Wednesday, December 14, 2011

Euro Takes Out Fibonacci .618 Retrace

The previous Euro post from Nov 23, Euro Breaks Down 
says it all, so it is republished in it's entirety, followed by an update.

From last Fri Nov 18 post
The Trillion Dollar Question ..Eur/USD

"It needs to accelerate one way or the other.
Breaking out of the range will signal the tell; 138 and 134. Again right in the middle of it.
Common sense would suggest that with all the turmoil in Europe the euro is doomed, but here it is at an unlikely 1.35.  
The highs put in last April/May in almost all assets were significant, and lend weight to the interpretation as depicted in the labeling above, implying another series of ABC's down.
 ABC structures frequently have equal (or nearly) legs; that would target 108."

It broke down this morning to new lows under 134. That's the tell mentioned above.
Additionally, the Euro has broken below the .78 retrace of the lesser x wave. Just.
click to enlarge
Next milestone on the downside is, of course, the overlap of the previous low and beginning of the x wave, at 131.42

The support at 134 was not only horizontal support from Nov. 18 as seen in the daily and hourly chart, but also a 50% retrace of the entire X wave, of larger degree , as labeled on the weekly chart.
click to enlarge
Note that overlapping the 131.42 low would leave very little between it and the next support, .618 of the X wave , at 130.33.
Below 130.33 no real support before the previous low of Jan 10 at 128.70.
Overlapping that level and you're really looking at the lows of 118 for support."

Dec. 14
And it HAS taken out both the overlap at 131.42 and .618 retrace of the preceding abc up, at 130.33, in the last 24 hr.s.
 click to enlarge
Note how long it travels along the lower Bollinger Band following a test of the mean back in May. 
Perhaps that will be repeated this time.

click to enlarge
Note the positive divergence on the hourly RSI.
The labeling above is quick and dirty, and intended to suggest the risk of a corrective bounce in here, possibly retesting the break down around 131.40.
In any case lower lows would certainly be expected and bounces likely of short duration.

Thursday, December 8, 2011

SP Update

Naturally it's a big moment coming up Friday and no doubt the market is going to be disappointed with the réalité.
Time to examine the SP chart. 
click to enlarge
I've labeled the first move down from the spring highs 1, but it can more easily be counted as abc's.
In the long term this will matter, in the next year or so, not at all.
Of more immediate concern is the top today and if it is the completion of c and the correction up as labeled, or if it is merely an "a of c "
click to enlarge
Note the repeated negative divergence on the RSI.
Additionally there is a classic false break up over the resist line, followed by a reversal that overlaps the beginning of the last leg up.

So in the short term, even if the move down is some sort of b wave that gets followed by another move up, it likely will be deep, say, to the .618 retrace.
However it's important to look at the volume and "look" of the move down; is it choppy on lower volume with lots of reversals? Or is it impulsing w volume?
If it has the latter characteristics than it is much more likely that the top of the move up is in and the next move down will be either a 3 or C;
seat belts everyone.

Thursday, December 1, 2011

Natural Gas Update

Just a quick look at the pullback and potential Fibonacci support.
click to enlarge

The 3.50 is double Fib. support, and then the .618 retrace level of the 1 up is right around the c=a and gap close point at 3.45.