Half AUD/JPY Position Stopped Out; I'm ReShorting

AUD/JPY


I was stopped out of half my AUD/JPY position this morning at 80.90 which resulted in a 68 pip loss. The other half of my position is still in play with a stop at 82.90. Although the strength of the rally looks solid, and follow through to stop me out on the other half of my position is a decent possibility right now, the wave count suggests otherwise. This latest rally may just be a C wave, and the strength and slope of the ascent would support this. Plus, with it trading around 81.90, it's fairly close to my stop at 82.90, so I like this risk/reward for a possible reversal here. I'm risking about 100 pips to possibly make well over 300 if the trade works out to full potential. I like those odds so I'm re-entering the other half of my position at a much better price then where I exited.

So I'm again fully short the AUD/JPY with a stop at 82.90. I may be throwing good money after bad, but the wave structure and risk/reward make it a desirable risk.

S&P

In regards to the stock market, it may be thrusting from the triangle I laid out yesterday, but we need to see a reversal start by the end of the day. Volume picked up at the open but has since declined later in the session. I hold firm on what I said yesterday:

"If the S&P cash index makes a strong push higher on high volume and strong internals, and momentum on the intraday charts turns up and it appears clear it will close well above 1125, I will close all my short term short positions."



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.

S&P Floating Annoyingly Higher; AUD/JPY Short Still in Place

S&P 500 Cash Index




The S&P failed to drop to a new low as I would have liked to see in order to create a small 5 wave drop. Instead the market treaded sideways and appears to have made a triangle. Triangles can only occur in B, X and 4th waves. Looking at the above chart, a 4th wave is the obvious choice. It also sets up well with tomorrow's jobs number because it suggests a sharp rally to a new high which will be immediately reversed. So tomorrow's jobs number can easily bring that type of volatility. So I hold the short term bearish view but am prepared for a sharp thrust upward from the triangle before topping and reversing. If my count is correct, it means the S&P will decline most likely to at least the prior 4th wave area of 1086 before even thinking about bottoming.

If the S&P cash index makes a strong push higher on high volume and strong internals, and momentum on the intraday charts turns up and it appears clear it will close well above 1125, I will close all my short term short positions.


AUD/JPY

1hr



My short at 80.22 on this pair was doing nicely last night as it fell to 79.17, but then New York jumped in and skyrocketed this thing higher to where it sits today which is pretty much right around my entry level. For the very short term, this drop and reversal is concerning for the bearish case because the drop looks like a 3 wave affair, and the ensuing rally is a much stronger impulsive looking rally. This makes me think that last night's drop might be a wave B, and the current rally is part of a C wave that will bust out to a new high above 80.90. This is also supported by the fact that it tends to track closely to the S&P, which I also am projecting to get a pop into tomorrow's session. So my stop at 80.90 is quite vulnerable from here. But a break of 80.90 is not certain and considering where the pair is trading now, and that only half my position will stop at 80.90, I'm holding short at this time.


4hr




Looking at the 4hr chart builds the picture of why I like this short trade on the AUD/JPY so much, and why I'll remain steadfastly bearish on it as long as it stays below 82.90. We have two clear 5 wave drops, the first one resulting in a correction that stopped near the 61% fibonacci level and then reversing in another 5 wave decline. The larger trend is clearly down so I want to remain short as long as the pair keeps trading underneath the most recent 5 wave decline.

My stops remain the same: half position stop out at 80.90 and the other half at 82.90


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.

S&P is Bearish in the Short Term

S&P 500 Cash Index 15min Chart Wave Count




Yesterday I posted two wave counts that had 5 waves completed yesterday, or the allowance of one more push to a new high to complete that 5th wave (click here for yesterday's chart). Well the latter occurred as we had a new high today but then the market faltered into the close. The further this rally has gone this week, the less buying interest there seems to have been as volume and momentum have declined as the market rose. Today's possible wave completion and reversal warns of further downside in the coming days.

As I said yesterday, I'm not sure of the larger trend and whether this decline is a resumption of the downtrend, or whether it's just a correction before new highs. The structure and strength of the decline will help me make a better determination of that. But no matter what the larger wave count is, the near term structure suggests the S&P is headed lower. There is some big jobs numbers coming out Friday so I do expect some wild moves the rest of the week which may throw a wrench in the exact short term wave count. But I would not be long right now, I'd be looking for shorting opportunities. The prior 4th wave is my first target around the 1086 area.


S&P Hourly MACD Histogram Crossed Down Strong




In and of itself, I know the MACD has little viable use in trading. But when combined with other indicators and a wave count, it has its uses. Above is the hourly MACD histogram showing that the moving averages have crossed down sharply. This has happened two other times since February and both times it coincided with moderate sell offs. The key is that the market has to be in some kind of uptrend with red bars on the histogram, then we'll get a "squeeze" and a sharp turn down into the blue. This signals a strong crossing down of the moving averages that are spread wide out, ready to run deep. Right now this behavior is occurring, and when combined with the other topping evidence, it's something to pay attention to.


S&P 500 Cash Index Bearish RSI Divergence




Another momentum indicator I feel is much more reliable is the RSI, but mostly on a daily, weekly and monthly basis. Here I wanted to show the hourly chart to coincide with the MACD chart I just showed. Here you can see that price has steadily increased, making new highs, while the RSI has failed to confirm the last 4 highs.

Momentum indicators have crossed down, the market should follow soon.

SUMMARY

The S&P appears to have completed its 5 wave rally and momentum has begin to shift downward. I expect the S&P to decline to at least the 1086 area of the prior 4th wave soon. Whether the market flip flops up and down the rest of the week in conjunction with the jobs data or whether it charges lower from current levels, I expect a modest decline phase is on the horizon. The structure and strength of the decline will help me determine if it's just a correction before surging to new highs, or whether it's a resumption of the downtrend.

AUD/JPY

I shorted the AUD/JPY at 80.22. I half a stop for half my position at 80.90 and a stop for other half at 82.90. This pair looks bearish, and should decline with the stock market. See previous post for charts and further analysis.


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.

AUD/JPY Short Opportunity

AUD/JPY 4hr




I have never traded the AUD/JPY but I see a good opportunity in the pair so I'm going to roll the dice. Notice on the above 4hr chart the pair has traced out a nice completed 5 wave impulsive decline. Then the ensuing rally is retraced a fibonacci 50% of the preceding 5 wave decline. After topping at that 50% level, I see another nice clean 5 wave drop. We are currently correcting that recent 5 wave drop so I see a good opportunity to get short. Let's get a closer up look:


AUD/JPY 1hr




When we zoom in on the hourly chart we can see a possible topping formation here. We see a rolling over effect combined with what could be a head and shoulders topping structure combined with hourly reversal candle.

I currently have a full short position with half of the position's stop at 80.90 and the other half to stop out at 82.90.


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.

S&P Running out of Steam in the Short Term

S&P 500 Cash Index






The S&P climbed mildly today but then reversed into the close. Today was another light volume day, and since the big reversal volume spike last week, volume has failed to even come close to getting above the 13 day moving average. So there is little interest in the masses buying up this rally. We have jobs data coming out later this week so I expect some volatility. Lately, no matter what the jobs numbers have been, the market has rallied by the end of the day, or early the next week. But since we're now rallying into a jobs number, I'm not convinced that trend will continue.

As you can see from the above S&P 15min chart, the market may have completed its 5 wave advance and is ready for a corrective phase downward. Right now I'm counting the 5 wave move as bullish for the medium term, but want to analyze the upcoming decline to see if it is in fact a correction before charging to new highs, or if it's a resumption of the downtrend. Please refer to yesterday's post to get my primary bullish count and my alternate bearish count for the medium term outlook. Right now, the key level for the bullish case is 1045, which is so far away it doesn't really do us any good. But once the decline gets underway I should be able to get a better idea of the short-to-medium term outlook and then come up with better key levels to control risk.

My stance now is that the market is probably at the tail end of this current rally phase and we should see at least a short term decline coming soon. The structure and strength of the decline will help us determine if it's a correction, or if it's a resumption of the downtrend to where I want to get aggressively short again.


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.

S&P Completing Imperfect 5 Wave Rally

S&P 500 Cash Index Primary Bullish Count




Looking at the above S&P daily chart there is a far from perfect 5 wave rise from the lows on the year around the 1045 level. The reason this rally is far from perfect is mainly due to its clear 3 wave rally off the low that can be seen on the hourly chart (see rise from 1045 - 1080 in bearish alternate count below). So I'm not completely sold on this bullish count at all. The problem is that the bearish count suggests quite a long and extended wave 2 rally that is getting quite carried away from an EWP "right look" perspective in my opinion, so this 5 wave rally needs attention. Plus, in 5th waves, there are often divergences in price and momentum where price makes a new extreme but momentum does not. Well a turn down tomorrow would confirm this divergence as seen on the MACD histogram It could still be a 5th wave within a larger correction, but I would need the market to prove that to me before I assume it.

Despite this bullish count being my primary view, I am not getting long quite yet. I want to see the speed, strength, and wave structure of the upcoming decline to determine if it's a correction before surging higher again, or if it's a resumption of the downtrend where I need to make my bearish count the primary view. In other words, right now I'm neutral as far as actually taking a position anywhere in the market.




S&P 500 Cash Alternate Bearish Count




Above is my 1hr bearish count that has a WXY combination correction in its last phase. Although I see no signs of a top yet, once it does top and reverse we should see an extremely strong wave 3 decline with increasing volume and almost all sellers in the market creating nice 5 wave impulsive moves to the downside. Without those pieces of evidence, I will assume the decline is just a correction before surging to higher levels as long as the market stays above 1045.

In summary, I want to wait until the market declines again so I can review the structure to try and determine what the larger trend is. Until then, my slight preference is that of a bullish count that will be looking for the market to eventually charge higher in the coming weeks. I do not have enough certainty to take a position at this point though, so I'm neutral as far as trading goes.

GBP/USD

What a slap to the face I got this morning by closing this pair a bit early. The pair tanked this morning after I closed my short position last night, making me leave a lot of money on the table. But that's the trading life I guess. I still was able to make a nice profit on the overall trade, so in that respect it was a success, and with the open gap and 5 wave decline looking complete, I can't fault myself too much for booking profits at that juncture. But hindsight's 20/20.


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.

I Exited the Rest of my Short GBP/USD Trade

The GBP/USD gapped down big this afternoon and those gaps usually get filled within a few days, if not hours, and seeing as that we have a nice proportioned 5 wave decline possibly complete, and a nice profit at the moment I'd like to close the position.

I closed the first have of the position at a 175 pip profit, and since my entry was at 1.5390 and my exit was at 1.5141, that makes a 249 pip profit on the second half of the position I just closed. Click here for the original trade setup.


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.