My short trade on the EUR/USD was executed at 1.3570 and with the current sell off I want to lower my stop again to 1.3630. My short trade on the GBP/USD also executed at 1.5555 and I want to lower my stop again to 1.5640.
With that said it leaves the question of wondering where we're at in the bigger picture. Well I'm not sure as of right now as it's too early to tell, but I'm in a good position either way with these GBP/USD and EUR/USD trades. One possibility is that this current dip to new lows is a 5th wave, which often occurs when the government intervenes in some way, which means once this selling stops, a sharp and strong multi-week to multi-month rally should ensue in both pairs. OR, the other possibility is that the pairs are in a wave 3 at various degrees. It's this reason why I want to stay short these pairs and not close out the positions too soon. If the pairs are in a wave 3, then the profit potential versus my current risk is very desirable and I want to take advantage of it. The behavior of the pairs throughout the night and tomorrow will tell us a lot.
Silver Futures
To help bring some clarity to the dollar picture I attached a 10min silver futures chart. If this count is correct, it means this metal should be headed down in a hurry. It also most likely means that the EUR/USD and GBP/USD are also headed down in a hurry since they tend to be correlated fairly well to this metal. Just another reason to not jump the gun and take full profits ont the GBP/USD and EUR/USD positions and let the market play out a bit here.
So the trades are in good positions now. With the drops to new lows I'm able to lower my stops to a much more comfortable risk level, and there is evidence to support the fact that a major declining phase is getting underway to where I can just sit comfortably with my stops and watch the market move.
S&P Cash Index
With currencies and precious metals moving like they are, it's quite in line with a top in the S&P. We've been looking for a wave 2 top the past couple days and although it appears there should be some more subdivisions higher, the fact that it came so close to the 61% fibonacci retracement level and that the US dollar is rallying hard right now and precious metals appear to be declining in a big wave 3, it would seem quite possible that perhaps the equity rally is over too. Also of note, yesterday's volume was very light, and today's even lighter on the NYSE with less than 1 billion shares traded. So the market has surged higher, but on lighter and lighter volume which is typical of countertrend moves. The rally is showing a severe loss of steam. It's a bit too early to get too excited about these moves because the Fed announcement just happened, and right now we're just experiencing the "knee jerk" reaction to the that announcement. What's really important is what happens to the US dollar and precious metals later tonight and tomorrow.
Although it's too early to know for sure, it seems quite possible that the wave 2 top in the S&P is in place at today's highs. Watching the action in precious metals and the US dollar throughout the night and tomorrow morning will help us determine if in fact the S&P did top at today's highs.
Poll Results
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.
1 comment:
Hello Todd:
In my opinion the gold not plummeted nothing until now, I can agree about an interesting movement to the downside under 1095-1074.
Regards.
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