Are you sure the rally will continue?

Better than expected GDP announcement on Friday gave the market something to be happy about. S&P rallied to new two month highs reassuring bulls that the uptrend is back on track and the worst is behind. Eurozone fears were wiped away by the announced alertness  of ECB officials. Intervention will be certain in order for EURO to survive and prosper. 

Technically speaking the market continued its bounce that we were expecting and continues to trade inside our sideways trading range. Now that the market trades around the upper boundaries where strong resistance is found, traders should take their profits if not take a bet for another decline. From the elliott wave perspective, the market from June lows has not done any impulsive move that would counter the April-May 5 wave decline. The only bullish pattern that might explain this overlapping upward move from June lows, is the existence of multiple one-twos. This is my alternative wave count. 1325 cash would certainly be the stop for any long position in my opinion. Bears definite stop is 1422. However a move above 1400 will be an early sign that bulls are winning the upper hand and that new hghs lie ahead. Bears will regain strength after the break of 1353 and 1325.

Will AAPL fall from the tree?

Apple’s sales for the third quarter missed estimates due to weakness in European economy and a pause in iPhone sales ahead of the release of a new version. Following the dissapointing third-quarter financial results, AAPL has dropped to 570$ after the announcement.As depicted in the chart, AAPL is right on its longer term support. The rise from 522,18$ to 620$ does not look impulsive. This move could very well be an X wave. This corrective pattern will end with another downward movement towards 500-450$. The first sign would be the break of the support lines (gann fan and pitchfork). This could coincide with our bearish views on S&P as posted in my blog. Concluding our view is that 567-570$ level should hold if AAPL is to move higher both in short and intermediate term. This price level can also be a reverse point for ones' position as it can accelerate pressures towards 550-520$.

Thank you for taking the time to read my thoughts.

EURUSD could make a bigger bounce

Despite the pessimistic sentiment around europe and the fears regarding the debt crisis, EURUSD could have found a short term support around 1,2050. In the daily chart EURUSD is trending according to our expectations and has touched the middle pitchfork support. This could justify a big bounce towards 1,25. Using elliott waves we could say that we are at the final stages of the decline from February highs. However the move is not over yet despite the expected upward correction. Another new low below 1,20 is still a very possible scenario as a final 5th wave.

Taking a closer look at the intraday chart we confirm that 1,2150 has been a resistance as stated yesterday in my twitter updates. Staying above 1,2120 the market could be making a pause with this sideways movement. A break above 1,2150 and staying above that level would be my first sign that a large upward correction might have already started.  The move from the lows is in 3 waves and if wave 4 and 5 are not completed then this move would certainly be an upward correction and the downtrend will resume soon. 

Thank you for taking the time to read my post.

GOLD is topping or breaking out of the triangle?

Gold rallied yesterday approximately 20$. However nothing has changed raltively to our longer term trading strategy. Gold still remains inside the tight trading range and within the triangle limits as depicted on the chart. This could prove a good opportunity to sell as prices are close to the 1630-40$ resistance. We could witness another rejection at these levels and another downward move towards the lower support limit of the triangle that stands at 1550$. If however gold breaks out above 1630-40$, then a large move towards 1750$ could be expected.

My preferred strategy is to sell near resistance and place a stop reverse order if a break out occurs. Otherwise we could witness a large decline towards 1300 if 1550$ and 1525$ are broken.

Thank you for taking the time to read my thoughts on Gold.

DJIA elliott wave analysis

DJIA has made a triple bottom/top formation in the daily chart.If we want to be strict with our wave count, we cannot see any sign of impulsive upward waves from June lows. On the other hand the decline from April-May is looking impulsive. So taking under consideration only the daily chart a trader should have in mind the 12500 level as support and the 13000 level as resistance.

In the 60m chart DJIA has slightly broken below the trading range but bounced right back up. The decline looks impulsive but it needs to close below 12500 in order to confirm the downtrend. Concluding DJIA is still trading inside the trading range having held above support levels. This may be a good sign for bulls, but if the bounce is in 3 waves I would bet on another sharp decline below 12500.

Taking a closer look at the decline, we can label it as a 5 wave impulsive move. Thus bears could have the upper hand again. If this count is correct, then a 3 wave bounce is to follow towards 12750-12800. At those levels I would think of selling this index once again, with a stop reverse at recent highs and a bit higher.

Thank you for taking the time to read my thoughts.