Three Charts Suggesting a Top in US Equities and in Junk Bonds, and the Resumption of a Huge Move Up in the US Dollar (by Sid from ElliottWavePredictions.com). Click on the charts twice to enlarge.
The attached charts show that US equities and Junk bonds are both at trendline resistance after possibly complete terminal patterns, and the British Pound appears to have entered intermediate (black) wave 3 of a downward thrust from a 4-year long triangle vs. the US dollar.
Elliott Wave Analysis of the GBP/USD Currency Pair by Sid from ElliottWavePredictions.com. Click on the charts twice to enlarge.
Since my last free post about the British Pound on January 10, when the pair was at 1.6166 and I suggested that a very sizeable move to the downside was imminent, Cable has moved southward by over 1300 pips.
More recently, since the March 12 low, the pair has been in an upward correction. It appears that GBP/USD may be in the final stages of finishing an upward 5-3-5 zigzag, with wave C pink likely in the final stages of finishing an ending diagonal. If this interpretation is correct, Cable will rally to challenge the upper diagonal trendline extending from the extremes of waves 1 and 3 green. Ending diagonals can truncate, but typically will “throw-over” that line slightly. Since the diagonal is contracting, wave 5 green cannot be longer than wave 3 green was, leaving a maximum for wave 5 green at 1.52447.
Despite the brevity of the proposed correction, considering the longer term count that the Pound is in a thrust out of a 4-year-long triangle, this could mark the end of wave 2 blue, and the resumption of an even more aggressive section of the proposed 3700+ pip crash, the wave 3 of 3.
Sid
http://ElliottWavePredictions.com
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Elliott Wave Analysis of the GBP/USD Currency Pair by Sid from ElliottWavePredictions.com. Click on the chart twice to enlarge.
Before chasing today’s huge move in equities to the upside, one might want to consider the pattern in the British Pound. The triangle that started in January 2009 has managed to last almost 48 full months now, but is still clearly discernible on the weekly chart. The movement up from the black wave D low in January 2012 is choppy, overlapping, and clearly corrective. The pair has already plummeted 115 pips from today’s high, creating a huge bearish pin-candle. Today could easily mark the end (finally) of the triangle, and the expected terminal thrust to the downside is a whopping 3691 pips, based on Elliott’s triangle measuring technique. This would equate to prodigious US Dollar strength (when compared to other major currencies) for most of 2013 . . . not exactly a bullish sign for US equities.
Sid
http://ElliottWavePredictions.com
P.S. A note to all EWP ScreenShots enrollees this week: Due to the markets being closed yesterday, I will be posting this week’s mid-week ScreenShots tomorrow (Thursday).
EUR/USD and GBP/USD Elliott Wave Update by Sid from ElliottWavePredictions.com. Click on the charts twice to enlarge.
Even though the wave count in my last EUR/USD post was not invalidated, it came so very close that I revisted all timeframes on both the Euro and British Pound, and here are the results.
Both the EUR/USD and GBP/USD currency pairs have been carving out apparent triangles starting way back in late 2008. The triangle in the Pound, when looking at a weekly chart (shown below), has much cleaner “look” to it, with wave E creating an obvious “three”, and retracing almost exactly a very common (and relatively deep) .707 of the previous wave D. It appears most likely that wave E ended in September of this year.
However, the triangle in the Euro is less tidy, with a wave E (as I have been counting it) ending all the way back in March, retracing only .382 of wave D, and not lasting near as long as the wave E in the Pound. The alternate count in the Euro (also shown on the weekly chart below) is that wave D ended in July, thereby forming a “flatter” triangle, with wave E yet to complete. The .618 target for wave E in this alternate view is all the way up at 1.3832.
This brings me to my main point. Since wave E in the Pound already lasted proportionally long enough in comparison with the other waves in the triangle, and finished (back in September) with a fairly deep .707 retracement of wave D, if the Euro was to rally from here all the wave up to the alternate 1.38 area, there likely isn’t room enough for the Pound to rally in a similar manner (against the US Dollar) without invalidating its triangle by moving above the extreme of wave C at 1.6746. So, when simultaneously considering the triangles in both the Pound and the Euro, I’ve been thinking, and continue to think that wave E in the Euro did, in fact, end back in March. This is why I have leaned heavily toward a bearish bias on the Euro for many months.
The rest of the Euro story is told on the daily and 360-minute charts below. I reworked the Euro wave count up from the July low today, and because my S&P-500 wave count expects a bit more rally (up to 1441, but not above invalidation at 1464.02), upward movement in the Euro is likely incomplete, with a final green wave 5 due next. The upward target zone for green 5 is fairly large, because 5th waves can truncate or extend. This leaves a target zone for the end of the upmove in the Euro somewhere between 1.31 to 1.3228. Movement below 1.30155 would indicate that a top for wave 2 black is likely “in”.
