Kiwi Dollars

A$ on track to dip below parity with New Zealand

By Stephan Cauchi

The Australian dollar is on the verge of a historic low against the New Zealand dollar and could even go below parity next year, according to foreign exchange broker ThinkForex.

Currently, one Australian dollar buys $1.049 New Zealand dollars – just above the $1.042 low reached in 2006.

“The currencies have always traded above parity since being floated so this will be an historic event,” said ThinkForex senior market analyst Matt Simpson.

The Aussie hold above parity was looking “increasingly tenuous,” he said.

View original post on Sydney Morning Herald

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BRENT OIL – ELLIOTT WAVE COUNT

Today’s close has now produced a higher high and a higher low which increases the chance of a bullish move unfolding.

Wave (iii)
Today’s close above b of (ii) makes me think we’ve seen the end of the Double Zig-Zag correction from the 127 high
If so, a likely target for wave (iii) will be back near the 127 high as this is also a 161.8% projection from waves (i) and (iii)
Wave (iv)
Wave (ii) retracement was a simple correction (ABC/Zig-Zag) so wave (iv) is likely to be complex (triangle, flat, expanded flat or combinations of)
However wave (ii) was quite deep at 76.8% so wave (iv) could be quite shallow (23.8%) – therefor I’m favouring a complex flat stalling around 121
Wave (v)
61.8% projection from (iv) is around 137
Please note I will need to do cycle analysis to anticipate timing as this EW is purely looking at the projection and retracement ratios as opposed to the timing of these events.
***

“Trade what you see, not what you think…”

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LSE:AFR – Breakaway Gap Confirmed

Quite a few bullish candles have formed across the FTSE today on high volume which confirms the Breakaway Gap on Afren.
This leaves 2 options on how to handle this stock
– Enter live at market tomorrow with a stop beneath today’s low, or beneath the gap (in case the gap may still be filled)
– Wait for a retracement towards the gap to achieve a better reward/risk – however your order may not get filled.
The thing to remember about breakaway gaps is they tend to mark the beginning of a large trend, so you could even use a simple buy and hold strategy with a wider stop. Seeing as mining stocks have a large impact on the FTSE then it also provides an insight into how the FTSE (and correlated markets such as US Indices, AUDUSD) may behave. I’ve also included a couple of other mining stocks below that may be of interest.

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GOLD – Point & Figure

– Gold has retraced to its intermediate P&F trendline.
– This leaves potential for a bullish retracement so I’ll be monitoring this chart to see if a bottoming pattern forms.
– A close below 1550 is bearish.

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ALOCOA vs ALUMINIUM

With Alcoa being a leading producer of Aluminium it shouldn’t come as too much of a surprise that the company has a well formed relationship with Aluminium prices.
– Last two primary tops of Alcoa provided a 1-3 month lead for Aluminium top
– Aluminium bottomed 1 month before Alcoa to provide a buy signal
– Both markets are within a downtrend so look out for either to provide the lead for a buy signal in 2012
– Relative strength should provide a clue here if it breaks its current downtrend line
– They currently correlate very closely (0.8 out of 1) so expect the correlation to drop once either Alcoa or Aluminium take the lead (historically Aluminium has bottom first)

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RIO TINTO PLC vs NICKEL

The primary uptrend from ‘09 produced some interesting signals once compared with Nickel.
– Whilst both were in a steady uptrend, the Ratio Line between the two would have quickly shown which market was most favourable to buy.
– Rio topped prior to Nickel on each occasion.
– Nickel broke its own trendline 3 months prior to Rio providing a very early warning that Rio’s trend may change – although in that time Rio also produced a lower high.
– The last two times Nickel topped the correlation between the two were near zero.
So there seems no clear leading signal – but the 2 markets do seem to work in harmony with each other which in itself is of use (ie Dow Theory). However, because both markets are currently in a downtrend the ratio line signals will be of no use as this is primarily a bullish tool. But should either market break their descending primary trendline then it may provide an earlier warning that the other market will also change its trend – and then the ratio line may be of use again to provide such signals.
These signals may never happen again… but I’ll certainly be monitoring these two markets next year.

Aerospace

TRADE: NMX2710 – Aerospace & Defence

Aerospace & Defence has produced an Evening Star Reversal pattern at a resistance level around 3157 for a potential short trade.

The 3 candle pattern is made up of a bullish belt-hold, hanging man and bearish belt-hold candles.

Looking at the stocks within the sector shows how the sector is littered with potential reversals patterns, so I find it more logical to trade the sector.

You could enter short beneath Friday’s candle, but I’ll set up a sell-limit to achieve much higher risk/reward (should to all go to plan…)

***

“Trade what you see, not what you think…”

Follow @cLeverEdge

USDCHF

FOREX: USDCHF

USDCHF weekly chart produced  a bearish engulfing candle and recent gains were rejected around a fibonacci cluster.

I’m currently short on this pair and posted a set-up recently on the TradeSecret forum and will continue to short any pullbacks.

The daily candle on Friday produced a hammer (bullish) so I expect a retracement before losses resume to test historical lows… and possibly beyond!

***

“Trade what you see, not what you think…”

Follow @cLeverEdge

Mobile-Telecomms

TRADE: NMX6570 (Mobile Telecomms FTSE350 Sector)

A slightly unusual trade for me – but I do like the multiple confluences of this FTSE350 sector to initiate a long position. 


I will be entering long above 3850 with an initial target of 4200. 

  • Closed above 50+200eMA
  • Broke out of descending trendline
  • Bullish divergence on MACD – signal line produces buy signal and crosses over zero line
  • ADX is neutral – ideal for a swing trade
  • Point & Figure chart has produced a triple top – buy above 3850
  • Sector has outperformed FTSE100 in recent weeks, despite under-performing since Feb 2011

SP500-Daily-Cycles

SP500: Update


SUMMARY


To quote myself from last week “I don’t see a quick conclusion coming from the current market”. Hmmm… Well that was a mistake! 

However we did see that vitial close beneath the 1260 for losses to take hold, and done with such force that the potential bullish symmetrical and and bullish hammer candle were quite literally obliterated on Monday after opening, despite opening with a promising gap-up. 

Monday’s trading saw the 200eMA get tested, but Tuesday rallied straight through this critical support as the markets witnessed the largest declines 2008. In fact losses were so rapid last week that we’re already close to reaching the minimum target from the head and shoulders pattern. 

Friday saw a critical 50% fib level tested but we closed the day just above it producing a long legged Doji. This is hardly a bullish  sign but represents the markets uncertaintly – personally I think the market is just catching its breath for another drop. 

So how long can we expect the bears to remain in control? 

The cycles are looking as bearish as ever but hinting a possible retracement. Weekly and Daily RSI have entered the oversold territory, so at best I anticipate a retracement before further losses and will continue to short any pullbacks. I don’t expect any gains to reach the 200eMA any time soon (if at all) but this will provide a solid resistance level, along with the previous swing low of 1260. 

If we can break through the fibonacci cluster my eyes will be set on the swing low of 1010.

CYCLES


22.1 Day
Centred  SMA
 
So it would appear the larger cycle has topped painting a bearish picture overall. 


MARKET BREADTH

McClellan
 Summation:
































I’ve been following the divergences between the large cap and mid-cap stocks US stocks since last year. The Russell 2000 is the most prominent.



0% (down from 40.49%)

 0% (down from 22.87%)

 0% (down from 7.89%)


SENTIMENT


1.23 (up from 1.0) – The highest level since March 2010


30 (Down from 69) – From just under overbought to just over overbought in 5 trading days

Closed at 32 but peak 39 on Friday making it the highest level since July 2010


TREND
Primary
 

SUPPORT & RESISTANCE


Fibonacci:















Resistance:









Support:


Fib cluster around 1100 – 1108 may provide support – of broken then I’ll look the swing low around 1010 (which is also near the 50% fib line)

1260: Weekly 50eMA 

1276: Daily 200eMA  

1255: Weekly Candle Marabuzo Line

1230: Daily Marabuzo Line




1188: Weekly 200eMA  

1170: Swing low 

1130: Pivot 

1100 to 1108: Fib Retracement  

1010: Swing Low 


PATTERNS
Reversal

















Weekly Candle:

Daily Candle:
















Using the distance between the head and neckline projects a minimum target of 1134.5.


Bearish Belthold

Long Legged Doji (Aka Rickshaw Man)
***

“Trade what you see, not what you think…”

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