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Elliott Wave: More Downside For Usd/Chf From 0.9330 Resistance

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Dec 06 2011

On Usd/CHf we came out with an extended leading diagonal in wave 1) followed by a bearish reversal from 0.9330 at the start of the past week, which appears to be only the first leg of a corrective wave 2) that will most likely move even deeper and show some more complex wave structure. Our primary interpretation is now a flat correction with sub-wave B underway.



On 1h chart we can see that pair is in a recovery mode from 0.9065, and is trading very close to previous highs, which however is not a concern since we are looking for a flat correction in wave 2) as mentioned above. We know that in flat corrections wave B can move into the area of a start of wave A and even beyond that level. So even if 0.9330 is broken, our forecast will remains the same; wave C yet to come!



S&P500 Intra-day; Recovery Not Good For The US dollar

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Dec 01 2011

Traders, price action and momentum are very poor AFTER yesterday explosion after the PBOC cut decision. The FX majors are mostly in intra-day ranges, consolidation patterns from where breakouts will occurs, but most likely with dollar negative reaction. The reason is the S&P500 which shows impulsive but incomplete advance from the lows. In the near-term we will liekly see a pull-back into 1230/35 zone from where we will look for a bounce into a wave (v), when also US dollar short positions shoudl be interesting on the FX market!





Nice Example "How Support Becomes Resistance"

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Nov 21 2011

Pound is one of the weakest today, down almost 300 pips from Friday highs, currently trades around 1.5600. We at www.ew-forecast.com anticipated that move, on some basics of technical analysis "how broken support becomes resistance".

Here is the chart and comments that we shared with our subscribers on Thursday, Nov 17th 2011 past week
  • Cable broke through the 1.5860/90 support region which could be start of something bigger to the downside, especially if we consider that prices slipped below the support line of a trading channel as well. But notice that even if we still count move from the top in a corrective way, such as double zig-zag, we still need one leg lower (wave (C)) after wave (B) bounce, which may occur in the coming session or two. Alternate count also signals for weakness after corrective retrace into 1.5860/90 area which will now tend to react as a resistance either in wave (2) or (B) wave! "Support becomes resistance; Resistance becomes support". Bottom line: Weakness to come after any pull-back higher, while pair trades below 1.6090!



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And here is now the updated chart:




Eur/Jpy: Downtrend To Extend

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Nov 17 2011

Eur/Jpy moved significantly lower from start of November, as three-wave of recovery from 100.70 found the peak at 111.50 region, where "C" wave was equal to wave "A" almost on pip! When an impulsive decline occurred two weeks back from top and then price action slowed down for a few days, we warned our subscribers that this is just a first leg of three down, which were our minimum expectations at that time, and that Eur/Jpy will fall deeper. Since then pair fell nicely, another 340 pips into the 104.70 region. But notice that this level was broken, so now we actually have five legs down from November highs, so we count the move as one-two one-two extremely bearish set-up. But even if you count the move corrective way from the top, the downtrend is incomplete! Why? Because corrections are never structured in five waves, so even if we count it as a double zig-zag the bearish trend is incomplete!

For more detailed analysis, you can also review video that was recorded for subscribers at that time.



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Usd/Inr Bullish Towards 51/52 Area

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Nov 16

Pair Usd/Inr is clearly in bullish mode, identified by higher highs and higher lows. In fact we can see a nice impulsive structure since late July already, and from the most recent 48.50 swing low as well. We see no reason why trend would change here, so its better to stay with a trend, and any pull-back from the highs will be considered as a corrective move and buying opportunity, while pair trades above support line of a trading channel, but more importantly above 48.51 critical support!

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Higher US Bond Prices Will Support The US Dollar

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Nov 14 2011

The risk is off today with Euro reversing significantly lower from 1.3800, and almost erased all gains seen on Friday. As such possibility for stronger US dollar remains in play for this week, but in such case, S&P500 needs to weaken towards and below 1215, while 1292 resistance holds.

One of the main reasons why "for now" higher dollar possibility exists is a bond market, which still shows bullish technical set-up on the TLT chart below. In such case US yileds will weaken which will send the US stocks lower and dollar higher. What we also want to point out here, is that moves higher on stocks and majors, seen on Friday are not confirmed by a bond market! So, if all markets are not showing the same direction, then something is wrong here. Now the question is to which market we should trust!? Well, we know that troubles in the Euro zone are not anywhere near the end and that any rally is just temporary hope. Based on this, we suspect that stocks are overbought and that sooner or later they will turn lower, which agrees with forecast for higher bonds; TLT in our case.

On the chart below we have five waves up followed by a slow price action, called consolidation. Its a contra-trend move from where market should break to the upside, above 119.50 wave (1) peak.

TLT 1h chart:



TLT; 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.


Eur/Usd The Breakout Point; "Weakness In Progress"

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Nov 10 2011

The US dollar moved significantly higher in recent sessions, as Risk trade fell sharply, driven by fears over the euro zone crisis! It was the worst day in six weeks for the US stocks market which lost more than 3%. It was also one of the worst days for Eur/Usd pair which lost more than 300 pips from its daily highs, and found the recent support just above 1.3500. Well, this appears to be just a temporary low for the pair, because based on the 4h chart we can see that downtrend has just started, if we consider a broken neckline of a head and shoulders pattern that we paid attention for some time.

Well, if we do just simple measurement from the head to the neckline and then from the breakout point, we can see that projected target for the pair comes even below 1.3. We also need to be aware that broken support, like neckline in our case, usually becomes resistance, so watch for sell-offs after any pull-backs. Of course, its never easy to call a target like that, but that’s it what market is telling us right now. So the concept is very simple here, pair is bearish as long the price trades below 1.3860!
If you want more detailed technical analysis regarding the USD strength which was expected from technical point of view, please review the video below.

For more analysis visit us at www.ew-forecast.com or follow us on twitter



08/11/11Video Analysis:





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