as I debrief the action in the Pound vs the USD over the past couple days, I can say that, perhaps, I might have done one thing different … a couple days ago we called for a pattern complete in the US Dollar and that coincided w/ the top shown in the GBP. The GBP is not as prominent in the index as the EURO so I didn’t put that much weight into it. I had my entry order ready to pounce at the top red line (w/ a stop) and, simply, it never went up there …so far, this count has been working nicely. would really like the level shown right now on the Pound to hold to go up and attack the area labeled 4 … at that point, after watching price action, we’ll know where we are -1) at the start of a major leg down in the POUND or 2) a corrective move complete w/ one more rally up into our target area. I don’t know …
I enjoy this chart, not only for the amazing dynamics of the math and harmony but … I’ll tell you in a minute
Exact high on crude oil …
here’s why – it occurred on my birthday! 🙂 July 11, 2008 was the high on crude …
anyway, I have to admit that this scenario I am putting out on the blog is, perhaps crazy, but it’s an interpretation that you can pay attention to or not … the one thing I DO NOT LIKE is that first move up from one ….it sure looks like only 3 waves and, well, that can’t be right BUT in the context of the picture it fits so I am going w/ it. the other thing is wave 4 can’t overlap the end of wave 1 and well, technically, it does go threw there for a bunch of months but NEVER closes below so I’m working w/ that one also .. subjective interpretation so to speak.
so, below are the pictures that I”m working w/ … the thesis is we have a very powerful C wave in oil down that has just begun and one that will, ultimately need to bought – perhaps 6-9 months from now … enjoy.
“HOWEVER, in the context of an amazing 30+ year bull market in the fixed income world we have reached the “normal” and “standard” correction that has existed since the beginning of this bull market in the 80′s. We do have one more correction low that “could” happen so perhaps a little lower is in the cards. what’s really fascinating to me w/ regard to the FED FUND futures chart is it hasn’t budged. the traders of the world don’t think anything is going to happen …
Per my post a week or so ago on bonds the BUY of BONDS (sell YIELD) is the side of the market I want to be on ….”
so, the fixed income market has bounced and here’s my explanation of the “why”:
let’s face it, the trend is your friend,and after 30 years this “normal” correction was doing something amazing predicatable w/ regards to the long term RSI and the bullish support zones inherent w/in a bull market. go GOOGLE RSI bull or bear zones and you’ll find that the 40-50 level is BULLISH support and, guess what, that is exactly where the RSI (on a long term chart) bounced. (see chart below)
again, call me crazy but we could see another new high in the bonds … nothing in this chart tells us that the trend is over. HOWEVER, our first HINT that the trend is over is a MONTHLY CLOSE BELOW our support zone shown …
as an advanced pattern recognition trader (music, sacred geometry, fibonacci) none of the most recent price action is surprising at all….
had the extreme pleasure to fly out of Miramar NAS (before it was given to the Marines) in San Diego CA…amazing flying, period. one of the neatest things about Miramar was the “Octagon.” circular in nature, it was 8 fuel stations that you would taxi up to in order to fill up the jet for the next go … it was fun to sit back as your jet received 16,000 (no tanks) or 20,000 pounds of fuel and look at the power of 8 jets around the octagon. do the math, basically 160,000 pound of fuel being unloaded 15,20 times a day.
we showed how parabolic advances can move equal and opposite the preceding move (advance or decline) and how once parabolic it’s better to either tighten your harness or just get out …TSLA hit our target nicely (see post) and bounced yesterday. A friend of mine has been playing the short side of this moves using options and last week (thursday or friday) I told him to target 153-154 and take profit or some off the table. basically, come in for some gas, debrief and get ready for the next fight.
if you are a bull for TSLA, the 154-155 area was an ideal entry point because it represented the first BUY PATTERN to try and get into this amazing move. here’s the rub, this was a 20% correction (or so) in an very powerful and extended (straight up) parabolic advance, so I still believe caution is warranted. Particularly focus on a CLOSE below 174 after October 31. That will be the FIRST MONTHLY SELL signal since the stock IPO.
here’s the chart that I was working off … pay attention, study it and hit me via email if you have any questions.
i had the wonderful pleasure to teach, for a little over a year, the Capstone CMT III course…the positive and negative reversal arena usually made both me and the candidates head explode. so, if you want to read about it and catch some understanding, Google: RSI negative and positive reversal by Connie Brown.
in this case we have a negative reversal, potential, on the POUND vs the USD on a monthly chart … negative reversal is when the PRICE does NOT make a new high relative to a former peak and the RSI DOES make a new peak. Basically, price isn’t keeping up so a change in trend might be on the way ….here’s the chart:
Long Term Negative Reversal on the POUND vs the USD (potential)
when we move to the weekly I’ve added the “bearish zones” for the RSI and “THINK” this entire range has held the bearish range as shown and is characteristic of a very large 4th wave triangle that lasted 4 years. recent price action labeled (1) and (2) are the beginnings of a 5th wave that will ultimately take out 1.350 which forecasts a 2500+ pip move in the POUND vs the USD.
bearish RSI zones on the POUND showing how this could POTENTIALLY fit into the context of a 4 year triangle
where are we now? well, if you have been following, my target zone of 1.6320 ish never got hit and it was missed by 60 pips which is just too many pips to swallow right now. so, below is the count I’m watching that could rise us to that area … I have not included the bearish count because it gets too darn confusing (imagine that in Elliott Wave) but the key here is that the “was this the high” could have done it and therefore we are in a wave 3 of something ( :)) so using stops if trying to get long is highly recommended. If we can successfully defend the 1.6020 area and get some THRUST and MOMENTUM going up then perhaps the target will be realized. If we LOSE 1.5969 then I think the top could be in place and I’m going to have to work like heck to get into a move .. sounds easy on this blog, but in the real world w/ massive moves and swings and a 24 hour market it’s simply hard to do …
where we might be …
we’ll see and let me know if you have any questions ….
in our last post we discussed the importance of current levels on the dollar or the 78.73 level a little lower. in “counting terms” believe the dollar is carving out a major bottom in what can be coined an expanded flat corrective move. if this analysis is correct, I am expecting a major move on the dollar…
the EURO has completed a major retracement, the POUND needs a little higher or right in here, the YEN finished a sell pattern, the SWISS hit a weekly pattern (or perhaps a little lower to the .382) and mulitple other pairs via the USD are showing the potential for a major dollar low in place. what else?
Commitment of Traders (COT): Non-commercial large futures traders, including hedge funds and large International Monetary Market speculators, cut their overall US dollar long positions to a total of $692.8 million as of Tuesday October 1st.
Here’s the data in chart form …
here’s the dollar index using red arrows to show the BEARISH and the blue arrows to show the BULLISH positions. NOTE, at the extremes the opposite happened w/ regard to price.
now, when we take a look at the the EURO we’ll see a pretty amazing picture w/ the net positions shown but this time w/ a price of the EURO vs USD overlaid on top of the positions. here take a look …
note the price of the EURO vs the USD .. at extreme levels of BEARISH and BULLISH points, the price did the opposite. When the level of bearishness by the large speculators was extreme the EURO went up and when the level was bullish it went down. take note of our dollar index we have been following since the end of August …w/ everything being presented here and in the past, certainly looks like being a dollar bull in/around here is the side of the market to be on …
dollar index updated as of 9 PM EST 10/27/2013:
US Dollar Index Weekly
US Dollar Index Daily
here is the picture for the UUP w/ potential support points noted … also, believe if the low that we carved out on this chart is taken out by a daily close then all of this analysis is completely incorrect.
the emotions are controlled but elevated and then you hear the “fights on, tapes on” and you know it’s time to get er’ done …
not often used, but very very effective, is the term “GATE” and that means FULL THROTTLE and MAX OUT on the direction of the threat to ENGAGE and KILL
“Cobra’s GATE Barber 180/15/35K/track 360/FAST
COBRA: that’s your call sign for the mission
GATE: full throttle get max knots!
Barber: that is a “code name” for the reference point
180/15/35k/track 360 FAST
a predetermined geographic point positions the threat 15 miles south at 35K flying north at 1.5 IMN ….
heads up, some body is ready to pick a fight ….
you are pushed back into your seat as the full thrust and energy propels your fighter and you feel the THRUST kick in and, guess what, you have 4 really really hungry fighters looking for a fight ….
unless you have been there, well, you just can’t imagine the POWER and ADRENALINE rush … it’s pretty amazing.
here’s the rub …
the more you do it, the more you realize how much you have to CONTROL the initial euphoria, intensity, aggressiveness and REMOVEemotion from the 4 fighters that are, literally, streaking thru the sky at 1.5 IMN to KILL.…
after many many hours of the above I am more concerned w/ watching the formation, the gas, the weapons, the weather, the threat and CONTINUOUSLY evaluate if you are winning or losing.
