Market Forecast for 08-30-12

EURAUD: The Euro-Aussie has reached our second price objective at the modified Schiff Median line @ 1.2150 area, after a brief day and a half correction that we forecasted. While this pair could still thrust up to its next target 1.2240-60 area, we are now looking to peel some positions off and wait for a pullback to reenter full boat. Corrections to below 1.1880 would likely negate a bullish view.

See daily chart below for two probable paths on this pair.

euro-aussie daily chart with analysis

EURUSD: The Euro is still partially long and with a new system long, after hitting our second target, then correcting as forecasted. Should the market continue up, the next price target is 1.2665, which would be a clear 5 wave advance with time and price proportion, if the Euro pulls it off to the upside.

ACTION 1: Higher risk day traders consider buying EURUSD pullbacks unless the current sessions low of 1.2523 is broken, which would then be a likely breakout to the downside. Exit longs @ 1.2665 limit, move stop to break even quickly and by 1.2620. If 1.2520 is broken, immediately sell intra-day rallies down to 1.2312, the target for any breakout to the downside.

ACTION 2 :  BUY EURUSD 1.2575 stop to open, use 1.2520 stop loss, move stop to breakeven at 1.2620, exit 1/2 position at  1.2665 and trail 40pips on the remaining in case it runs. From that target, I think we will then get the bigger sell off again. See the weekly and daily charts below with the complete analysis.

euro weekly chart

eurusd daily chart

GBPCHF: After a likely 12-36 hour selloff that should not exceed 1.5120, consider buying intra-day pullbacks. Should 1.5120 be exceeded, then sell intra-day rallies. See chart below.

gbpchf 240 minute chart

GBPAUD: is within our first target area of an mid to to mid bisect line and where the TMA upper band (in red) is currently at. Thus, if you are long this pair, caution is warranted. If it does run up, target 2 = 1.5490. See chart for likely market path. The weekly charts is suggesting that a larger rounding bottom may be forming (see weekly and daily charts below).

gbpaud daily chart

USDCAD: Loonie appears to be attempting a breakout to the upside from a small wedge price pattern. This should hedge any EURUSD long or USDCHF short position:

ACTION: BUY @ .99215 stop to open, use .9885 stop loss, move stop to breakeven at .9945, exit 1/2 position at .9996 limit, exit the remaining at 1.002 limit. Should market first drop to .9879, then one more new swing low would likely occur to below .9840.

USDCHF: is in the opposite position of the EURUSD. Should .9607 be exceeded on the upside, then buy intra-day pullbacks until .9750 is reached. Else, if .9540 is broken on the downside, stay with the shorts until .9467 is reached with your limit exit.

Notice the previously drawn manual forecast lines drawn on or around July 30th are still relevant for Swissy.

S&P500: The system is now short from 1404.50, with a stop at 1413.26, stop gets moved to break even at 1393.30, target 1 = 1376.80, target 2 is a hold for a potential crash moving into late October mid November. Should 1413.26 be exceeded, then a 5th wave top to above 1424 would be most likely. see daily Standard & Poor's chart below with forecast.

standard and poors 500 daily chart

NASDAQ: The chart shows a clean 5th Elliott Wave up pattern and some apparent selling distribution, known as a garbage top, into a Fibonacci resistance zone of 1.618 of the first leg up off the lows, June 4th low to the June high.

nasdaq stock market daily chart

The attached VXX volatility chart has yet to give a sell signal on the stock market, but could do so today.  With the VIX Volatility index in the 14 region last week, it is looking like you should consider buying some November VIX call options. It is worth a play here (see VXX and VIX charts below).

volatility etf vxx chart

vix volatility chart from 2008 to present

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