Market Update for 09-20-12 – Part 2

EURUSD: The Euro reached its 60-minute systematic price target 1 on the short side, with the 240-minute price target being 1.2775 and the 50% retracement of that last leg up (we label a Wave-3 advance) being 1.2815, but we are using 1.2825 as the price target to be a little more conservative.

Note that the market is currently on the TMA Band center-line which tends to provide some support so we will likely get a bounce here.The 38% retracement level of 1.2905, to be exact, will converge with the 3-4 day upward sloping Andrews Pitchfork support line, Saturday, which means the market should find tradable support for an upside pop (at least), between now and Sunday evening, between the current price low of 1.29419 and our preferred initial support of 1.2900 to 1.2915 area.

The 240-minute automated price target for this systematic short-trade is at 1.2773 (red dashed line between the 50% and 62% Fibonacci retracement zones) where it converges with the longer-term 11 day Andrews Median Line. That target area should stop any down drafts for the next few days, should the Euro continue lower.

The big picture view on the weekly charts (see both weekly and 240-min charts below) shows that the Euro is closely following our manually drawn pattern originally published in July 5th, 2012 (if the EURUSD broke to the upside, which it did). The high on 09-17-12 tagged one of the downtrend lines. Which means we will likely have an inside price bar this week.
 
ACTION: Those traders short off 240-minute chart, consider exiting 1/3 to 1/2 of your positions here with trailing stops at breakeven or 1.2997, whichever is lower. Cover another 1/3-1/2 at 1.2915, if hit. Consider using 60-minute / 240-minute trends for the time being to direct most of your trading direction.
 
euro weekly chart
 
eurusd 240-min chart
 
S&P500:  The S&P500 240-minute chart (see below) hit its first systematic price target on the down side and an Andrews Pitchfork support line. This sets up both a buy and a sell breakout bar. Similar patterns exist in the NASDAQ (ND – see 240-min chart below), and the Euro STOXX50 index. The markets will remain vulnerable to potential shocks for the foreseeable future, which likely means that sometime between now and March 2013, and perhaps between now and early November, we could see a large downdraft in the market that sets the major top. We will focus on between now and the first 14 days in October since those days have often provided major tops or bottoms for 12 years; thus, we will soon be leaning more the the short side and recommending holding for trailing stops and longer-term price targets, rather than the short-term targets we are now using.
 
ACTION-1: BUY SP500 1453 stop to open, use 1443.35 stop loss (but, should the market break to the upside, with that upside bar being a small range bar or if the breakout bar reverses and closes below the prior bars close, consider a much tighter stop of 1446.6 or higher), move stop to break even @ 1457.55, close 1/2 position @ 1459.3 limit and trail the remaining position with Target 2=1479.60 limit out.
 
ACTION-2 (equally important): SELL SP500 1443.50 stop to open, use 1450 stop loss (but, should the market break to the downside, with that downside breakout bar being a small range bar or if the breakout bar reverses and closes above the prior bars close, consider a much tighter stop of 1446.6 or less), move stop to break even @ 1439.50, close 1/2 position @ 1436.55 limit and trail the remaining position with Target 2=1418.45 limit, or consider holding the short if the market is accelerating lower.
 
sp500 stock index chart 240 minute
 
nasdaq nd index 240-minute chart
 
STOXX50: See chart for breakout and targets since this could breakout before I can write up the details. If more time allows, I'll post the exact numbers, which are at the upper left of the chart anyway (see chart below).
 
euro stoxx50 240-min chart
 
The GBPUSD also has a buy/sell pattern trade setup. See chart for details. If more time allows, I'll post the exact numbers, which are at the upper left of the chart anyway. In most of these pattern trades, I give the market a little extra room as a fudge factor. You may wish to do the same for your entries (see Cable chart below).
 
cable 240 minute chart
 
NOTE: When I have time to draw additional lines to the automated lines, the horrizonal lines are the breakout points, the next closest lines are the price to move the stop to breakeven, then there are 1-3 price targets.
 
Cheers!
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