Friday, October 7, 2011
Key Level For S&P; Euro Bumping Up on Trendline
Stocks continue to move higher after that big reversal that got my attention a few days ago. Although it seems likely that 5 Minor waves down have completed and therefore finished Intermediate wave (1), the market still has work to do to prove a major bottom is in. The series of lower lows and lower highs on the daily chart is still intact. So it's possible we'll still get another drop lower to a new low in a choppy grinding torturous 5th wave. I am not projecting that move, but I'm simply sayings it's still on the table until a new swing high can be established, breaking the series of lower highs. So getting too aggressively bullish here for a swing trader like me does not seem wise. That new high is above 1195.86 in the S&P cash. A strong break and close above that level will probably get me to finally go long in anticipation of a long and deep Intermediate wave (2) correction higher. Until then, I'm neutral and I wait.
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The euro continues higher but it too has not made a new high to break the series of lower highs and convince me the trend has turned up. You can see I drew a hasty trendline where the euro is currently bumping up against. I wouldn't be surprised that a strong break above that trendline will lead to an imminent breakout to a new swing high above 1.3700 shortly after. From there, 1.4000 is the target. I'm still unsure of the short term direction of the euro so I'm only holding a long term short position here. A strong move above 1.3700, and 1195.86 in the S&P, will probably get me looking at the long side though for short term trading.
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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.