EURUSD: The Euro sold off from out systematic trend exhaustion signal. We now expect a counter trend rally as the USD traders take some profits.
ACTION: Short term traders can play the long side today; swing traders will be looking to go short on this rally once 240 minute charts get overbought. Be looking out for that because it is likely to happen over the next several days. See daily Euro chart below with analysis.
USDCAD: The buy from last week on this currency pair has worked out perfectly.
ACTION: EXIT at market. We will look for a buy on a pullback, perhaps to the 1.003 area or lower. We will let you know. See USDCAD 240 minute chart below.
XAUUSD: Gold broke to the downside from the compression pattern mentioned on the 02/08/13 report as either a long or short breakout possibility. We now expect lower prices to 1633 and 1622. Stops should be at break even. Short term traders trail on 240 minute stops. See daily chart below.
S&P500: The S&P's trends are all still up as of 6 AM EST on the 240 minute and daily charts (see daily S&P chart below). However, with each lower momentum high, we are seeing more and more price and volume divergence. This market is skating on thin ice.
We are still waiting for the 240 minute trends to flip to the downside as we are within time price window of the March 2013 Cycle crest. That does not mean the markets will top then, but they could around that time, which would be any week or day now. We are being cautious on longs and looking for the big sell that is lurking in the bushes. When the 240 minute trends roll over, we will be there ready with those signals.
SUGAR: (mistakenly said Wheat on 02/08 report): A huge and declining wedge pattern has been unfolding since the January 2011th high of 35.97. These wedges usually get resolved to the upside which would mean a measured move high greater than or equal to the Jan 2011 high of 35.97. Conversely, occasionally these patterns break to the downside. Breaking 17.40 to 17.20 would likely portend a massive drop because of the size of the pattern. Thus, we suggest straddling both sides with orders.
ACTION 1: LIGHTLY BUY @ 19.03 stop to open GTC (good-till-cancelled), use 18.03 initial stop loss. move stops to breakeven at 19.60.
The market would have to get above 21.75 to confirm a long-term breakout up with targets potentially to 35.95 or greater. We would be happy to see 29.00, the 62% retracement level of the entire pattern and 32.13 (but use 31.98) which is the 78.6% retracement level.
You may want to add to the position at 20.02 and 21.77, which would clear out much of the overhead resistance.
ACTION 2: LIGHTLY SELL @ 17.40 stop to open GTC (good-till-cancelled), use 18.67 initial stop loss. Move stops to breakeven at 16.07. Consider selling more at 17.20, sell stop to open. Long-term target would be around 7.80 to potentially lower. Weekly sugar chart is provided below.
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