General Notes:
Today is another great example of why technical analysis is the ONLY way to trade these markets (for investing you need much more). As you know, we look at the screens for the whole US session, and when we left them yesterday night, it felt like Armageddon again.
A sharp bearish intraday reversal, China considering selling EURO stuff, the EURO crossing below the lows, and a general feeling of misbelief about the ability of the markets to find some footing here.
Now, we woke up and what we see? Green all over! The EURO up 130 pips, Dow futures up 240 points and a great positive divergence in many risky assets. What happened? Nothing.
None of the problems, and even the rhetoric attitudes changed. A small event happened: The EURO (in Asia of all places) decided that it wants to save the day, by respecting the lows (Support), and also decided to rally from here.
Fundamentally, people are still talking about parity but technically; the descent is more elusive every time: a small new distance on the short side with stronger and stronger counter trend moves. In our books, this is a bullish sign. Look out CDS raiders! The real short covering of the decade is on the way….
We remind you that we believe in the dismantling of the EURO, eventually, unless Europe becomes truly the united states of Europe. (Fat chance!)
AUD/USD Visual Trading Update
Price and Indicators Technical Overview:
The double bottom did hold and we see now the starting phase of a corrective move. Will it go very high? It depends on the EURO and China but also on the short covering action in the pair. A normal correction is between a third and two third, so they are the probable targets.
The recurring feature in many risky assets is the positive divergence between price and the RSI-ADX combination: When you see a double bottom (or a new low in price) with a positive divergence in the RSI, while we had already an extreme in the ADX (trend acceleration indicator), it is usually a very good sign for a change in direction (daily chart).
EUR/USD Visual Trading Update
Price and Indicators Technical Overview:
Short covering or not, it is still a fractured pair and we need to see some more upside action before we know that the trend has changed. Maybe double bottom here also? We look at the ADX for the main guidance here because the extremes in it (and the reversal) is showing that the pair could have reached the highest conviction level for shorting. A move up (conviction for the other side) could take a while…
The recurring feature in many risky assets is the positive divergence between price and the RSI-ADX combination: When you see a double bottom (or a new low in price) with a positive divergence in the RSI, while we had already an extreme in the ADX (trend acceleration indicator), it is usually a very good sign for a change in direction (daily chart).
USD/JPY Visual Trading Update
Price and Indicators Technical Overview:
Last time we said: "You can see the exact correlation between the stock (risk) markets and this pair. It is the "funding" carry trade game that is moving the pair these days and the technical's are quite bad. In principle, we should see a test of the lows at least. Maybe a double bottom was found here?" 88-95 is the very big trading range here. Look for the 4H chart to make some higher or lower highs and lows before deciding.
Charts Legend:
3 Price Windows: Main (Daily), Right Side (Up: 4 Hours, Down: Weekly)
INDICATORS:
Simple Moving Average (20): Green
Average of Average (9 weighted): Violet
Price Channel (20): Orange
Volume: Black
Daily separations: Black Dots
Support & Resistance price areas: Light Blue Areas
Trend lines and Channel Boundaries: Blue
Elliott Waves Counts: Black and Blue numbers
RSI (10): Blue, ADX(20): Blue
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