Market Forecast for 12-12-12

I am glad we are getting this forecast out on 12-12-12. The next date three numbers will align on the Gregorian calender is January 1st, 3001! That means this must be a special report!

AUDJPY: The Aussie-Yen rallied out of the automated triangle-the suggested corrective wave 4-leading to one last rally of this leg up. Now it is just past the measured move price target and right into weekly resistance trend-lines. We would expect a test of the trend-line, then a sell-off, then either the trend-line holds and it has larger correction lower or, after a shallow correction, it breaks out of this huge wedge pattern on the weekly charts and runs12 handles higher, into the upper 90's to par.

ACTION: If still long, begin to pare down positions and take some profits to await a correction or breakout for another long opportunity (see weekly and daily charts below with the complete analysis of Aussie-Yen).

audjpy weekly chart for 12-12-12

audjpy daily chart for december 12, 2012

AUDNZD: This Aussie cross is nearing our measured move downside price target from the breakout pattern sell signal. However, it has yet to have a correction, so if have have an inside day today (Wednesday), then place a stop 3 pips above Tuesday's high of  1.25725, else keep your trailing stop at the two-day high (currently Monday's high) + 3 pips, OCO cover at or near the horizontal dashed line target of 1.2436 + 4 pips so that would be 1.2440 limit. See AUDNZD daily chart below.

audnzd daily chart 12-12-12

EURNZD: This pair sold off without a correction and will likely be in a position within 24-48 hours for a tradable correction up from here or perhaps slightly lower, then up. After the correction, we would expect a continuation lower unless the correction wave structure and momentum suggests otherwise.

ACTION: Bracket Tuesday's range for a breakout. If lower, then likely only one or two days down with the potential for a key reversal up after a quick low. If  it breaks to the upside, then we would expect a 2-5 day corrective rally (see daily chart below).

eurnzd daily chart for 12-12-2012 with analysis

EURJPY: Euro-Yen is into the resistance target range of 107.89 to 109.10. Caution if long. We will be looking for a pullback for a potential breakout higher or the retest failure to go short from (see 240-minute chart below).

euro-yen 240-minute chart 12-12-12

S&P500: The Standard & Poor's 500 Index (US stock market) will almost certainly test its last major resistance between at 1437 to 1437.50 (where the Andrews Pitchfork upper resistance line is plus a fudge factor if it runs stops) before it could be in open water again. From this resistance level, the market will either top and begin the bear market or it will break, say, 1439 on the upside, and run up until late January to March, 2013 (see daily S&P graph below).

sp500 daily chart 12-12-12

ENERGY

OIL: Crude oil has held support while heating oil broke lower, in line with our forecasts. Expect a rally attempt in crude to test the 86.89 area, where it could break out up for a bit larger corrective rally. I am still bearish on it longer-term (2-3 months) unless 89 is exceeded on the upside. I think we will see 81.20, then a move into the 70's if the if the two-month low of 84.61 is broken on the downside.

ACTION: While we may have a corrective rally here, If 85 is broken, then consider a short for to at least 84.62 and perhaps into the 70s (see daily crude oil chart below with analysis).

crude oil graph daily for 12-12-2012

HEATING OIL: Heating oil got close to the 50% retracement level of the January to September 2012 rally.

ACTION: I still think we will see at least one more low before a larger corrective rally, but it short, lighten up here. We will reassess later (the daily chart is provided below).

heating oil daily graph for 12-12-12

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