Market Forecast for 02-20-13

EURUSD: The Euro popped up for a quick rally, almost exactly as mapped out in our chart, but a bit faster than I wrote it would be time wise. It provided 240 minute automated sell signals within the systematic downtrend indicators and also broke the manual HORIZONTAL RED breakdown line at 1.3326. The Euro is at a support area now. If it has an hourly close below 1.3257, there is a good chance for much lower prices, especially if it breaks the Andrews Pitchfork support line at 1.3195 (and rising) area. (See 02/05, 02/8, 02/15 and 02/19 recommendations).

ACTION: Short-term traders expect some support here for perhaps another multi-hour correction, but look to continue to sell short on intraday rallies as long as the 60-240 minute trends are heading lower and likely until the lower Andrews Pitchfork support at 1.3195 is reached. From there, we would suggest a more cautious stance until (and if)  the EURO has an hourly close below 1.3185; then you can start selling rallies again until lower targets @ 1.2885 area are reached, should that occur.

ACTION: Medium-term traders continue short, exit 1/2 at 1.3195, consider selling additional contracts on a break of 1.3185, trail stops to lower targets @ 1.3055 (likely a bounce to short again), and 1.2888, which is just above the automated measured move target. If still short, exit all positions if 1.2645 is reached, which is the 423.6% of the first reaction (swing) off the February 1st high. See Euro daily and 240 minute charts below with complete analysis.

euro daily chart 02-20-2013

eurusd 240 minute chart 02-20-13

ASIA: We have been talking about the Asia crosses forming either an intermediate top, and/or some pairs possibly being in a triangle formation that is considered a terminal pattern that precedes the final 5th wave up move in a bullish move. Watch for a break below the lower trend-lines drawn off the February 8th or 11th lows. The CADJPY and the CHFJPY appear close to breaking lower now.

GBPJPY:  The 240 minute trends are all down and this currency pair is short on 240 minute and daily signals with increasing downward momentum. If 142.75 is broken, expect a move to the 137.35 to 135.95 price area.

ACTION: If not short, SELL 142.75 stop to open, use 143.85 stop loss. Trail stops to lower targets @137.35 and 136.05. Expect some support at 140.90 to 140.21. Use caution in that area. See Pound-Yen daily chart below.

gbpjpy daily february 20, 2013

XAUUSD: Gold hit our initial longer-term target using the 240 minute chart, exceeded it a bit, and is now at the 100% of extension of wave (1) down from the October high. The action over the next 24 hours "may" complete a Wave 3 of a larger Wave (3) and provide another bounce to sell from.

ACTION: Medium-term and long-term traders use 1622 stops loss. Medium-term and short term traders should look to peel some off, preferably on weakness and continue to sell 60-240 minute overbought rallies until we have another systematic pattern trade. Gold daily and 240 minute charts are provided below.

gold daily chart for 02-20-2013

xauusd gold 240 minute chart 02-20-13

STOCK MARKETS:

SP500: The Standard & Poor's 500 index looks like it will surely have an outside bar reversal sell signal today. 

ACTION 1: SELL SHORT on intraday rallies, especially on 60-240 minute oversold rallies.

ACTION 2: For those who cannot watch charts during the day, SELL at the Market or SELL at 1510 limit (whichever is more comfortable), with a 1522.25 stop loss,  move stop to break even @ 1493.25. Initial short-term targets are 1470, then 1432. The WEEKLY CHART MEASURED MOVE TARGET IS 1345.50. Should the market break below 1440, the MONTHLY chart targets are 1346 and 1189, which is the lower trend-line of the expanding top/megaphone pattern that we have been talking about.

Of course, we do not yet know if this is THE top of the bull market (a giant bubble correction up) or just a top of this extended 3rd wave, which, if that is the case, the SPOOS (slang for S&P 500 contract that trades on the CME) would still have a nice sell-off anyway, but then one more high. Using a simple zig zag indicator, you can see that there are 13 swing points (turns or waves) from the December low, which is the exact number of waves needed to complete an impulse wave top, in the case where its middle wave–Wave 3–is subdivided into 5 swings or waves. Of course, 13 is also a Fibonacci number.  See S&P 240 minute chart below.

s&p 500 chart zig zag indicator 02-20-2013 13 swing points from december low

UK100: The Footsie (FTSE) also looks very toppy and provided us with a HANGING MAN candle pattern, which in this context is at least a short-term sell signal.

ACTION: We suggest selling at the market, preferably@ 6335 limit or better, with a stop loss at 6415. Move stop to breakeven point at 6316. Targets are 6178 and 5917 (GAP from December 31, 2012), if in fact this is the top of Wave 5, not just the top of Wave 3, as mentioned could be the case with the S&P 500. The daily FTSE 100 chart is provided below.

footsie ftse 100 index chart february 20, 2013

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