Asian Open / European Preview
3.13.2012 11.33 PM EST
Good Morning Fellow Traders
SPX500 (Cash): Bulls continue to prove their strong hold over this market. We are labeling 1341 as the end of a FLAT wave 4 and believe uptrend has resumed in wave 5 and we see multiple nests which needs to be answered. A drop below 1384 without making a new high tomorrow would concern but only a below previous high @ 1379.6 would imply that we have seen a zig-zag move in wave B. This ALT count would allow for a full retest of 1341 low to complete a FLAT correction for wave 4.
DAX: Rally from 6598 low is in 7 swing so far. We are presenting an impulse count which suggests a pullback in w.(iv) is due before a new high to complete a 5 wave rally from 6598. Ideally price should remain above 6966 but only below 6912 would confirm that the rally was in 3 waves and would allow for a retest of 6598 low to complete a FLAT w.((iv))
Oil: Oil continues to consolidate after facing rejection @ 61.8 fib of last week’s decline. Our revised wave count suggests that current consolidation is part of a bearish ((b)) wave triangle which allows for a sell off toward the daily uptrend support (currently @ 102.70) to complete an X wave before the rally resumes toward measure move objectives of 114 and may be even 121. A break of 108.16 would invalidate the bearish triangle count and expose 110.53
Gold: No change in outlook. Following a 5 wave decline to 1687 we have seen a 3 wave rally to 1725 and a 3 wave decline to 1663. Today Gold dropped below 1663 low and our suspicions of a running correction proved correct. We see more downside as long as price remains below 1701.60 level. 1621 & 1626 are levels of interest on the downside.
EURUSD: Cycle from 1.2620 ended @ 13485 and we believe we are seeing a correction of the entire rally. First leg of correction ended @ 1.3195 and after a corrective recovery to 1.3290 pair has once again dropped impulsively. We are labeling drop to 13077 as wave (a) of C and wave (b) of C ended @ 1.3192. Wave (c) of C appears to be underway. 1.2970 & 1.2991 are levels of interest on the downside.
EURAUD: Rally from 1.2348 – 1.2545 was in 3 waves. We are labeling the sharp pullback as part of a FLAT correction from 1.2519 to complete wave (b) of ((Y)) with (c) of ((Y)) up still to come toward 1.2700 region. Only below 1.2261 invalidates this wave count and would threaten early resumption of the downtrend or further consolidation / range trade in the form of a Triangle.
GBPUSD: Our revised wave count from 1.5991 suggests that first leg of the decline was in 3 waves (w) and ended @ 1.5785 and then we saw a running FLAT correction (x) to 1.5834 (secondary peak). This leaves us looking for another 3 wave decline, we view the pullback from 1.5601 as wave b of (y) and as price holds below the downtrend resistance (currently @ 1.5750) we are expecting another leg down in the pair to complete a double zig-zag correction. 15510 – 15522 are levels of interest on the downside.
AUDUSD: Drop below 1.0508 confirmed our suspicions that rally to 1.0666 was corrective (7 swings) and was either wave (x) or wiv of C. Either way bounce from 1.0477 once again proved corrective and we are considering a triangle which would result in a new low below 1.0477 to about 1.0437 and even 1.0360 (c = a) before the pair attempts to recover again.
USDCAD: We believe pair has completed a 5 wave decline from 1.0027 and pulled back to 0.9949 (50 fib) in 3 waves. Drop to 0.9889 might have completed an x wave and another 3 wave or 5 wave (in case of a FLAT) advance to test 0.9967 (61.8 fib) is expected to complete a double zig-zag or FLAT wave (b).
To conclude, Bulls continue to prove their strong hold in Indices as Stocks Markets continued the rally after FOMC rate decision. 1379.6 & 6912 are key pivots and bulls must defend these levels for the rally in these markets to continue. A drop below these levels would be concerning for the bulls and in such an event full test of last week’s lows can’t be ruled out to complete a FLAT correction. USDX remains strong specially against EUR & CHF with GBP, AUD, NZD & CAD holding firm. Patterns (Triangle) in these pairs look bearish and favor at least 1 more round of USDX strength. Gold broke below 1663 and proved our suspicions of a running correction correct. Further downside is expected as long as price remains below 1701.60.
Trade Safe & Good Luck
Daud Bhatti
Elliottwave Forecast Editorial Team
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