, both of which have proven to be extremely accurate, here are a few pictures and comments from the previous posts on russia.

"As seems evident from the chart posted above, the decline from the wave i(circle) top seems corrective, infact it has broken out of the corrective price channel which signals that the correction is over and the uptrend is back in force. Infact if this count is indeed accurate the upcoming third wave rally shall prove to be a prolonged parabolic explosion. Now what has made me come to such a conclusion? Well several factors.

Factor 1: We had a leading diagonal first wave which signals an extended third wave to come.
Factor 2: Notice how as the wave C of wave ii(circle) made a new low on the price chart it formed what looks similar to a double bottom on the oscillator. Which seems to have been broken to the upside.
Factor 3: An inverse head and shoulders pattern has formed on this 3 hour chart. In an inverse head and shoulders usually the neckline is sloping downwards. However on rare occasion the neckline is sloping upwards, which signal underlying strength in the market. The 'unusual' strength in the market is usually highlighted by a smaller right shoulder relative to the left shoulder which was the case in this particular market. "

 Above is the the first chart posted on this blog and here is the result.

That is the beauty of R.N. Elliot's discovery gentleman. Speaking of stock indexes lets take a look at the NASDAQ (considering the hype arround the facebook IPO)

As seems evident the bounce from the '02 lows is corrective which channels perfectly as well. Regardless of its structure which is debatable both legs are almost equal in size and we are comming off fibonacci retracement levels on both logarithmic (which is the appropriate scale in this case) and arithmatic scale. I certainly have to take my hat off for the folks in Facebook, not becuase of what they've built which I think will be alot less valuable in the next 2 years, but for the timing of the IPO. They know its a sellers market and they've sold at the right time, Facebook's investers will not share the same smile as that on Mark Zuckerberg's face as he was ringing the opening bell after making over a billion dollars off of the IPO and you can take my word on that.

Posted above is the S&P500 E-mini, it seems evident once again that the top called last april was held and primary wave 3(circle) is upon us. A few points to note is that wave (c) is exactly 0.5 the length of wave A (fibonacci ratio) and the april peak occured arround that 1x  January trading range reflected off of the high of January. At a clusted as such with price hesitating a top can be called which is partly what made me go out on the limb and call for a peak in US equities arround the same time Goldman sachs put out a bullish 'generation' call. As for the early May high/lows, they are likely to hold due to the tendency, emphasized seversal times on this blog, of financial markets to remember thier firsts

Regards,
Ahmed Farghaly

P.S. Please view previous weekend update for preffered and alternate counts on both the EUR/USD and USD/CHF (Which are not as clear as the charts presented above)

McDonald's stock & what it means for the market

Jim Cramer of CNBC hated this stock all the way up to 100 a breach of 100 made him turn very bullish. MCD is down almost 10% since he made that call (I was looking for a top on MCD at 1/1/2012 as visible on the first image above). His call could be a reflection of the mass optimism on wall street or he could be participating in an effort to distribute MCD shares to the public in anticipation of a decline. Similarly the 'generation' call made by Goldman Sachs to get into stocks right into the April peak in equities could be interpreted in either way, however the end result will be the same, a complete destruction of their reputation which is exactly what occurred in 1929 where investors lost 99% of their investments with Goldman's 'investment trust'.

Regards,
Ahmed Farghaly

Weekend Elliott wave Update

The market till date tells us a very exciting story. First let us start with an update of the NZD/USD. (This is an update of the chart posted here http://competent-trades.blogspot.com/2012/04/point-to-note-on-gold-and-audusd.html)

As evident on this long term chart the year 2000 low was the end of an impulsive pattern to the downside that started in the 70's and  it seems likely that that the corrective rally seen since then is complete as of the 2011 high.

 Posted above is a smaller time frame chart, there seems to be enough evidence (highlighted above) that a turn is indeed upon us. There seems to be symmetry in the head and shoulders top highlighted above, usually a parallel line to the neckline of the head and shoulders pattern reflected off the left shoulder gives and estimation of where the right shoulder will end. If you examine the above chart carefully you will notice that the right shoulder ended exactly at a touch of the the parallel line. Minimum objective for this trade is 0.6580 which is where the diagonal triangle began. When the head and shoulders proves complete we'll also have another measuring tool to further narrow down our targets. The 1.618x wave (1) target lies close to 0.6100

Another point to note on the NZD/USD currency pair is the moving average compression (13,21,34,55 SMA) that occured on a daily chart of this currency pair. First lets explain what a moving average compression is, a moving average compression is when various moving average coil together like christmas lights. Moving average compression occurs when there is little price movement i.e the market is a contraction phase. We all know that market contraction (corrective waves) is unsustainable and eventually leads to market expansions(impulse waves) which has started as of last weeks break out. Another technical point to note about this currency pair is the Average directional index (ADX 14 period) indicator, The down trend started to gain strength as the ADX popped above 20 (current reading on daily chart 28.57) notice that the reading on the daily still doesn't suggest that the trend is at an extreme which would be a reading above 40 which simply states that this down trend still has room to strengthen even more.

Above is my alternate count. This count suggests that the cycle wave decline from the 70's that bottomed in late 2000 was a wave C and we are seeing a serious of 1st and 2nd wave as illustrated above on this chart. In either case our minimum objective is where the diagonal wave 5 of C has started and that takes us towards the 0.6580 area again.

Now lets take a quick look on the AUD/USD which tell us a very similar story.

 Above is my preffered count on the AUD/USD similar to the kiwi I see a completion of a corrective pull back from the 2000's low ( wave c(circle) relationships 3 = a little more than 4.236x1 wave 5 = wave 1). Notice the divergence on the RSI between the wave A (circle) and wave C (circle). The technical conditions are very similar to the NZD/USD with similar alternates as well.

ALT on the AUD/USD similar to that on the kiwi with a series of 1st and seconds from the 2000's low.

This count seems to be in contradiction with those on other commodity currencies however still seems possible from a structural perspective which is why it is being discussed and presented on this post.

Above is a shorter time frame chart focusing in on the wave (5) and the subsequent price action, if you recall I have mentioned earlier on this blog the idea that financial markets remember their firsts, now what does that mean on a monthly basis, it means that the high for the month is usually seen within the first few days of the month, and the range of such a candle (Apr 3rd in this case) acts as resistance/support (resistance in this case) Prices made it back into the range and failed to close above the Apr 3rd peak which proved to be a fantastic selling opportunity.

View http://competent-trades.blogspot.com/2012/04/point-to-note-on-gold-and-audusd.html for longer term perspective

Above is one of the two counts I have on gold. I would like to state that I have no preffered count on this market. In this count however the wave (3) of 5(circle) is the shortest wave in the wave 5(circle) sequence on logarathmic scale but not on arithmatic scale and due to that I hold the alternate count presented bellow.

This count supports the idea of a more complex 4th (circle) wave, it calls for another push higher upon completion of the wave (4) of 5 (circle). Some people would argue that such a count would mean that a commodity currency such as the AUD/USD would pop higher before selling off as I am anticipating. That argument makes sense at first, but if you study the charts posted on the link presented earliar you will notice that the AUD/USD market is the weaker of the two, lags on the upside and leads on the downside.

It seems like a highly probable low has formed, and this currency pair should pop in a (3)rd wave higher. ALT count on weekly chart would be that we are currently in wave XX of wave 2/b(circle). View http://competent-trades.blogspot.com/2012/04/usdcad-update.html for an in depth look at this currency pair

A flat pattern since Oct. 2011 seems complete as of the late march low on this currency pair. The stage seems set for a third wave rally. (View http://competent-trades.blogspot.com/2012/05/usdrub-and-what-it-means-for-eurusd.html & http://competent-trades.blogspot.com/2012/04/collapse-of-russia.html )

Now that we've looked into commodity currencies, which point towards US dollar strength with significant clarity, It is time to look at the GBP/USD & EUR/USD.

Unfortunately the European currencies don't show as much clarity in terms of wave structure as most commodity currencies. The count above is my preferred on the GBP/USD it seems possible that the turn is upon us but there exists alternates that support perhaps one more push higher, hence I wouldn't start aggressively shorting this pair unless the 0-b trendline above is broken to the downside. Now remember every chart has a wave count but not every wave count is a trade which is why I'm more cautious with this than I am with the commodity currencies (CAD,NZD,AUD,RUB).

Posted above is my count on the EUR/USD this count suggests a continuation of the declines (ALT still in wave (2)) (view http://competent-trades.blogspot.com/2012/04/eurusd-elliott-wave-counts.html for more details)

Now lets take a look at the CHF pairs

I have to admit, I wouldn't normally labell the wave (2) low (ALT still in wave (2)) so prematurely in terms of price and time however we need to realize that the price floor set by the SNB on the EUR/CHF stopped the CHF from rallying significantly against the USD and its European peers which is why I'm willing to accept a wave (2) low in place ( another factor is the outlook on commodity currencies which support a dollar bull which most likely wont be an isolated move on them alone) perhaps I'm rationalizing which is why I would rather wait for more confirmation on this currency pair, unless I plan on taking a position set up and place a stop bellow the all time low. (view http://competent-trades.blogspot.com/2012/04/usdchf.html )

Above are my counts on the GBPCHF I believe that the lows seen in augest last year terminated an ABC decline since the early 70's. The wave (2) decline could be done if so prices need to gain momentum very soon.

Posted above is the EGYPT CMA general index, a supercycle low could have been placed as of the dec 2011 lows, be on the look out for a third wave rally to kick off this year. (View http://competent-trades.blogspot.com/2012/04/egyption-stock-market-buy-buy-buy.html)

I haven't changed my counts on the S&P (European Indices are in a third wave down of intermediate degree as highlighted on the 'Collapse Of Russia' post) Please view the following for S & P counts

http://competent-trades.blogspot.com/2012/04/s-500-counts.html
http://competent-trades.blogspot.com/2012/04/s-fibonacci-time-analysis.html

From an analytical prespective, it seems evident that the clearest charts of all discussed above are the commodity currencies, I would go short the CAD, NZD, AUD & RUB against the USD. I am also intersted in playing the USD/CHF (Thankfully I'm already long this pair from last year) since it looks like the CHF will underperform relative to the EUR & GBP (judging from the counts on the EUR/CHF & GBP/CHF respectively). Wait for confirmation on the USD/CHF though.

Regards,
Ahmed Farghaly