Japanese Yen & Australian Dollar Update Sep 14

I would like to remind all the MC Community that it is also important to keep an eye on the Forex Market as there are often nice opportunities for both the short term and the long term trend. The currency market is about §5 trillion a day trade volume which is about 200 time bigger than the NYSE which trades a volume of about §22 billion each day. It is a 24 hour market of huge liquidity that can not be controlled and with minimal or no commissions. Here is an update on the Japanese Yen & Australian Dollar which should reach important turning points in the coming weeks.

The Japanese Yen and Gold topped in 2011 almost at the same time. The structure of the Yen is relatively easy as we can clearly identify an impulse wave from 1976 to 1995 (Wave (A) or alternate green count Wave (1)) followed by a corrective pattern which can be either a Triangle or a Flat Pattern. I prefer the green count with the corrective Flat Pattern as it reflects more proportionate wave relationships compared to the black count. The green Wave B of the Flat Pattern has an exact Fibonacci relationship between its subwaves a and c (c=1.618 x a) whereas the black Waves A and C have no Fibonacci connection.

Whatever the case, the Yen was due for an impulsive downmove from its 2011 top. The structure of this impulsive downmove is composed of 5 waves (1-2-3-4-5) and you can notice that Wave 3 is extended and is made of 5 subwaves (i-ii-iii-iv-v). The Yen is currently in Wave 5 and when Wave 3 is extended, Wave 1 and Wave 5 are often equal in magnitude or have a Fibonacci connection. The Japanese Yen is now very close to the support trendline from 1998 bottom and also to the Fibonacci convergence supports. I think that it should find a bottom very soon and rebound to the upside. The structure of the rebound should indicate whether it is an impulsive or a corrective move and therefore indicates if the extreme of the green Wave C has been reached or not.  There are two levels that could be interesting to watch, 0.92110 that matches with an equality between Wave 1 and Wave 5 and 0.89980 that is 0.382 retracement of the huge impulsive move from 1976 to 1995.

Japanese Yen Elliott Wave Long Term

Japanese Yen Short Term Elliott Wave

Here you can see that the USD/JPY structure has an inverse relationship with the Yen. The USD/JPY pair just broke above a strong resistance and should be in a Wave (5) of (5) of (I).

USD JPY Medium Term Elliott Wave

On a closer view you can see that the current Wave (5) of (5) looks like an Expanding Wedge Pattern (each blue wave of the Expanding Wedge is composed of 3 subwaves).

USD JPY Weekly

The current move from 2011 low is an impulsive one so I am expecting a minimum of 3 waves to the upside. In case of a 20 Years Flat Pattern, the USD/JPY could go much higher with a Wave (C) that has approximately the same magnitude than Wave (A).

USD JPY Monthly Chart Flat Pattern

On the following chart you can see that USD/JPY made a complex corrective pattern for blue Wave (4) and is currently forming the final Wave (5) of the Expanding Wedge Pattern. Once the pattern is complete the USD/JPY should reverse down into a correction.

USD JPY Short Term Elliott Wave

On the intraday chart you can see that Wave 3 is extended and has more upside potential before the Yen reverses down into a Wave 4.

USD JPY Intraday

The Australian Dollar is strongly connected to the Metal and as you can see on the following medium term chart the AUD/USD pair is following a classic Elliott Wave structure with an impulsive move composed of 5 waves (1-2-3-4-5) and followed by a corrective Flat Pattern (A-B-C). The final Wave C is an ending diagonal and AUD/USD should plunge into a final Wave v of C which should mark the end of Wave 2 of a higher degree. Wave 2 is clearly composed of a corrective pattern (A-B-C) and should be followed by an impulsive Wave 3 which should propulse AUD/USD to new highs. The extreme of Wave 2 should generate a great buy opportunity for many Forex traders.

AUD USD Medium Term

On the AUD/USD daily chart you can see that the pair broke down of a corrective channel which is characteristic of a Wave 3 down. This confirms a Wave C in progress which should be composed of 5 waves:

AUD USD Short Term

The intraday chart is showing that AUD/USD is currently in a Wave iii of 3 and has still lot of downside potential.

AUD USD Intraday Elliott Wave

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Market Update Aug 11

Getting back from Singapore where I met some of our wonderful Singapore clients made me even more realize the importance of the Elliott Wave analysis for the Asian traders. In responding to our readers’ requests for the possibility to follow the Elliott Wave Count I decided to publish my Elliott Wave charts in order to make this information accessible to all the MC Community. A notification email will be sent to all members when the Elliott Wave Section has been published.

Here is this the weekly Market Update:

On the weekly chart you can see that the US Market could plunge into a Wave 4 and then make a Wave 5 up. Odds favor a truncated Wave 5 as the market had an extended Wave 3. As you know I think that the US Market has entered a new secular bull market since March 2009 and the bottom of Wave (IV) should be a nice buy opportunity. I trade only with price action as all indicators are lagging but I put the rsi 14 on the Elliott Wave Count as it is helpful to label the count.

SPX WEEKLY ELLIOTT WAVE COUNT AUG 11

For the moment I think that the US Market is due for a rebounce after this down move since July 24 high. On the following chart you can see that both Elliott Wave counts are bearish on the medium term. I will watch if the rebounce will be composed of 3 corrective waves (a black Wave 2 or a Wave B) or 5 impulsive waves (a green Wave (V)). As I am an intermediate term trader I am keeping my short positions for the moment.

SPX DAILY ELLIOTT WAVE COUNT UPDATE AUG 11

On the chart below you can see that both the SPX Index and the Banks Index found support on the red dashed support trendlines.  The Russell/SPX ratio chart made a false breakdown and just recovered above the neckline of a Head and Shoulders Pattern which confirms that a rebounce is coming in the US Market.

SPX DOW RUSSELL DAILY UPDATE AUG 11

Once the rebounce has been completed, the Russell could quickly break below the neckline of the Double Top Pattern and the Banks Index below the neckline of the Head and Shoulders Pattern:

NASDAQ RUSSELL BANKS DAILY AUG 11

Gold broke out of a Falling Wedge Pattern last week and it is important to see some follow through this week. A breakout of the Base Pattern is key to confirm the bull market, $1360 should be the next resistance (upper trendline of the Triangle Base Pattern). Silver found support on the 61.8 Fibonacci retracement level and should take off very soon. Reaching 78.6 retracement is also possible for the locals to run some protective stop orders.

GOLD SILVER DAILY CHART AUG 11

I think that Gold entered a Wave iii up which will be valid once price breaks above 1392.60 (top of Wave i). A Wave iii could send Gold to $1451.40 (Wave iii = Wave i) or $1581.90 (Wave iii = Wave i x 1.618) or even to $1792.20 in case Wave 3 is very extended (Wave iii = Wave i x 2.618). The structure of the up move is key as it is important that the uptrend since December low unfolds in 5 waves (motive waves) instead of 3 waves (corrective waves). A break above $1392.60 level should propulse Gold much higher as it would erase a bearish count for some Elliott Wave Institutions.

GOLD WEEKLY ELLIOTT WAVE BULL COUNT AUG 11

GOLD WEEKLY ELLIOTT WAVE BEAR COUNT AUG 11

GDX broke out of a Descending Wedge Pattern and is still holding above the neckline of the Inverse Head and Shoulders Pattern like the Junior Mining Index (GDXJ). Once GDXJ breaks out of the Falling Wedge Pattern it will also be a bullish sign to confirm the uptrend in Miners.

GDX GDXJ GLD DAILY AUG 11

MINERS INDEXES DAILY CHARTS AUG 11

Copper and Steel have recently made bullish breakouts and I expect Platinum to do the same. For the moment it is still locked in a Triangle Pattern.

PLATINUM DAILY CHART AUG 11

I believe that Natgas is entering a new impulse move (Wave 5) which should push prices at much higher levels. On the weekly chart you can also see an alternate bearish count but I favor the bullish black count for the moment.

NATGAS ELLIOTT WAVES BIG PICTURE AUG 11

NATURAL GAS WEEKLY ELLIOTT WAVE COUNT AUG 11

NATGAS DAILY ELLIOTT WAVE AUG 11

An update is coming for the Yen and the Nikkei as I think that the sideways movement is coming to an end.

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Miners and Metals Jul 9

As I mentioned in my last article “Metals and Miners Bull Market Point of Recognition” the Metals and Miners are about to print the point of recognition of a new bull market and price action is showing me that it could be done today. The complete Domed House and 3 Peaks Chart Patterns ended the cyclical bear market and some ratio charts in Metals and Miners were also telling us that the bull market was back several weeks ago. It is important to understand what the charts are telling us in order to jump early in a bull market and not to be left behind. Otherwise jumping in and out at the worst times possible could end up losing money.

On the following chart you can see that GDX, GDXJ and SIL just broke out above the neckline of an Inverse Head and Shoulders Pattern which should launch a new bull market in both Miners and Metals.

MINERS INDEXES JULY 9

On May 30 I bought leveraged positions in Miners and Metals and I intend to keep both my leveraged positions and my conservative positions during all the bull market and to hang on during corrections. Patience is sometime frustrating when there is nothing to do exept watching the market but it is key to bring nice profits. My plan is to trade the intermediate term trend of this new cyclical bull market.

Patience is already well rewarded as the leveraged positions are making nice profits (JNUG,NUGT,USLV,UGLD):

JNUG DAILY CHART UPDATE JULY 9

NUGT DAILY CHART UPDATE JULY 9

USLV DAILY CHART UPDATE JULY 9

UGLD DAILY CHART UPDATE JULY 9

The conservative positions are also making profits and should bring more gains:

GDX GDXJ JULY 9

SLW DAILY UPDATE JULY 9

PAAS DAILY UPDATE JULY 9

AG DAILY UPDATE JULY 9

NEM DAILY UPDATE JULY 9

CDE DAILY UPDATE JULY 9

GPL DAILY UPDATE JULY 9

MUX DAILY UPDATE JULY 9

ASM DAILY UPDATE JULY 9

FSM DAILY UPDATE JULY 9

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US Market Projection Jun 24

I think that the SPX Index is very close to an Intermediate Top at 1968. The Golden Ratio has a target at 1973 for the Leg 2 since March 2009 bottom and in terms of percentage you can see that Leg 2 is almost the double of Leg 1. The risk/reward ratio looks good for short positions on the intermediate term trend.

SPX BULL MARKET JUN 24

As you know I think that the US Market entered a Secular Bull Market since March 2009 bottom and I think that the Dow Jones Index should plunge into a corrective wave 4 very soon. The 7 Year Cycle bottom lets me think that an important low is due in 2016.

DOW JONES PROJECTION  JUN 24

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Metal and Miners Jun 11

It is important to keep in mind that Miners are extremely undervalued. You can see on the charts below that the HUI/GOLD ratio bottomed almost at 2000 level which was a major bottom for the Miners Index.

MINERS GOLD RATIO CHARTS JUN 11 2014

On the following charts you can see that the XAU Index backtested strong supports and the Domed House and Three Peaks Chart Pattern has been entirely completed.

XAU MONTHLY CHART JUN 11 2014

DOMED HOUSE AND THREE PEAKS CHART PATTERN JUN 11 2014

When a market (whatever the asset) is too far from its 65 monthly moving average it returns to the mean. All markets return to the mean.

HUI REGRESSION TO THE MEAN JUN 11 2014

Here you can see on the long term trend that the Gold Metal is very close to strong supports around $1220-$1230 and that Silver could have already bottomed:

GOLD LONG TERM CHANNELS JUN 11 2014

SILVER COPPER WEEKLY CHART JUN 11 2014

The big picture of the Complex Metals is showing bullish consolidation patterns. Corrections often end with Falling Wedge or Expanding Wedge Patterns. You can notice that Silver and Copper are very close to break above the declining trendline resistance from 2011 top. Platinum broke out of a Triangle Pattern and Palladium makes new highs which are also bullish signs for the Complex Metals.

METALS MONTHLY CHARTS UPDATE JUN 11 2014

The Gold/Silver ratio chart is making new lows after breaking down from a Head and Shoulders Pattern, this is also bullish for the Complex Metals.

GOLD SILVER RATIO CHARTS JUN 11 2014

On a closer view you can see that Miners rebounced as expected on the 78.6 Fibonacci level (here you can see how Miners are connected to the 78.6 Fibonacci ratio - Miners: End of the Bear Market?). The Miners Junior Index (GDXJ) is leading as prices already broke above the apex of the Triangle Pattern and also above the declining trendline resistance. On the 60 mn chart you can see that SLV is forming an Expanding Wedge Pattern which could reverse the downtrend as I already mentioned above.

GLD GDX DAILY CHART JUN 11 2014

GOLD SILVER DAILY JUN 11 2014

GDX 60 MN JUN 11

I think that is time for the Miners and the Complex Metals to outperform the SPX Index and that the US Markets are now due for a correction.

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Miners and Metal Update May 4

The first charts are the 10 mn charts of the Miners Index and Junior Miners Index. The HUI is forming a bull flag and GDXJ an Expanding Wedge Pattern. They both rebounced on the neckline of their Inverse Head and Shoulders Patterns. This is a bullish price action.
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MINERS 10 MN CHARTS  MAY 3

The charts below are the 60 mn charts of the HUI Index and GDXJ. You can see that the HUI is probably making a Double Bottom Reversal Pattern and could soon break out of a Bull Flag Pattern. It also took out the red dashed resistance trendline. The Junior Miners have broken out of a Falling Wedge Pattern. These are all bullish price action formations.

HUI 60MN CHARTS MAY 3

The daily charts show the 1 Year Parallel Base Bottom Pattern of the HUI Index and GDXJ. After backtesting the apex of the Triangle Pattern twice and the neckline of the Inverse Head and Shoulders Pattern, prices resume to the upside which is also a bullish sign.
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HUI DAILY CHARTS MAY 3
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Here are the monthly charts of the Miners Index (HUI), the Junior Miners Index (GDXJ) and the Silver Miners Index (SIL). The Junior Miners made a false breakout of the descending channel two months ago but broke out above the channel last week. Some follow through next week would confirm the breakout.
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MINERS INDEXES MONTHLY  CHART MAY 4
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Let’s have a look at the Metal charts. The first one is the 60 mn chart of GLD and SLV. You can see that Gold made a successful backtest of the neckline of an Inverse Head and Shoulders Pattern. Prices resumed to the upside this week and also broke above the declining red dashed resistance trendline. This is a bullish price action.
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Silver broke beneath last December’s low and made a false breakdown to complete an Expanding Wedge Pattern. This bear trap was to run some stops and prices reversed to the upside. An exhaustion decline followed by a reversal higher is a very bullish price action. False breakdown happens over and over in the market as it is an emotion response. An Expanding Wedge Pattern often acts as a reversal pattern but it is not a requirement.
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GLD AND SLV 60 MN CHARTS UPDATE MAY 4
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A break above the high of the previous Daily Cycle high at $1331.40 would validate Apr 24 as a new Intermediate Cycle Low. A break above the last Intermediate Cycle high at $1392.60 would make this Intermediate Cycle right-translated and prices should go up during a minimum of 10 weeks. It would not be a surprise if Gold printed an Intermediate Cycle Low at week 16 (early in the timing band) as the previous one lasted 27 weeks. If prices break below $1268.40 this scenario will not be valid.
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GOLD DAILY CYCLES COUNT MAY 4
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GOLD INTEREMDIATE CYCLE COUNT UPDATE MAY 4
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On a longer timeframe you can see that Silver is also very close to break out of a 3 Years Falling Wedge Pattern. A closing price above $20.50 should valid a breakout. Copper made also a false breakdown of a Triangle Pattern which is a bullish sign for the Complex Metal.
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SILVER  COPPER WEEKLY CHARTS MAY 3
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Palladium is leading the Complex Metal as the breakout occurred 2 months ago. Platinum is still in a Triangle Pattern and I expect a breakout to the upside very soon.
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PALLADIUM PLATINUM WEEKLY CHART UPDATE MAY 4
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The big picture of all the Metals charts is showing that some consolidation patterns are coming to an end very soon. Palladium already broke out and I think that Silver and Copper will be the next ones.
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METALS MONTHLY CHARTS UPDATE MAY  3
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On the chart below you can see that the Yen broke out of a Falling Wedge Pattern and backtested it. (I used a weekly line chart based on weekly close to avoid noise.) The GOLD/CCI ratio chart backtested the lower trendline of the Falling Wedge Pattern and prices just reversed up. Some follow through to the upside should favor a bullish breakout and I believe that it is time for Gold to outperform the Commodities sector.
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GOLD YEN NIKKEI CHART MAY 4
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The next chart shows how the Miners are extremely undervalued. 2001 was a major bottom for the Miners and you can see that the HUI/GOLD ratio chart is almost at the same level as in 2001. As I have often said, Markets are irrational and like to move to extreme levels.
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MINERS GOLD RATIO CHART MAY 4
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The GOLD/XAU chart is showing a possible Head and Shoulders Pattern. Once prices break below the neckline of the Head and Shoulders Pattern, this pattern should play out and Miners will outperform the Gold metal. On the Gold/Silver ratio chart you can see that a Double Top Reversal Pattern could reverse the current uptrend. I also believe that a false breakout of an Inverse Head and Shoulders Pattern occurred last week when Silver prices broke to new lows and then reversed higher.  A false breakout often results in a strong move in the opposite direction. Old highs or lows are often broken fractionally in order for traders to capitulate and think something is wrong, then prices reverse to the opposite side.  Most of the beginners get whipsawed by these emotion response. Once the ratio gets back under the neckline I expect Silver to strongly outperform the Gold metal. Price action and pattern formations are setting up for another leg up.
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GOLD XAU RATIO CHARTS MAY 4
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It is also important to keep in mind the big picture and to watch what is happening when prices are very far from the 65 Monthly Moving Average. The next 20 years charts on different assets are showing that all markets return to the mean. The regression to the mean forces can generate a powerful move which can bring large gains for those who are patient.
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HUI MA 65 REGRESSION TO THE MEAN MAY 4
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I would like to see some follow through to the upside on the HUI/SPX ratio chart. You can see on the big picture that the XAU/SPX  (I use the XAU Index as HUI prices began only in 1996) rebounced right on the blue 30 years support/resistance trendline. The bottom in the Miners Index in December 2013 was made right on this backtest.
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HUI SPX DAILY CHART MAY 4
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XAU SPX BIG PICTURE CHART MAY 4
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Many investors are currently bearish on the Miners and the Metal sector, that is what we need for a bull market to climb “a wall of worry”. The price action shows bullish signs for the moment and I expect prices to resume to the uptrend. The 1 year consolidating price action should lead to trending price action very soon.
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We already made profits in Commodities (Natgas, Coffee, Corn, Soybeans), it is now time to wait patiently the new leg up in the Metal and Miners sectors. In this difficult market situation it is important to diversify the portfolio to make consistent profits and not be exhausted in one sector by a sideways ranging market. Basic principles like position sizing, portfolio diversification and money management are very important.
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Biotech – End of a Bubble?

The performance of the Biotechnology sector has been impressive but as we know, all good things come to an end. Since our original buy the Biotech has had an amazing run up these last two years and the high reward/low risk is now far behind us. On the following charts you can see that the Biotechnology Index (BTK) reached recently important resistances and prices got rejected. These resistances are the upper channels of the long term trend and also of the intermediate term trend.
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BIOTECHNOLOGY INDEX BTK WEEKLY CHART BIG PICTURE MAR 23
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The Biotech iShares Index (IBB) had a parabolic vertical move these last six months and broke down the parabola support last week. I think we should not be surprised by a violent down move after such a bubble.
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IBB BIG PICTURE 2 MAR 23
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All the MC Community has made large profits in this sector and I believe that the last 10% position will be sold very soon with our protective stop on IBB at $244.58.
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IBB WEEKLY CHART MAR 23
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Below is the chart of the short term view on IBB. Last Friday prices broke down an Ascending Wedge Pattern and I expect further downside in the coming days. BTK is showing almost the same pattern with a false breakout of a Rising Wedge Pattern and prices are currently back inside the Wedge Pattern.
 IBB DAILY CHART UPDATE MAR 23
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BIOTECHNOLOGY INDEX BTK CHART DAILY UPDATE MAR 23
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I am seeing some investors coming into this sector which has reached extreme valuation and thus it is time for us to book our last profits and to leave this sector. In my opinion the Biotechnology sector is now due for an important correction before we could see another massive out performance in this sector. Our gains will be invested in an other profitable sector.
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