Current waveÂ 3 down - below parity.
My Bias:Â short in wave 3 blue.
Wave Structure:Â downward impulse wave 1, 2 blue
Long term wave count:Â lower in wave 3 blue
Important risk events:Â EUR: Spanish Unemployment Change, CPI Flash Estimate y/y. USD: Unemployment Claims.
Good evening everyone.
And what a day it has been, there is a whole lot to say about the action in the DOW today, Bu first the currencies.
The resistance line at 1.0630 repelled the price today in what may be the begining of wave 3 green.
The confirmation point for wave 3 green is at the low of 1.0493, no change there,
If that lower support line is not broken soon, then the alternate wave count shown circled in red, becomes more likely.
That would involve another rally up to the resistance at 1.0680 before turning down proper.
The bullish alternatives for EURUSD are slim to non existant at the moment, and we are likely at a pivotal turning point in this pair.
WaveÂ 2 red, downtrend resumed.
My Bias:Â short below parity.
Long term wave count:Â decline in wave (5) blue, below parity
Important risk events:Â GBP: Construction PMI, Core CPI Flash Estimate y/y. USD:Unemployment Claims.
Since the high labelled wave 'ii', the market has dropped almost 300 points into todays lows.
The structure of the current decline off the recent high of wave 2 red at 1.2705 looks more and more like a three wave movement within a larger contracting triangle.
I have shown the decline as a developing five wave structure in either wave 'iii' pink, or the alternate wave D, circled in red.
How will we know which interpretation is correct? well;
If the price declines into support at 1.2190, touches the lower trendline in green and then rallies impulsively, this action will lean strongly in favor of the alternate wave count.
Should the declines continue through support at 1.2190, then the operating wave count is our man!
Both counts call for the same eventual outcome as shown in the 4hr chart, They only differ in form.
My Bias:Â LONG
Wave Structure:Â rally in wave [C]
Long term wave count:Â wave [C] is underway, upside to above 136.00
Important risk events:Â JPY: Household Spending y/y. USD: Unemployment Claims.
USDJPY continued a strong rally today as theÂ wave countÂ suggested.
It is quite likely wave 'i' brown is complete at todays high, so a three wave decline back into nearby support at 112.60 would be enough to give a bullish signal that wave (iii) green has indeed begun.
The next leg up in USDJPY has the potential to carry the price above 119.00 the most recent high.
And in the longer term, the wave count calls for the price to rally up to the upper trend line as shown in the daily chart.
That trendline projects the current rally to top out at about 136.00 or so over the rest of the year.
So the potential is 'UGE' as the president might say!
For now the invalidation line for the short term bullish outlook still lies at 111.58,
Watch that support at 112.60
DOW JONES INDUSTRIALS
Topping in wave (5)
My Bias:Â Long towards 21000
Wave Structure:Â Impulsive 5 wave structure, possibly topping in an all time high.
Long term wave count:Â Topping in wave (5)
Important risk events:Â USD: Unemployment Claims.
Today was the day that I have been waiting for for a while now.
As you all know I have spoke about that upper target at 21190 on the 4hr chart at some length recently.
That is the fibonacci projected level given by the 161.8% projection of wave (i) grey from the wave (ii) low also shown on the 4hr chart.
Todays high was 21169, which is close enough between friends.
That high is still likely to be broken to the upside, as shown on the short term chart.
But that will be a short lived, Pyrrhic victory in terms of the longer term outlook.
Which is for a monumental bear market to begin in short order.
It is now time for everyone to be very prudent, wind down your longs, call in debts, and protect what you have!
For when this next bear market is complete, those who have saved a little will reap a big reward.
There is a real chance for generational wealth to be created in the coming years, for those who don't get wiped out that is.
For the short term I am looking for aÂ five waveÂ structure in red to complete to the upside off the recent wave 'iv' low.
Current wave [B] - Long to 1550
My Bias:Â Long towards 1550
Wave Structure:Â ZigZag correction to the upside.
Long term wave count:Â Topping in wave (B) at 1500
Important risk events:Â USD: Unemployment Claims.
GOLD declined below that confirmation level at 1244 today, which suggests that wave (c) blue is in fact underway.
I expect a five wave structure in wave (c) which would complete a simple expanded flat correction in wave [ii] green.
If the action turns excessively choppy to the downside, it suggests a more complex structure in wave [ii] green.
But the lower target remains the same in both circumstances.
I would like to see the low of wave '1' pink at 1250.79 remain untouched.
The high of wave '2' pink must not be broken in order for the current short term wave count to remain valid.