EURUSD: The Euro has reached our 3rd profit target as well as the weekly Andrews Median Line Resistance. Tonight at this moment, the market has caused the BAND midpoint and upper resistance band to turn lower, indicating that we are at the top of a leg or with only one more spike up before this leg is complete and a larger correction should set in, even though it could move to 1.35 or into the 1.40's if during the upcoming pullback, the EURO's weekly automated trend line continues with a positive slope.
ACTION: Expect another pullback from here or at one more slightly higher high to short from. Then we will look to reenter long positions. See Euro weekly and daily charts below.
GBPUSD: As previously mentioned, cable is making its way to the 1.64 area, confined by the large wedge pattern top trend line shown in the weekly chart (see below). The monthly chart (see below) also appears to have had a nice breakout to the upside, with forecasted price targets in the 1.7289 area.
ACTION: Continue to buy pullbacks until 1.64 area. From there, we will assess the odds of a further breakout upwards to 1.7289, or a reversal back lower to the final E wave low at the lower wedge to complete an Elliott Wave based A,B,C,D,E triangular correction.
GBPAUD: This pair held the Andrews Pitchfork upper resistance line, then sold off as anticipated to the automated Band midpoint trend-line. Now the market has hit the same Andrews resistance line currently at the lower at 1.5550 area.
ACTION: While both automated and manual forecasts offer higher price projections, ease up on long position size until we see if this market can break the Andrews resistance and make a larger run of 10 handles or more, or it stops right here and consolidates its gains for a while. The easy trade is over for a few days. See the Pound-Aussie daily chart below.
SP500: The market index is also hitting an Andrews Line, this time the Median Line, which should provide enough resistance for a tradable pullback on intra-day charts. Markets typically bottom on horrible news, and top on great news when it is already overbought (can it get much better than the FED offering potentially unlimited funding?). Well, long-term, this is not a good sign, as it will ultimately force interest rates all that much higher because countries are already at odds with the USA's foreign policy and our monetary policy must scare them if they are dollar holders. This will kill the market over time.
ACTION: Look for a another pullback in here, then perhaps one more rally. However, this top could be it, so be extra nimble when on the long-side. See weekly and daily Standard & Poor's charts with analysis below.
We have again provided the "ED INTEREST RATE futures contract" chart Commitment of Traders (COT) Net long position report shifted (or offset) forward by 52 weeks against the normal timescale, scaled S&P500 that we have been posting occasionally since late May. This chart has essentially been a road map for what the the US stock market has been doing since its suggested low on June 4th, 2012 (right on schedule).
The chart (provided below) still suggests a top approximately 4 months after the June lows. If correct, that would put us into early October, and due to the fact that the markets have been tending to top, or bottom, in October or March, since the year 2000, and that other longer-term cyclical factors that we have been discussing are suggesting a major top between these two dates, we can say that there is a high probability that the US equities markets will likely top out either in the next 2-4 weeks (early to mid October 2012) or top in mid March 2013. One of our other longer-term cyclical forecast calls specifically for a March 2013 top.
The takeaway is that after March 2013, all forecasts we currently have will show lower prices until 2016, with another higher or lower low in 2022. So unless the FED can change the world, we still think a top in either of these two time windows is the way this will ultimately play out.
XAUUSD: Gold also happens to have hit its Weekly Andrews Median Line, also a 3-tap resistance trend line and reached all but one of our intermediate price targets. Gold then sold off $20/oz thus far.
ACTION: While both automated and manual forecasts offer higher price projections on the WEEKLY chart, the daily forecasts are showing a topping for now in here to perhaps one more stab higher, potentially to 1783. Ease up on long position size until we see if gold will have an $80-100 pullback where we would then likely receive another long signal on the daily charts.The easy money trade is over for several days. See daily gold chart below.
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