Thursday, January 7, 2010
EUR/USD Fulfilling Wave Count Expectations; Stock Market is Not
The EUR/USD has fallen as projected in yesterday's post (click here for post). The pair has yet to break beneath its previous low at 1.4216 so it should continue lower in the short term. If I were to have shorted this pair at the 1.4405 level which was where it was trading at when I posted this count, I would move my stop loss now to break even right now, or at least to above the wave (2) high around 1.4450. Once this pair makes a new low beneath 1.4216 it will have satisfied all of EWP's requirements for a nice clean 5 wave decline from the highs a few months ago (click here for count), so it will be ripe for a sharp and deep corrective wave 2 rally. So I would not get too cute and greedy on this short trade right now, and make sure I protect my position aggressively.
As for the stock market, I had a count Tuesday that suggested the S&P would rally strongly in a wave 3 soon (click here for count). That obviously has not happened, but neither have any key levels I cited been broken yet either. Tomorrow has the all important jobs data that everyone clings to lately, so we should get some volatility and deliberate movement in the market either later today or early tomorrow surrounding the report. Once that occurs we should have a better idea of the short term wave count.
Just food for thought, I posted a daily chart of the S&P cash index to keep our eyes on the bigger picture. It shows that we are in a wave C of a triple zig-zag. There is no quadruple zig-zag, so once this count is complete, that's it, it's over; the market must selloff sharply in wave 3 or C to lows beneath those made in 2009. When we look at the close up of this structure on the 30min chart posted, we can see that it's possible that we're in an ending diagonal right now. This most likely will result in a pop to the upside trapping the bulls, then an immediate sharp reversal. So with the jobs number coming out tomorrow, the bullish wave 3 of C count as well as the ending diagonal bearish count are both viable as they both set up for big market moves tomorrow. Refer to the key levels made in blue that were cited in Tuesday's post for reference by clicking here.
PLEASE NOTE: THIS IS JUST AN ANALYSIS BLOG AND IN NO WAY GUARANTEES OR IMPLIES ANY PROFIT OR GAIN. THE DATA HERE IS MERELY AN EXPRESSED OPINION. TRADE AT YOUR OWN RISK.