Hi There Forex Traders!
Yesterday was quite a wacky market with many ups and downs during the FED chairman’s testimony on the economy. Today there is a similar testimony scheduled, so make sure to watch out for that news event!
Today we are going to take a look at a couple of currencies that are at an interesting spot, make sure to check it out. Also take a look at these great articles from Tim and Tony, and the video from Nathan:
The Golden commodity has been in a freefall for quite a long time now and we have been covering that gigantic fall ever since it developed at the beginning of this year.
This author was a major bear during the first 6 months and tried to show good trade setups on numerous occasions in his articles. Hope you managed to catch a few pips! Today is no different.
Of course the commodity is in a different stage (Elliott Wave) of its development, but I am expecting yet again one more fall for the XAUUSD and it could happen soon: maybe this week or otherwise next week.
Here are my observations on XAUUSD:
1) The gigantic 2 day free fall on April 12 and 15 from +/-1600 to 1320 was the most impulsive part of down trend
2) With that fact in mind, we can calculate and reason that all moves completed BEFORE the crash are waves 1 and 2, and all moves AFTER that crash are waves 4 and 5. With that said, we can safely conclude that Gold is in a wave 5.
3) MAJOR question is: is the wave 5 finished?
The ANSWER: probably not. When we analyze internal structure of the wave 5, then we are able to detect a clear wave 1, wave 2 and a wave 3 so far. Currently XAUUSD is making a sizeable correction for a wave 4. Once this is finished, there should be – at minimum – a wave 5 of wave 5 remaining.
4) LIKELY TURNING SPOT: the usual level for this wave 4 to finish and this wave 5 to start is at the 382 Fibonacci retracement. Second most likely spot is either the 236 or 500 Fibonacci retracement level. Yesterday XAUUSD briefly tagged the 500 Fib level at 1300.65 and price went spiraling down.
5) INVALIDATION LEVELS: the maximum retracement should be the bottom of the wave 1 and the 618 Fib at 1330-1337. Any price movement above this level would make the analysis different expected, and maybe invalidate the setup and analysis. Any price movement above the top at 1420 would definitely invalidate the entire thought process displayed here above.
6) TARGETS: the -0.272 target at 1114 is the most likely target for the wave 5. The conservative target is in fact the bottom at 1180, but considering the character of the entire wave 5 structure so far (not moving slowly), a break of the bottom seems likely. There is even a slight chance of reaching the -0.618 target at 1030, BUT that would imply that Gold can break the 500 Fib of the entire bull run at around 1080-1100, which is now a major level of potential support and I do not see that level being broken easily.
7) ALTERNATIVE COUNT: there is a probability as well that the Wave Green 3 has not yet ended and that in fact Blue wave 3 of Green wave 3 ended where Green 3 is mentioned in the screenshot. In that case, we are currently in Blue 5 of Green 3 and the commodity would still need to finish a Green 4 and Green 5, indicating another 2 moves down – not 1.
What do you think of this analysis? Do you agree? OR do you see it differently. Would love to get your feedback in the comment section down below.
The GBPNZD made a fantastic move up and down, but the downside pressure seems to have halted at the 500 Fib of the entire move up at around 1.8880. The currency bounced off that level very precisely and is diligently working itself to higher grounds. Besides the 500 Fib, there was also a very solid top and sideways zone to the left of the charts that acted as a grand support area as well.
Now that the Oscillator is back to the 0 line, the retracement could be close to finishing and a break to the upside could be in the cards. That is why I have a very thick green line on top of the tops. A break of the green line could indicate the upside continuation.
The EJ is at an interesting spot as well, as discussed 2 days ago. After breaking out of the corrective trend lines (black and dark red/brown), the currency remains above the uptrend line (green) and is now challenging the potential head and shoulders resistance level of 131.10 (red line).
A break above that price level would indicate that this particular chart pattern (H&S) will most likely have no affect on this currency pair. That means that the uptrend has cleared a significant resistance obstacle and the currency cross might finally have the space it needs to continue up. It sure has all the hall marks: AO back to 0 line, massive up trend prior to the screenshot view, green uptrend line, broken resistance lines, and close to breaking major horizontal resistance line.
The targets are the conservative top at +/- 133.75 and the -0.272 target at 137.80.
Thank you for reading and sharing this article!!
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