Daily Analysis

By: TheWaveTrading | Thu, Jan 12, 2012
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I am placing the Ending Diagonal option on a stand-by "mode".

There are no technical reasons behind this decision but I don't want to get ahead of the price.

Don't misinterpret it. I am still a firm believer that the pattern from the October lows is not completed yet but "marrying" the Ending Diagonal scenario would put a constrain on the upside potential of the counter trend EW pattern that price is unfolding from the October 4 low.

The main idea remains the same. It calls for a Zig Zag off the October lows. Therefore price is now involved in tracing the wave (C).

Where I want to remain open minded is on the issue of an impulsive or converging (wedge) wave (C).

So far price is within the limits for a wave (III) of an ED as long as it does not extend above 1310.44


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One of the main reasons behind my sudden "step back" attitude, as I mentioned this weekend, is the out performance of the US Banks:

"A key sector in the SPX is the Financials, and the out performance of the Banks from the November's low in addition to a potential impulsive price structure can alter the conservative target for SPX.

In this respect as long as price does not overlap below 20.08 it is reasonable to consider that price is unfolding the wave (3) of (C) and that price could reach at least the equality target in the area of 22."

At the moment the wave structure of KBE allows a "very" bullish outcome hence we have to wait for the next pullback in order to increase the confidence on the most likely scenario


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I am also monitoring closely the Euroxx 50, which at the moment is badly lagging behind but it does not have any indications of a top pattern in progress.


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Lastly, but clearly is the most important issue here is the EUR which is now in shaky grounds if it is trying to establish the bottom of the assumed wave (A) off the December highs then a wave (B) will need time to be unfolded and higher prices should be expected.

For the immediate time frame price has the opportunity of confirming a Double Bottom reversal pattern if it achieves an eod print above 1.2818


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TheWaveTrading

Author: TheWaveTrading

TheWaveTrading

Contact: If you would like to contact the author, you can e-mail him at thewavetrading@gmail.com

The main objective of this project is to share my views on several markets and asset classes.

In the initial stage TWT website will be a free service.

My main focus will be the equity market with SPX being the leader but I will also follow US equity sectors, major European indices, fixed income, currencies and commodities markets.

My analysis is based upon traditional Technical Analysis, Elliot Wave guidelines and investor sentiment.

My goal is to establish the most likely path that the price of a particular asset will undertake and profit through ETF instruments both on the long and short side and mainly with leveraged ones (2 x & 3 x).

The advantage of ETF investments is that it allows getting involved in equity indices & sectors, currencies, fixed income, commodities etc.

Therefore the main purpose of TWT will be to establish investment strategies regardless if the market is in an up trend or in a down trend, leveraging the chosen scenario while managing the risk by establishing protective stop losses.

Hence I will always define the risk, I will try to let winners run the wave and I will cut the losses if my strategy is wrong.

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