How to Handle Stalled Elliott Wave Counts

Last week we were looking for a continuation of the rally in the euro, which failed to materialize this week. As I write, it seems the Eurogroup is closer to allowing a Greek disorderly default. And, while that’s a possibility, that’s not what we are focusing on. Instead of focusing on fundamental developments, or only How to Handle Stalled Elliott Wave Counts

Elliott Wave Forex: The Trendline Breaks

Why does former resistance become support when prices push above it? And, why does former support become resistance when broken? There is one reason that this “reverse polarity” has ALWAYS been the case – human psychology, which never changes. The psychology has to do with an overwhelming desire to “take profits rather than losses.” Think Elliott Wave Forex: The Trendline Breaks

NZDUSD Trading Signal Was “Against the Odds”

...echoing in the background noise of a casino

One core flaw traders make is when they use support and resistance levels, trend lines or Elliott waves alone – in other words, only “Context type” of ideas. Others traders fancy near term price action or candlesticks analysis alone, and they miss the forest for the trees by relying totally on the right side of NZDUSD Trading Signal Was “Against the Odds”

Euro Ready to Launch, Says Elliott Wave Currency Forecast

Sailors signal the launch of an F/A-18F Super Hornet

As recently as March, many were calling for parity for the EURUSD. One Forbes article stated, “Like a hot knife through butter, the EUR has managed to penetrate its long-term medium target with ease (€1.0762). It’s near impossible to stop a runaway train…” While the Forbes article wasn’t making a direct forecast, it reflected sentiment Euro Ready to Launch, Says Elliott Wave Currency Forecast

Creating Inflation & Elliott Wave Currency Counts

Mark Twain quote: It ain't what you don't know that gets you into trouble. It's what you know for sure that just ain't so

This week the Federal Reserve’s mouthpiece at the Wall Street Journal John Hilsenrath penned a letter questioning, with an almost baffled tone, why people aren’t freely spending money. While I could write a list of reasons why they aren’t, suffice it to say that the economy isn’t nearly as good as those holed up in their ivory towers assume. And why is that?

The “Most Hated” Currency & Elliott Wave Forex Counts

There’s little doubt the yen will ultimately end up in the currency dustbin of history - Elliott wave forex counts

We’ve made no secret of our detest for Japanese monetary and fiscal policies, and the ultimate outcome for the yen. There’s little doubt the yen will ultimately end up in the currency dustbin of history, along with the Zimbabwean dollar and Venezuelan bolivar (The Wolf correctly called for Venezuelan hyperinflation in January 2010.). In fact, The “Most Hated” Currency & Elliott Wave Forex Counts

Burning Yen & Elliott Wave Currency Forecasts

Coins exposed to fire - Traders were awfully comfortable taking home USDJPY long

USDJPY Back when writing as an analyst professionally, I was taught, “Don’t bury the lede.” In other words, start with the most interesting facet first, and that’s why we’re starting of with dollar/yen. It closed at a new high today, since its all-time low, and we’ve often pointed out the importance of Friday closes. Traders Burning Yen & Elliott Wave Currency Forecasts

Monetary “Quacks” & Elliott Wave Currency Forecasts

monetary mis-management

At the end of last week’s post, we lamented about the sorry state of monetary policy today. This week, we’re going to show a few charts that show some proof that the “adults have left the room” when it comes to prudent monetary policy. There’s only one tool the current crop of central bankers know Monetary “Quacks” & Elliott Wave Currency Forecasts

Gatsby’s Punch Bowl & Elliott Waves

McChesney: take away the punch bowl just when the party gets going

This week, we’ll get right into the Elliott wave currency forecasts, since we’ve ended this week’s piece with a bit of a tirade against the buffoons that control monetary policy today. EURUSD The euro fulfilled our forecast for a push to a new high this week, which completed a five wave rally. The push higher Gatsby’s Punch Bowl & Elliott Waves

Combine Elliott & Wilder’s RSI For Clues

The Welles Wilder's RSI is a speed indicator that helps to pick the preferred Elliott wave count.

You’ll notice from time-to-time that we’ll have multiple counts on our charts. In fact, The Wolf likes to think more in terms of probabilities of counts, rather than either/or. For example, the top count will usually be 50-85% probable, with the top alternate 15%-50%, and the second alternate 5%-20%. Doing that has a couple benefits Combine Elliott & Wilder’s RSI For Clues

We’ve correctly called the early week USD weakness, especially against the pound and Kiwi. We tweeted out a bit earlier today that we’ve moved flat ahead of the US GDP announcement and Federal Reserve meeting that begins tomorrow. There’s still plenty of room to the upside under bullish Elliott views, but sometimes it’s just about managing risk and avoiding volatility. We’ll be looking to be dip buyers on GBPUSD, AUDUSD and NZDUSD.

When It All Goes According to Plan

Last week's Elliott wave currency forecast was accurate

We started last week with a question, “What’s more important, Signals or Elliott waves?” Going into the week, we didn’t write, “this week we’re super confident of the outcomes,” but sometimes, you’re just in the zone. We were able to catch both the early week dollar rally, using EURUSD, and the late week dollar decline When It All Goes According to Plan

Are Signals or Elliott Waves More Important?

Our weekly column that shows our Elliott wave currency forecasts is step one in our trading methodology – the Context. Steps two and three are Momentum and Signal. You have to start looking for opportunities somewhere, and for us, we build “themes” and weekly opportunities off of daily charts. But, just because we’ve generated an Are Signals or Elliott Waves More Important?

Currencies At a Crossroad

Potentially look for opportunities in some currency crosses

All of the pairs don’t agree on the near term path for the dollar. At a point in time like this, it’s best to view each of the pairs individually (as opposed to a dollar theme), and potentially look for opportunities in some crosses (EURGBP & CADJPY). Early week action may confirm several counts, and Currencies At a Crossroad

Fugazi or the Real Deal?

Is the dollar decline is a head fake or the real deal?

The US dollar’s trend isn’t so unanimous anymore, is it? We’ve pointed out ad nauseum over the past several months that the Fed may balk at raising rates, may raise them awfully slowly when it finally does, and that a Greek default doesn’t have to mean a weaker euro. This week’s manic/depressive action in currency Fugazi or the Real Deal?

The Great Euro Collapse

A photo of rubble - the damage is the done the EUR has collapsed

The euro refuses to stage any rally at all. In fact, most participants have become extreme in their thinking: Greece will exit the EU causing banking failures, deflation has ensnared the ECB and the US has “policy divergence.” Here’s the thing though, each and every one of those thoughts was also true six months ago The Great Euro Collapse

Time For Business Insider to Update Its Numbers

David Einhorn follows a second "guy"

We would like to welcome our latest Twitter follower, the esteemed David Einhorn who is the founder and President of Greenlight Capital, a long/short hedge fund. We are honored, humbled and motivated to continue to strive for excellence through promotion of our Context, Momentum, Signal trading approach for all of our Twitter followers, but David’s addition Time For Business Insider to Update Its Numbers

Clear 3-Wave Decline on 60-Minute Chart For NZDUSD

NZD banknotes

Here’s our Elliott wave currency forecast on the hourly chart for NZDUSD: I wanted to show some additional color on the kiwi, because we feel the rally has a little room to run. Here’s the details: First, we can see rallies a, c and a are all in five waves. Declines b, (x) and b Clear 3-Wave Decline on 60-Minute Chart For NZDUSD

The Dollar Wrestles for Control

EURUSD walking on the rope - illustration by Laszlo

Thursday’s reversal in the dollar from support leaves our larger dollar sell-off call at risk. Many longer term players we’ve spoke with have “taken advantage” of the recent dollar sell-off to get bullish again. Maybe we’re wrong here, and the low isn’t in place, but we see an ending move even if the dollar has The Dollar Wrestles for Control

What’s Wrong with the ‘Good’ Deflation Argument

Popular consumer product advertisements on deflating baloons

Great investors, and great traders, often ask the question, “What if I’m wrong?” A trader might ask, “Where should I put my stop loss?” While a great investor might ask, “How will my portfolio (60% stock 35% bond and 5% cash) perform if interest rates rise 1%, the S&P falls 20% or a recession occurs?” What’s Wrong with the ‘Good’ Deflation Argument

A Sideways Week Means Dollar Pullback Can Continue

A sideways, consolidating market usually means continuation. Here’s the tough part. Both the daily chart, and 240 minute charts have been moving sideways. The daily charts would suggest sideways equals continuation of the uptrend, but the shorter term charts suggest continuation of the budding uptrend. Generally we’ll defer to the larger degrees message, but in A Sideways Week Means Dollar Pullback Can Continue

Non-dollar Pairs Attempt to Lift

Sailor lifts weights during a squat competition - When does he reach the point of failure?

It’s not much, but it’s a start. That about sums up the ongoing counter trend rally in many USD pairs (EUR, GBP, AUD, NZD, CAD and CHF). We still believe that the longer term trend for the dollar is up, but a “reset” is needed to balance the market prior to the next bull wave. Non-dollar Pairs Attempt to Lift

A Chink in the USD’s Armour

Suit of armour image detail

You’ll notice a different look with this week’s “Wolf’s Prey” Elliott wave currency forecasts. As we get closer to publishing more than once per week, we’ve moved to the shorter 240-minute charts as our default time frame, which is ideal for The Wolf’s swing trading style. We’ll still publish our longer term charts from time-to-time A Chink in the USD’s Armour

US Dollar Trend is Unanimous

White water rafting on The Nile in Uganda

Markets are constantly changing. Currencies in particular move from a “trending” status, to one of “ranging” status quite often. Recall 2013, when with the exception of the yen and Aussie, currency market volatility was extremely low, and it paid to buy dips and sell rallies, as markets made little net progress. That changed in 2014 US Dollar Trend is Unanimous

Oversold, Another Word for Downtrend

A ban symbol

Oversold and overbought are two technical analysis words that I’d like to ban! The phrases seem to suggest that a stock, currency or futures contract really should not decline, or advance, anymore. In an overextend wave, however, we should not attempt to expect anything rational from the highly emotional driven price trend. Wave extensions are Oversold, Another Word for Downtrend

Canadian Bankruptcies Begin, Not Only in Energy

First, and foremost, we’re traders here at Trader Skillset. We don’t need stories, or narratives, about our trades – we use technical analysis. But, sometimes, if you get stories that back up your analysis, your conviction on a trade may lead to larger wins. Such as in USDCAD. We mentioned our USDCAD target of 1.1985 Canadian Bankruptcies Begin, Not Only in Energy

Dollar’s Run Turns Climactic

A mountain climber reaches top - on the brink?

On the back of Mario Draghi’s quantitative easing announcement, and a Canadian rate cut, the US dollar has become ever more popular, and the trend has become euphoric. A counter trend move is due, although it’s difficult to want to fight the trend without clear cut reversals. Wait for them to show up first. We Dollar’s Run Turns Climactic

Tomorrow comes the most anticipated announcement from the ECB since Mario Draghi’s notorious, “Whatever it takes” monologue. Many are spending time attempting to guess at a “proper” level of QE, and what more or less than that “proper” number will mean for the euro, S&P 500 and every other asset. To me, it just doesn’t matter what the ECB does.

Right now, the EURUSD sits a full 250 pips away from its 20-day moving average, which means a snap-back rally is due. At the same time, we have yet to see an impulsive rally from the low, so the trend remains down. How about instead, we focus our attention on something actionable, rather than something ambiguous?!!!

How about the very clear three wave decline in USDTRY for instance.

Lira Should Fall, USDTRY Headed to New Highs
Lira Should Fall, USDTRY Headed to New Highs

Our previous mentions of the potential currency or debt crisis, the recent lowering of interest rates and our tweets regarding the pair all reinforce our objective up towards 2.80. Rather than take a guess on the ECB and how the market will react, take a setup that has Context, Momentum and a Signal already present.

Swiss National Bank Cries Uncle

MMA style chokehold

What a week in currency land. The biggest story, of course, was the Swiss National Bank’s (SNB) realization that it’s not more powerful than the market. By removing the artificial peg versus the euro, it allowed the franc to strengthen, essentially admitting its mistake in creating the peg in the first place. Two items are Swiss National Bank Cries Uncle

Dollar’s Rally Stalls

A light aircraft stalls upward

We’ve been talking for a while now about looking for evidence of a turn in the US dollar. Friday’s action was almost uniformly bearish for the buck. The NZDUSD in particular, along with the Aussie, appear to be bottoming according to our Elliott wave currency forecast. There’s still room for a final Elliott wave move Dollar’s Rally Stalls

Four Ideas for 2015

fouréleaf clover illustration

Here are some long term charts that we feel will be a source of trading opportunities in 2015. It’s not a license to trade them blindly with no risk controls, but we do like these ideas. This piece is meant to highlight some technical, and fundamental, concepts we’ll focus on when looking for actual trades this year. We will apply Four Ideas for 2015

Monthly Charts for Perspective, Daily Charts for Trading

Welcome to 2015. We’re going to provide our long-term, monthly Elliott wave counts along with our shorter term counts to start off the year. This will provide some perspective for some of the counter trend rallies being called for. In addition, we’re going to discuss the difference between analysis and trading. Last week we wrote: Monthly Charts for Perspective, Daily Charts for Trading

Dollar Extends Gains as “Levitation” Continues

There’s still no evidence the larger US dollar rally is complete, although we do see that in NZDUSD. We’re not going to ignore reversals, although maybe the market is waiting for the calendar to turn 2015 prior to that. Right now, the meme is “the world is weak, the US is strong,” economically, and the dollar Dollar Extends Gains as “Levitation” Continues

Running Flats Abound, Create Clear Wave Counts

The US dollar rally is becoming a bit of a cliché, in part due to the Russian ruble’s collapse to start the week. However, by week’s end the Central Bank of Russia raised overnight interest rates from 10.5% to 17%, making it awfully expensive to bet against. Vladimir Putin told citizens to expect up to a 2-year Running Flats Abound, Create Clear Wave Counts

Signs of US Dollar Weakness

The week isn’t quite complete, but The Wolf will be traveling again this weekend, so this week’s Wolf’s Prey comes slightly prior to Friday’s close. EURUSD Prices saw a substantial bounce from the .618 expansion target from the wave (iv) correction. This is consistent action with our idea of a Terminal Set Up and larger corrective bounce Signs of US Dollar Weakness

Dollar Rally “Topping Process” Continues

The US dollar pushed to new highs versus most major pairs on Friday, leaving a lasting top elusive. It seems people are of the belief that the economy is improving in the US, and so rate hikes can’t be far off, and maybe they aren’t. Of course, according to the Federal Reserve, the economy isn’t Dollar Rally “Topping Process” Continues

Elliott Wave Currency Review

It can be worthwhile to step away from markets for a time as a way to refresh the mind, and come back with an objective viewpoint. The Wolf is on vacation, but thought a quick comment on the EURUSD was worth making. We’ve been talking about looking for a bottom in EURUSD, but the bounce from Elliott Wave Currency Review

US Dollar Rally Fractures

We are now seeing US dollar strength wane, and in some cases, reverse. Individual pair analysis now becomes more important than simply saying “the dollar will strengthen.” The dollar seems likely to weaken further versus NZD and AUD, so as we pointed out a few weeks ago, the “China slowing” meme is being reversed (see AUDUSD US Dollar Rally Fractures

Price is the Ultimate Source, WSJ is entertainment

Front page of the Wall Street Journal's October 26 edition

Before boarding a recent flight to Amsterdam, I grabbed the October 24-26 weekend edition of The Wall Street Journal (WSJ). Reading the news is quite out of the ordinary for me, a full time trader who relies almost exclusively on price action. The only reason I got my hands on the paper was solely to Price is the Ultimate Source, WSJ is entertainment

Sherlock Holmes the Great Trader

US dollar and a magnifying glass

A market analyst is a bit like a detective. In order for a homicide detective to make an arrest, he needs a body, a murder weapon, motive, physical and testimonial evidence. Just like a detective, making market forecasts is all about building a solid case based on multiple types of evidence. Trader Skillset uses Elliott wave analysis as our primary Sherlock Holmes the Great Trader

USD Strength Part of a Terminal Set Up?

Our post FOMC update mid-week shined a light on our thinking, and not much has changed. Look for strength in the USD to complete impulse waves over the next couple of weeks in some of our major pairs. Sentiment should reach extremes, as is the case AFTER extended moves have already been seen. Don’t fall USD Strength Part of a Terminal Set Up?

FOMC Ends QE3, and That’s Bearish for USD?

Today’s expected announcement, that the Federal Reserve thinks the US economy is in good enough shape to allow Quantitative Easing (QE) to come to an end, has many calling for extended USD gains. And, while we do indeed expect some near term gains, we think many newfound US dollar bulls are likely to be disappointed FOMC Ends QE3, and That’s Bearish for USD?

Dollar Strength Will Complete Impulse

Recall a couple of weeks ago when a mainstream business news reporter and a “famous” newsletter writer proclaimed, “The beginning of the USD bull market.” We mentioned at the time that it was ironic that someone could state that a bull market was “beginning,” considering the USD had been up for 12 weeks in a row (The “beginning” Dollar Strength Will Complete Impulse

USDCHF at Support, SNB Foolishness Ahead?

Clearly corrective action has developed in both USDCHF and last week’s favorite USDCAD. Other pairs suggest dollar strength ahead too, but some of that may be “terminal action.” USDCHF and USDCAD remain our favorite major pairs; could the Swiss National Bank (SNB’s foolish EUR/CHF floor) and oil price weakness (leading to USDCAD strength) come into traders’ focus coming up? USDCHF USDCHF at Support, SNB Foolishness Ahead?

US Dollar Breaks 12-Week Rally

Last week we pointed out that sentiment, and our counts, suggested a pause in the 12-week-in-a-row dollar rally. Specifically, we wrote, “there might be some further follow through to the upside early next week, but I’d bet against the US Dollar Index closing out the week with another gain.” That’s not to say we’re now dollar US Dollar Breaks 12-Week Rally

Currency or Debt Crisis in Turkey

A Turkish grunge flag - is there debt crisis ahead of Turkey?

The Wolf met with a very well respected team of London-based emerging market debt/currency managers in New York on Thursday who confirmed our suspicions about trouble ahead for emerging market currencies. At Trader Skillset, we use technical analysis above all else to determine Context, but sometimes understanding fundamentals can clarify and strengthen a previously held opinion*. According to The Currency or Debt Crisis in Turkey

How Running Corrections are Born?

Where does the market run when we see a running correction form

We often see sideways corrections being somewhat skewed in the direction of the preceding trend leg. For example, in a bull trend the market suddenly turns down for a couple of bars (wave A) then forms a marginal higher high above the peak (wave B) and when many expect price to return at least to the How Running Corrections are Born?

CAD in Trouble – The Wolf’s Prey Currency Review

Photo of a red maple leaf

FOCUS CHART OF THE WEEK:  USDCAD Last week we wrote, “A pullback would be welcomed now, since the larger corrective pattern, wave 4, is complete, and new highs above 1.1300 should be seen.” A pullback is what we saw this week, and with Friday’s upside reversal, it’s possible that we’re about to push higher in CAD in Trouble – The Wolf’s Prey Currency Review

Wolf’s Prey Forex Forecasts for Exotics, Yen & Euro Crosses

In the weekend edition of the Wolf’s Prey we detailed the longer term Context for the major currency pairs. This time, in the special interim edition we’re going to go through our weekly charts for some of the euro crosses, yen crosses and exotics; EURJPY, GBPJPY, AUDJPY, EURGBP, EURAUD, USDNOK, USDMXN, USDZAR, USDTRY is in discussion.
The article is available with TraderSkillset Free Membership. Sign up today.

Major Forex Pairs’ Daily Context

one dollar note - in charts we trust

Last week we covered Trader Skillset’s longer term views in the majors, which are basically unchanged this week. Now we’ll begin to drill down to the daily charts where we can identify more swing trading opportunities. EUR/USD Prices found support this week, arguably at the wave (iii) bottom. It’s entirely possible that the current bounce is Major Forex Pairs’ Daily Context

Yen Weakens Again, More to Come

illustration: JPY bank note detail with zeros

We’ve talked about the bigger picture yen count before. Mainly that a major bull market in yen (bear market in USDJPY) was completed at the 2011 low. Now, I think that the new bull market is headed to the 125-150, and beyond. A portfolio manager friend of mine has a target of “infinity” for yen Yen Weakens Again, More to Come