Taken from the latest Elliott Wave Newsletter
Bottom Line: We are seeing slow gradual weakness in some markets linked with the risk markets such as AUDUSD and NZDUSD, however there is one caution point I want to raise, and that what the EURUSD and US$ potentially "might" be doing.
I have a concern about the move that started from Feb 2012, and that it might be ending a 5 wave decline on EURUSD so the bears in risk need to be careful here.
As if the US$ is setup to potentially reverse, then logically that suggest other markets will push higher such as AUDUSD, NZDUSD & US, European stocks, so it's a concern that I see a potential setup for a strong break lower in risk markets, yet when I look at the EURUSD and DX charts, they suggest a potential end to the move that start from Feb 2012, so it's important to stay in touch with the EURUSD pair here and watch for any aggressive move back above 124 for the 1st sign of a move higher.
If we see other risk associated markets join EURUSD higher, then it's a warning for the shorts that are selling other risk markets.
Now that is a big if, but I want to highlight it, in case the US$ and EURUSD are potentially signally a message, but for now whilst the EURUSD is under 124, I am comfortable looking lower with a view to seeing 120 hit.
ES
That's a clear 3 wave move from the 1367ES highs, and well as finding support from the trend line, so we come to the point where we confirm if the decline is a small [x] wave or not. We can use 1345-47ES now for guidance, as a strong push above that area and then above 56ES suggests a test of 1370ES.
We have seen a lot of nasty waves on this current upside move and its making trading tough, so if you are felling worn out then the market is doing its job well.
So let's stick with the plan and adjust, I understand that many probably just want to put on a trade and see if we can run a strong break lower, but the markets don't always make it easier and it's how we deal with the tape that will make us better traders.
I have been here countless times, but it still doesn't get any easier, chop is chop and no one is immune to it.
SPX
If price can remain under 1350SPX it can setup for a 12 12 bearish move lower, if we see a strong break above 1350SPX then 1360SPX then 1380SPX is back in the frame, as so far we only have a 3 wave decline from 1373SPX, as well as holding trend line support.
If any trader was around in March-May 2008, they will have noted a similar pattern and whipsaw style of moves as we are seeing now.
The bears need a strong break of the trend line support.
Gold
I suspect this is probably still in wave [d] and target $1560, although we can't rule out the ending diagonal idea, but whatever idea is working, I know the trend is down and I don't see any reason to be bullish on Gold, so as long as it remains under $1625, look to sell bounces with a protective stops at $1625.
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The markets are poised for a strong move; make sure you are on that next move.
Until next time
Have a profitable week ahead
