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EURUSD Broke 2012 Support Line; Can This Be Start of a Major Sell-off?!

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Mar 04 2013

Recently we were tracking a possible corrective decline from 1.3700 on EURUSD because of the overlapping structure. However, sharp and extended fall through 2012 support line with a weekly and monthly close price beneath it forced us to rework the count. In fact, we decided to check the line chart, where fall is pretty clean and directional. Move can be counted impulsively which that’s s bearish sign for the pair, but we expect a three wave bounce back to 1.3300 in March, before downtrend extends.

EURUSD daily- line chart


EURUSD weekly


The reason why we also turned bearish on EURUSD is the overlay chart below which shows that most of other correlated markets turned lower, but not S&P which is still bullish but alone. This could be a sign and S&P is approaching to its top. If this proves correct and if S&P will turn lower from 1560-1600 then USD will probably accelerate sharply which is already showing strength without any S&P help.

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USD -Index: Testing 61.8% Fibo Of July - September 2012 Move

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Feb 27 2013

USD index recovered very sharply last week but don't let the strong rally trick you. The fact is that current sharp leg up could easily be wave C) of a flat correction in wave (B) which is unfolding already since September 2012. In fact, price is approaching to some very interesting resistance zone around 81.70-82.00 (61.8% Fibo) where bulls could slow down. As such, larger trend for this market remains down, but only impulsive weakness from that resistance and back to 80.30 figure can confirm the bearish case. In such case we will look for a fall through wave (A) supports. In fact on a weekly chart below we are also observing a huge head and shoulders pattern while 84.00 level is not breached.





USDCAD Could Make A Pull-back from 1.0280/1.0310 Within Extended Uptrend

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Feb 26 2013

USDCAD is higher, but pair could be in final stages of an uptrend in wave (iii) as we can count five waves up from 1.0000 with current fifth wave approaching to some key Fibonacci resistance levels around 1.0290. We know that after every five waves correction follows so reversal from here would not be a surprise but pull-back will be temporary blue wave (iv) that may retrace back to 1.0150-1.0200; wave four zone of one lesser degree. Keep in mind that larger trend for USDCAD is up, so we will continue to look higher after a pull-back while 1.0087 invalidation level is not breached.

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GOLD: Weakness Could Extend To 1530

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Feb 26 2013

GOLD moved lower as expected, but because of a very sharp and aggressive sell-off we reworked the wave count. We are now tracking a three wave A)-B)-C) Elliott wave pattern from 1795 swing with wave C) underway, which appears incomplete as we need five waves down from 1696. As such, Elliott traders must be aware of more weakness in this week as current recovery could be a black wave 4 that will look for a tip around 1595-1605. Market remains in bearish mode as long as 1651 resistance is not breached. Under this bearish scenario prices could hit 1525/30 level where red wave C) equals to wave A) measured from wave B) high.



AUDUSD: Larger Trend Remains Bearish After Stevens Speech

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Feb 22 2013

It seems that markets are recovering slightly after strong push lower on stocks and commodities in this week. The only question when again risk-off trade will resume. The fact is that recent gains on AUD and now also EUR (German IFO index) are driven by news. AUDUSD found the support after RBA Governor Stevens mentioned that China’s growth slowdown has ended. Pair found the support for 80 pips, which could be erased soon if we consider that he is not satisfied with current »strong« AUD value.

With that said we are tracking two slightly different counts for AUDUSD, but both are bearish Elliott wave patterns. The first price action is showing five wave fall from 1.0366 followed by a three wave rally in wave ii) which could be counted as an expanded flat. We like this count but need to see impulsive decline from current 61.8% retracement, while 1.0366 is in place.


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Well, if today market will remain strong and closed somewhere around or above 1.0330 level then we will be focused on the second wave count. This one suggests that market could rally in five waves from 1.0220 and towards 1.0400 before larger downtrend resumes.




So both counts are pointing for weaker AUD in the mid-term, and if you would like to short it don’t give up if pair will extend higher in the next 24-48 trading hours, through 1.0366. We somehow like the second wave count.


GBPUSD : Strong Weakness Could Accelerate After 1.5267 Break

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Feb 21 2013

Cable extended even lower yesterday with very sharp decline during the US trading hours. We know that sharp and big moves usually represent wave three that is part of an impulsive, five wave cycle. As such, we updated the count that is pointing for more GBP weakness in days ahead. We are tracking wave three of three now that may reach 1.5000 level in the very near-term. Meanwhile any pull-backs should prove corrective while price is trading below 1.5440.


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On the weekly chart we can see that price is well below 2009 support line and now also took out the swing low from January 2012, which could be very ugly for GBP. Larger count suggests that pair is at the start of big wave (C ) down.


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EURUSD: Pull-back Within Corrective Decline

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Feb 20 2013

EURUSD is in recovery mode after a sharp fall down to 1.3300 last week. For now, rally from the lows cannot be counted in five waves and pair is also still trading well below 1.3518 invalidation level. Therefore, we think that complex corrective decline from 1.3710 is incomplete and that market will make one more push down, towards 1.3250 in this week to complete wave C of a second zig-zag that we are tracking. Pair is now testing a very important level around 1.3430/60 which appears to be ideal resistance zone for wave B; 61.8% retracement and also wave B equality from a second zig-zag. An overlap with 1.3370 would confirm the bearish view. Any new, aggressive shorts should have stops above 1.3518.


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