New York Open
11.29.2011 09.29 AM EST
Good morning traders around the world. Last night we mentioned that a new high above 1197.9 would complete 7 swings and hence a 3 wave corrective move from Nov 25 low. SPX500 futures spiked higher following a better than expect Italian Bond Auction and reached an intra-day high of 1207. This could be the first leg of correction labeled W BUT if we get another high after corrective consolidation, that would make it 9 swings from Nov 25 low and complete an impulse wave labeled A/1. Implications would then be for 3 waves back to 1175-80 before higher again. Either way, we see more strength in SPX500 after a pullback from current levels or a new high. We believe this recovery in SPX500 could last into next week before the Index runs into a peak.
USDX got sold off during the London Session but the move down from NY high (79.35) – London session low (78.61) is in 3 waves, so we believe USDX has completed first leg of the correction as a w-x-y move from 79.68 with a flat x wave in the middle (79.10 – 79.35). USDX appears to be making an impulsive recovery from 78.61. While price remains above 78.61, we are expecting more strength in USDX which could last until tomorrow before the next leg down to end below 78.61. EURUSD is showing a very similar wave structure, where the move from 1.3211 is a w-x-y move with a flat x wave in the middle (1.3329 – 1.3284). EURUSD decline from 1.3440 is impulsive and we are expecting 1 more leg down to 1.3250-60 after a pullback before wave c/y up to end above 1.3440
Commodity currencies like AUDUSD, USDCAD and NZDUSD are showing 5 waves from their respective highs/lows which means more USDX weakness after corrective pullbacks. Gold structure is not very clear at the moment, we could still see another rally above 1803 to about 1830 to complete the correction from 1533 low. Prolonged consolidation above 1666-67 low would give conviction to this view but still we favor the bearish bias as long as the descending trend line (currently @1763) is not breached on a daily closing basis.
Like we mentioned last night, we believe USDX correction is not over yet and we are still expecting more USDX weakness and strength in SPX500 after corrective pullbacks and we think this Risk On move could last into the middle of next week.
Trade Safe & Good Luck
Elliottwave Forecast Editorial Team