Wednesday, May 23, 2012

Hi Traders,

I couldn't wait to tell you that we just created a new MeetUp Group in Sydney about Option Trading.
Please click on "Sydney Option Traders"

Cheers. Mario

AUDUSD, Tuesday May 22, 2012

Hi Traders,

As predicted, the AUDUSD stopped  the downtrend at 0.98 USD as displayed in the monthly chart below. Theoretically, given the new temporary USD weakness against all currencies, we could see the Aussie very last rally to 1.0220-1.0450 and maybe to 1.0760 before starting the big downrend.

If this happens,it would complete "every wave 5" of major, medium and minor grade. See the 4 waves in white at the top right end of the chart.

As a confirmation we have the channel being touched 4 times, so we expect a small rally followed by a breakout to the downside

In the weekly chart below there's a bullish reversal candlestick formation called "the three crows" confirmed by the chart touching the channel at level 0.98 USD which is also a 61.8% retracement down of the last rally. From here we should start the very last wave 5 up.

The daily chart below shows the "engulfing" reversal candlestick and this confirms the level 1.0220 as possible tartget. The last wave down (C) was performed in 5 waves and should be finished.

Finally, the 4hour chart below shows the new trend direction and the possible tartget at 1.0220 (red line)



WTI OIL,Tuesday May 22, 2012

Hi Traders,

It's actually Monday night: I've been asked to check the WTI OIL and I found the task a bit hard.

After taking a bit dive to $35.50 from $147.50 in 2008, the commodity is sitting now at $92 which is exacly 50%  of that range.

As you can see by the weekly chart below the WTI performed 3 waves up, reaching $115 (wave 3). Now the question is: why 3 waves only and not 5? A plausible explanation could be that it's now unfolding "major retracement wave 4" (out 5 waves up).

In its simplest espression, "major retracement wave 4" is a big zig-zag made of 3 to 5 retracement waves. The OIL so far performed 2 of those retracement waves and now it's trying to complete wave 3 down.

On its way down, it stopped on the most important support. Hence, it might bounce back for a while (rally) before resuming the downtrend and breakout the channel on the downside.

If this happens, the target could be $97-$98.5. Then down again to $80. Also, the channel was touched 4 times and this prelude to a bounce back (rally) usually followed by a breakout on the downside.

This could be confirmed by the 3 red candles down that usually indicate a bullish reversal formation named "the ladder bottom".

The daily chart below confirms the wave count (1-2-3 in red). There might a attempt to reach a low around $91.67 as the last bit of the wave is still missing.

This is confirmed by the 4hour chart below which shows 8 waves out of 9, The 9th should be the last leg down and it usually shows a reversal candlestick (which is not there yet). The channel was touched 4 times and this is the prelude to a breakout.

The 1 hour chart below show the last le down missing (wave 5). It also dispays 4 contact point in the channel. hence there could be a breakout soon.

Note the last orange numbers 1-2-3 in the 15min chart below where the last wave 3 is still missing at level $91.67 or lower. That could be our reversal point.

GBPUSD, Monday, May 21, 2012

Hi Traders,

Dealing with GBPUSD has never been an easy task as this currency is heavily traded by the smartest operators in the world, Bank of England included.

The Pounds dived to almost 1.35USD in Jan 2011 from over 2.11USD in Nov 2007. It barely recovered 50% of that loss (1.70USD)

Since then, it performed an oscillation around the 1.58USD fulcrum. We are still there now, in May 2012.

This time, given the temporary weakness of USD against GBP, Gold, WTI Oil, Euro and Aussie, there might be a chance for the last rally.


SITUATION

See the 4 sideways waves in the monthly chart below. Hence there could be the chance for a short rally of 5 waves up, whereas wave 1 and 2 (in turquoise) have already occured.

The currency touched 4 times the channel in the weekly chart below and it's supposed to breakout on the upside, unless it follows through the support at 1.5770 USD. 

This is confirmed by the daily chart below which shows a reversal candlestick (Hammer) right across the 50% support.  

The "Hammer" of the daily chart above is confirmed by the "Kicking"reversal pattern of the 4hour chart below. Also, note the completion of the Elliott pattern 5-X-3-X-5 (called 5-3-5 by Elliott) that formed wave 2.

The 1hour chart below shows the breakout of the channel on the upside and the targets of 1.5930 USD and maybe 1.6050 USD  

 Surprisingly, the 15 min chart below shows that the pair could move slightly down before starting the rally

 This is confirmed by the 5min chart below in which the Pound didn't reach the support at 1.5860- 1.58040 USD yet.