Market Forecast for 07-20-12

EURUSD: The Euro has another sell signal, after the sort of rally we were expecting. However, it may only have completed wave B of an ABC correction. For now, since we are likely approaching a wave 5 low of this intermediate wave down, use shorter-term charts and targets. See 240-minute chart for example (both daily and 4-hour Euro charts are provided below).

euro eurusd daily chart for july 20th

eurusd 4-hour chart with analysis

CHFJPY: The Swiss Franc vs the Japanese Yen is another text book example of our forecasts and their fulfillment. It appears to be completing a 5th wave low after the projected corrective rally. See the manual forecast lines for time-price estimate of the move on the chart below.

chfjpy daily chart

USDJPY: The Dollar-Yen has broken below our daily breakout point but not very strongly, and not yet below the weekly point. Stay with the shorter-term charts and trends.

The upcoming low in the Euro and intermediate high in the USD should afford a bit larger bounce to trade long for a while. We will again show the monthly camshell pattern in the EURO this weekend, so you will see that this pattern must NOT be broken on the downside for any rally to materialize.

US Stock Market: ND and SP500 broke out to the upside, but there was NOT an inside day, so the trade was not recommended to our retail clients, which would have reduced the stop loss risk. We will see if an acceptable pullback occurs or if it tops out in here. The wave count is still ambiguous and it therefore remains unclear if the US indexes will rally as the ED Interest futures contract moved (shifted) forward by 6 months (see chart below) has suggested and we've written about since May (and it has rallied). However, the real question is, will it continue to rally into the end of the year, or will the market fail this time and roll over here?  It sure seems as if the powers that be are manipulating it higher for the election. Again, any day now a big move will certainly clear all patterns up. With the tensions growing in the Middle East (Iran and Syria are at issue), the market should make a clear pattern move shortly. See Nasdaq daily chart below.

nasdaq nd daily chart

euro dollar interest rate futures chart

Gold (XAUUSD): See weekly and daily charts below for gold.

xauusd weekly chart

gold daily chart

SUMMARY: As stated Wednesday night, keep with the 30-60 minute trend and trade short-term pullbacks or retracements until the major breakout points are breached or the wave termination points are approximately reached.

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