Monday, 12 July 2010

22:10 BST - SPX Update

Alot of choppy sideways action again today. which means not much has been resolved since Friday.

The Options listed below are the different ways to count the move down from 1219.80. There are 5 that I'm following and they are set out on the 60 min counts page

On the chart of each Option I have labelled one of the 2 remaining Counts  for the decline from 1131.23. Each of these Counts could apply to any one of the Options, though what they mean may differ depending on which Option you are looking at. Count 1 shows 5 waves down from 1131.23 complete at 1010.91 and we are retracing the whole of that decline, while Count 4 shows a (i), (ii), i, ii decline from 1131.23 to 1101.91 and we are only retracing the decline from 1082.60 which is the wave i start point.

Here's how things stand after today:

Option 1 - Wave (ii) of [iii] topped at 1131.23

10 min chart:

I've applied Count 1 to the chart of this Option. It assumes that we completed 5 waves down from 1131.23 to the low of 1010.91. From that low, I've labelled a double zig zag count with the (C) wave of [Y] possibly complete at today's high, applying the count I showed earlier, of the ending diagonal for wave 5 of (C) which started at the 1058.24 low.

It remains to be seen whether or not that count will survive - today's high is the invalidation point. If we take that out, there remains the count showing an ending diagonal from the 1039.93 low, which appears to be in its 5th wave - it has to stay below 1092.99 to remain valid.

So, we just have to wait and see what the market does next on this.

Option 2 - Wave [ii] topped at 1131.23

10 min chart:

For the decline from 1131.23 to 1010.91, I've applied Count 1 to the chart of this Option also.

For the move off the 1010.91 low, I've also shown a double zig zag, but the [C] wave of the second zig zag is labelled differently. For the 5th wave of [C] I've assumed an ordinary impulse in is progress. (see the chart below showing an impulse wave from 1058.24). 

It could count complete at today's high, but we really need to see some decisive downside action to be convinced that it is a complete impulse.  Perhaps taking out the wave 4  low at 1069.54 might be a start.

Option 3 - Wave [iv] of an ending diagonal completed at 1131.23

10 min chart:

I've also applied Count 1 to the chart of this Option, giving us 5 waves down from 1131.23 to 1010.91.

I've labelled this 5 wave decline as wave [v] of a leading diagonal down from 1219.80 and, therefore, minor wave 1.  It places us now in minor wave 2.  I've labelled the start of 5 waves up from the 1010.91 low, on the assumption that we will get a zig zag type move up for wave 2, since we  would be retracing the whole decline from 1219.80, not just the drop from 1131.23.

I'm showing us currently in wave [3] of iii, which could well have been completed at today's high. If  wave [3] is complete, wave [4] will have to stay above the wave [1] high at 1042.50 for the count as labelled to remain valid.

The alternate labelling assumes that the 5 waves down from 1131.23 is only wave (a) of [v] and that we are now retracing back up in wave (b). Its possible that wave (b) completed at today's high, in which case, we'd now be about to start wave (c) down.

Remember, if there is further downside  to come, we must stay above 999.83 for the leading diagonal count to remain valid. 

Option 4 - Wave [b] of minor Y within intermediate [X] topped at 1131.23

15 min chart:

I've applied Count 4 to the chart of this Option. It puts us in an extending 3rd wave down from 1131.23. 

We've now retraced over 94.1% of wave i of (iii) - its still a valid 2nd wave, but its close to invalidating this count. Remember, the retracement can't exceed 1082.60 if this count is correct. If it does, it'll be likely that Count 1 is in operation (see chart of Option 1 above) and that will bring in the possibility that wave [c] of Y is done so we have also completed intermediate wave (X) - see the 60 min counts page.

I've shown the double zig zag count up from 1010.91. For wave (C) of [Y], I've shown the count for an ending diagonal from 1039.91 (the low of (B) of [Y]) making the whole of (C) an ending diagonal. 

This diagonal  looks like it still needs another up leg to complete the 5th wave of the diagonal. The 5th wave only needs to get above 1080.78 if the labelling is correct - but it has to stay below 1092.99 to remain a valid diagonal.

Option 5 - Minor wave X within intermediate wave [X] topped at 1131.23. Now in minor Y down

10 min chart:

On the chart of this Option I've also applied Count 4, so the comments made in respect of invalidation on Option 4 also apply here. 

I'm also showing a further alternative way to count the rally from 1010.91. Its a single zig zag, but different from the one I've shown previously in that we would have wave [C] starting from the low at 1018.33.

I've shown wave [C] as complete at today's high. If its not, then this (i)-(ii)-i-ii Count may be invalidated and I'll switch it to Count 1 showing a complete 5 waves down from 1131.23 so that we'd be retracing the whole of the decline from there to 1010.91.  It may not make a great deal of difference if we are in wave (ii) of [a] down, or wave [b].

Here are the charts dealing just with the last few day's action, showing the complete ending diagonal, the impulse up from 1058.24 which also looks complete and the ending diagonal that still appears to be in progress:

Complete ending diagonal - see the chart of Option 1 above:

Impulse from 1058.24 - see the charts of Options 2 and 3 above:

Ending diagonal still in progress - see the chart of Option 4 above:

18:38 BST - SPX Update

We've possibly had an impulse down from today's high (on my labelling, wave 3 is about 1.618 x 1 and 5 is about 2.618 x 1):

SPX 1 min - ending diagonal complete at 1080.78:

Obviously, today's high is the invalidation point.

If we take out the high, this ending diagonal may be the one in play:

SPX 1 min - ending diagonal from 1039.91:

Wave [5] has to stay below 1092.99 to be shorter than wave [3].

15;27 BST - SPX Update

Well, this ending diagonal would have to be counted as complete now (its the one in the first chart in the weekend update):

SPX 1 min - ending diagonal complete at 1080.78:

However, the one I posted in the 3rd chart in my weekend update could still be in progress - we'd have to drop below the dotted line without making a new high to invalidate it:

SPX 1 min - ending diagonal from 1039.91 still in progress:

15:45 BST - SPX Update

I think its possible to count either an ending diagonal or an impluse wave complete at today's high for either a 2nd wave corrective high or wave [3] of iii in an impulse up from the 1 July low. These are two of the charts posted at the weekend which I've updated with today's action:

SPX 1 min - ending diagonal from 1058.24:

SPX 1 min - impulse from 1058.24:

The impulse count may be the more likely to be complete, whereas the ending diagonal count could still only be in wave [4], today's high being wave [3], rather than wave [5]. On that count, we'd need to see the wave [2] low taken out to feel sure that the ending diagonal is complete.

13:10 BST - ES Update

Its possible to count 5 waves down from Friday's high on ES:

Es 5 min chart close up:

The alternate that we are still in the 4th wave down seems unlikely given how much it has retraced (over 61.8%). Clearly, Friday's high would be the invalidation point for this count.

If it does turn out to be correct, it would fit nicely with the completed ending diagonal on SPX that I showed on Saturday. Obviously, be aware that the other counts I showed in the same post anticipate more upside and I don't think the risk of that can be completely discounted at the moment.

Here's a wider view of the 5 min chart for context:

ES 5 min:


11:13 BST - Dollar Update

From the dollar page which I updated this morning, this continues to be my preferred count:

Dollar Daily - Option 2B: minor 3 extending, currently in [iv] of 3:

This chart doesn't capture today's push up in the dollar since the potential ending diagonal that I posted on Thursday 8 July, but it is looking like we may have seen the end of a wave [iv] correction, if this count is correct (as pointed out on the dollar page, the drop from 7 June could just be the completion of the first leg of an intermediate wave (2) correction which has a lot more downside to go).

Here's the 60 min ichimoku chart:

Its looking like the beginnings of an uptrend on this timeframe, with price above the turning (blue) and standard (red) lines and above the cloud , the turning line above the standard line and the lagging line (turquoise) above the cloud as well as above prices of 26 periods ago.

If this is a sustainable move up, pullbacks in price should now find support at the turning and/or standard lines and the lagging line must stay above the price line.

The initial aim is to see the wave iv high at 84.826 taken out, with the (b) wave high folowing quickly after that. As mentioned, caution is still nevertheless required given the possibility that Option 2B (see the dollar page) is the correct count.

My count for the Euro fits well with my favoured count for the dollar. Here is the daily chart:

Euro Daily:

Obviously, it could just have easily completed minor 5 at its June low, as shown in my Option 2B for the dollar (see the dollar page) which is my next preferred count. However, at the moment, the retracement since the June low does look to me more like a wave [iv] within minor 3, but that can change quickly. So, caution would be required on the short side here.

10:27 BST - Dollar Page Updated

See the dollar page in the menu above or click here