Market Forecast for 07-18-12

USDJPY: Compression breakout trade and a bullish Gartley pattern that could extend 140 pips lower and still be bullish, but we think the trade should be considered in either direction:

ACTION: Buy ( and sell) 3 pips above (below for the sell) the outside bar of 07/16/12.

If a breakout to the upside occurs, move stop to break even at 79.60, target 1 = 80.20, target 2 = 80.60, target 3 = 81.10.

If a breakout to the downside takes place, move stop to break even at 78.33, target 1 = 78.20, target 2 = 77.92. See chart below for Yen analysis.

usdjpy daily chart

Euro: The EURUSD should make one more low to complete a 5 wave down pattern and a potential bullish Gartley pattern will be ready.

IF it does not acellerate lower now, then the pattern could be complete and ready for a pop up as suggested by the Gartley pattern. For today, we favor the downside. See chart below.

eurusd daily chart

eurusd 4-hour chart

GBPUSD: You can see the HUGE diagonal pattern on the Pound Sterling, with the break out points and the moves it portends if there is a large breakout. For now, it may still fill the pattern up. The next 3 sessions should clarify that one way or the other. 

If it happens to break hard to the downside, do consider taking that one for its huge potential down. See weekly chart below.

gbpusd weekly chart with analysis

US Stock Market: The S&P500 is pressed up against the Upper Andrews Pitchfork resistance line. This is often a good place to go short with little risk. If this line holds for 48 hours, an acceleration lower is likely that could put us on CRASH WATCH again, especially if 1528 is broken on the downside. See Standard & Poor's 500 chart below.

sp500 daily

ND (NASDAQ stock index): Compression breakout trade; the trade should be considered in either direction:

ACTION: Buy ( and sell) 3 pips above (below for the sell) the outside bar of 07/16/12.

For a breakout to the upside: ONLY take a breakout to the upside IF there is an INSIDE DAY on 07/18/12.

If an inside day, place a  BUY stop to open at 2594,  move stop to break even at 2613, target 1 = 2628, target 2 = 2660 target 3 = 2728

For a breakout to the downside, we do NOT need an inside day. So, consider selling on intra-day rallies IF the 30-60 minute trend turns lower, AND, SELL on the daily charts at 2548 stop to open, move stop to break even at 2524, target 1 = 2479, target 2 = let it crash with trailing stops.

I am still very bearish long-term and think this pattern could easily start the ball rolling, if it does break to the downside and take out the low of 07/16/12.

If that happens, then CRASH WATCH is in effect! See ND chart below.

nasdaq daily chart with forecast

See other charts below for breakout points and projected paths and price target areas.

Gold (XAUUSD):

gold xauusd daily

Euro-Yen (EURJPY):

euro-yen daily chart

Cad-Yen (CADJPY):

canadian dollar vs japanese yen daily

Please leave us your comments and votes below.

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