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S&P500 And TLT Forming A Temporary Pull-back Within A Larger Trend

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Feb 04 2013

S&P500 is forming a pull-back after a Friday's rally which could be just another corrective move that may provide new long opportunity within a larger uptrend. We will be tracking a three wave retracement back to 1496 key support zone.

sp

This ongoing pull-back is also confirmed by TLT which is rising against previous five wave fall. Three wave bounce should stop at 117.90 or maybe at 118.60 resistance level. Fall from there will support the US stock market.

tlt

*When stocks are up, yields are up, TLT is down and dollar is down and vice-versa!

*iShares Barclays 20+ Year Treasury Bond Fund (the Fund) seeks investment results that correspond generally to the price and yield performance of the Barclays Capital U.S. 20+ Year Treasury Bond Index (the Index). The Index measures the performance of public obligations of the United States Treasury that have a remaining maturity of 20 or more years.


S&P500: Correction Within Uptrend May Stop At 1488/1496 Support Zone

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Jan 31 2013

Bellow its the detailed wave count for the S&P500 since start of January. Market has been in sharp uptrend for the whole this month, clearly in impulsive fashion. In our past updates we also noted that we could see a pull-back or a sideways price action from above 1500-psycho level. Well, this appears to be the case as market fell more than 10 points from 1510 yesterday after the FOCM statement. Anyhow, those who trades the S&P500-cash market must be aware of a larger trend which is still up, and based on Elliott Wave theory we see current pull-back as a temporary pause within a larger uptrend. Most likely thats corrective red wave 4) that may find a support at 1496 or maybe 1488/90.



AUDUSD Could Make A Corrective Bounce Back to 1.0465 Before Turns Bearish Again

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Jan 31 2013

AUDUSD reversed nicely lower yesterday and already made a new swing low, which means that pair has now five wave down from 1.0600 high, called an impulsive wave. In Elliott wave theory impulses show direction of a current trend. As such, we are ready for more aussie weakness but could see a corrective retracement back to 1.0465 before downtrend resumes. There is a Fibo zone around 1.0370 and December low just beneath it that could cause a bounce.




UPDATE II GBPUSD: Pull-back In Progress

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Jan 30 2013

Pound is already recovering about we warned you yesterday when we highlighted a five wave fall in wave 3). Notice that current prices are already testing upper trend-line of an impulse channel. Break of this line usually confirms end of a wave 3). In our case it means that market is in a temporary recovery mode, ideally in wave 4 which will retrace back above 1.5800 possibly even to 1.5900 level in sessions ahead.

Larger trend however is still down, but we need to see a completed three wave rise in 4) before we may look for weaker GBP again.

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GBPUSD: Price Could Retrace To 1.5800-1.5900 Within Larger Downtrend

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Jan 29 2013

Pound is falling sharply for the past two weeks from 1.6180 Jan 11 swing high. Notice that decline from that high can be easily counted in five waves. That’s called an impulsive structure which represents huge red wave 3) which is part of much bigger five wave decline started back on Jan 2nd. Therefore we expect much deeper levels on cable, but not just yet. In fact, we think that before market breaks lower again we will see a corrective bounce in wave 4), ideally back to 1.5800-1.5900 range before new sell-off begins. Pair is also approaching some strong Fibo support for current third wave; its 1.618 x wave 1) measured from wave 2) high which very often reacts as a turning point at the end of a third wave. In our case that’s comes in at 1.5650. Bottom line: watch for a corrective bounce in 100-200 pips before new leg lower.




Euro-Crosses should Extend Even Higher In Risk-On Environment

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Jan 28 2013

USD has been trading higher against its rivals during the Asian trading hours. AUD, GBP and CAD are still one of the weakest while JPY is trying to find some support for the near-term. Larger picture of the markets remains unchanged but still very messy.
Below we have an overlay chart between some major FX currencies compared to S&P Futures and Crude Oil. We can see a strong negative correlation between FX pairs where only the EUR is moving higher in-line with risk-on assets, such oil and S&P. Honestly, we do not like divergences too much, especially not between aussie and S&P which in fact could be signaling for a coming pull-back on stocks.
Overlay-Daily

Anyhow, traders need to trade what they see and not what they think, so at the moment looking for longs on EUR-crosses should be the best choice.

See you on the intra-day updates page with more charts and comments.



Weakness For USD Index Is Still In View Which Will Lift The EUR Much more

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Jan 27 2013

EURUSD broke higher last week as expected and closed above important 1.3400 resistance level after a nice pull-back down to 1.3250. Current break is just another confirmation of our bullish view for an impulsive wave 3) rise in wave (C). As such we expect even higher levels now towards 1.3640/1.3700 next week while market trades above 1.3250 support. Meanwhile any pull-backs on a lower time frame should prove corrective.



The reason why we think that EURUSD is headed much higher is USD Index which is still trading above its 2012 September low. Break of that level should occur as recovery since then is clearly corrective in nature so movement should be fully retraced which will pressure the USD and lift the EUR. In fact we are tracking a triangle pattern, which is a continuation pattern in our case that means break lower.




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