Monday, January 25, 2010
Stock Market Should Work Lower; AUD/USD Stop Lowered
The stock market attempted a rally today, as it has many times before on Mondays. And it succeeded most of the day. But the bears came out roaring into the close and pushed this market down by the time the bell rang at the end of the day. I count today's action a small wave iv. which in the S&P it's a bit wide compared to its wave ii. I show attached. However, the Dow did not make a new high late in the afternoon like the S&P did so it's sporting a much better proprotioned wave iv. to its wave ii. With that said, it's important for the market to surge lower in full force in the short term if my count is correct because we're now embarking on a wave iii. of iii of (iii). It should be virtually a straight line down affair. If the market doesn't plummet lower tomorrow or early Wednesday, then this count needs to be reworked.
The AUD/USD has worked to a new low, making it a possible 5 waves down completed soon as you can see from the attached 1hr chart. I'm lowering my stop to .9090 from .9285 at this point. A break of that level will mean the series of lower highs has been broken, and may mean that a larger rally is underway that I want to get out of the way of. I'd like to see the AUD/USD's decline accelerate in perhaps an extended 5th wave, or even a wave 3 if my count attached is incorrect. Normally I would exit this trade with the new low, but with the stock market possibly on the verge of sharp move lower tomorrow or Wednesday, I want to hand on to my long dollar positions as the dollar should benefit from a stock market sell off. My GBP/USD stop is still at 1.6295.
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.