Technical Analysis

Video: http://youtu.be/uOl4LvS87p4
Description:
Technical Analysis
TradingLounge’s Peter Mathers Technical Analyst outlines Technical Analysis and Trading Strategies using the Tradinglevels Pattern Recognition Elliott Wave as Trading Education.
This Day Trading report is only the lead in for the actual mechanical Robo Day Trading for the Australia, US and UK Markets, Forex Elliott Wave Technical Analysis is also available for a Free Trial go to http://tradinglounge.com.au

Dow Jones 12,359 -0.45%
Base Metals Positive
US Gold: 1617
Oil WTI: 101.87
Copper: 342
US Dollar: 81.59
EURUSD 1.2715
AUDUSD 1.0225
Dow Jones CFD 12,365
S&P500 CFD: 1278
FTSE 100 CFD: 5637
SPI CFDs 4113

Welcome Back
It was great to have some time off and we haven’t really missed any main moves in equities, so all is well. The European dilemma will override most other events and this problem is far from resolved as we can see in the Euro, the driving factor in my uneducated opinion on the matter is simply when the EU drafts new regulations for being in their community, these new rules will have to be enforced and here in sits the problem, the enforcer will be the catalyst for strife.
Last year we turned our Robo trade management method into a Trading Strategy with reasonable results, therefor more attention will be focused on the Robo this year, with better courses and services, late last year we started the US NYSE and Nasdaq, this year we will look to add the LSE UK so we can set trade up around the clock.
Website, last year I was toying around with other website models, so in the first quarter this year, we will be adding a social platform, essentially you can talk to other traders who use the TradingLounge, there will be forums, groups, blogs, trader profiles, you can post charts videos and so on.
We have also been working on a web based charting program it’s very basic but handy with 20 minute delayed data, indicators and stock scanning I will work on it through the year..


CFD Commodities

US Gold CFD: 1617
Technical Analysis: Viewing the Daily chart there are three possible Elliott Wave counts, two for the downside and one to the upside, it’s important to understand these counts, as the market unfolds we will be eliminating the counts that don’t fit. I will point these counts out in the video.
TradingLevels, the main game as support or resistance is the MediumLevel (65) 1,650, we would not go long unless the price finds support on 1,650. The current price of 1,617 is very close to the Fibonacci number 1.618 so day traders can use the 1620 as support or resistance. The current move up from the 1520 area to the 1630 is a trend that appears complete, in that trends like correction have a being, middle and end and we can see the price pattern above the 1600 to 1630 has overlapping wave structures which is a sign of weakness, so we should naturally expect a correction of the move up, the support would be 618 retracement or around the SG2 1565|1572|1580 expect and abc zigzag correction at least. On our Elliott Wave charts this move up is a wave four retracing back the fourth wave of one lesser degree, this move up is also only Wave (a) of the correction
Strategy, would be to wait for the price to correct the current trend up, after the correction you need to work out if the 1600 becomes support or resistance. The outside triggers would be long if 1630 (SG1) becomes support or short if 1572 (SG2) becomes resistance.
The other important point with wave fours is that they can get complicated, choppy and they are not the structures to trade. Silver may be the better option to trade as you can work with TL3 30.00
Sliver Same - Add to short when 29.00 becomes the resistance then more so with a failed retest as resistance for MinorLevel mTL8/ 28.00 other numbers 27.72 and 26.50 then 25.00 the MediumLevel to cover shorts.
Oil WTI: 101.87
Technical Analysis: Above TL1 100 is a positive market.
If you were to go long, then work Group1, scale in starting at the pivot 102 as support, expect a reaction at 103 and if the prices are to go higher then expect the price to fluctuate at 103, testing and building support on 102 and eventually developing support on 103 once and if this occurs then add to the position and take profit at 105.
The 102 is the critical support and resistance above 100, if the 102 cannot find support then it’s back to 100 and 98.
The Elliott Wave count is for higher ground, however the price is testing 100 for support and this process needs to continue, but support on the 102 and more so on the 103 top of Group1 is the catalyst for using the Day Trading Robo on the long side of the energy sector
Base Metals

US Spot Prices (in l/b)
US Copper: Last: 3.43+
US Nickel: Last: 8.48+
US Zinc: Last: 0.83+
US Aluminium Last: 0.83+
Copper CFD: 342
Technical Analysis: The move up from the 15 Dec, is much the same as the AUDUSD, it should be pointed out that there is an alternative count for the AUD and that is on the 4 Hr chart the current Wave 1) can also be the top of a rally an abc for a larger Wave E, we will work through this alternative count over the week ahead, but it does reflect back in Copper, so we could say while copper stays above the 330 the 72% retracement level then Copper remains positive. I will talk about this in the video so we are all on the same page, the AUD Copper and SP500 should all fit together. The LME Copper needs to stay above 7,200 (72) to remain positive which I think is unlikely, the 2011 Sept rally pattern until now is likely a wave four correctional rally retesting 8000 (TL8) I would expect 6500 as the wave five target.
Any positives coming from base metals would need to see the CRB Index develop support on 300 TL3 it is currently testing it in a series of tests, but will it hold over the month ahead is what we will be observing, the precious metals will be part of this mix.
My bias is short for Copper but this means we also need to see the AUD Alternative count unfolding down
Forex

Forex US Dollar: 81.59
Technical Analysis: TL8|80 is support, we were a little unsure of how the corrective pattern at 80 would unfold before Xmas but it’s clear to see on the hourly chart a simple abc correction on TL8. You can now work a positive pattern through Group1
We have always understood that the Dollar would push higher and the Euro lower, we can even see the EURAUD being the best trade short as these are the weakest and strongest currencies in play.
Any way the Dollar up and the Euro down is the main trend ahead. This also should make equities traders be aware of the divergence between the Euro and SP500 as these guys normally travel together, the SP hasn’t been as strong as the Dow… we should therefor soon see downside for the SP500 as the Euro moves lower.
If the SP500 is going to roll over and follow the Euro, then the AUDUSD will also roll over lower, the AUD has much the same wave pattern as Copper and copper/ base metals should also line up with precious metals.

Forex EURUSD 1.2715
TradingLevels:
The EURAUD is and has been the better short.
The EURUSD has support at 1.25 from the Weekly trendline that said the Euro is in a large wave three down and old lows at 1.20 should be reached. In the bigger picture it is worth noting that the Euro is entering Minor Group1 1.30|1.20|1.10 to me this means the Euro will reach parity with the Dollar.
Elliott Wave: in the Wave 3 down into the 1.25 weekly trend line is about right
Trading Strategies: Scalpers; On the Open work the 1,2720 (72) be on the right side of this number, add on the failed retest of 1.27. you can see the Elliott Wave count on the 1 hour chart. The 1,2650 is a target low
Weekly Robo traders hold short.
Forex AUDUSD 1.0225
TradingLevels: The MajorLevel TL1|1.00 as support, with the current price working through Group1 101|102|103 if the 103 becomes the support then trade to 105, you may be able to buy lower around 101 at the end of Wave c, see the Elliott wave 1 hour chart, but after the ABC correction the safer place to buy is the pivot 102 scaling in and adding if and when 103 develops as support
Elliott Wave: You can see the Elliott Wave count on the AUD charts, however I need to point out that the last high around 104 can also be the end of an abc correction that started Nov 2011 at 97. So we will be talking about the current pattern about to unfold at 103, I will talk about this in the video so you understand both counts and at what point on is eliminated. Essentially the ABC pattern on the hourly chart, can also be 1,2,3… down?
Trading Strategies: Keep your trading within the sublevels until we work out the larger trend
Indices

Dow Jones CFD 12,365
Technical Analysis
TradingLevels: Support 12,272 and 12,300 resistance 12,500 the 12,400 resistance should be broken looking at the corrective price pattern above 12,300. The main development would be 12500 as support, this would put the price at 12,650
Elliott Wave: Once again we search for the top of Wave (2) and the current move up in Jan is subdividing into the later stages, we should stay diligent for the reversal
Trading Strategies: Continue to hold long above 12,272 SG2
S&P500 CFD: 1278
TradingLevels: The price is subgroup2 SG2 12651272|1280 and the price is above 1272 support this is a positive development, the next step if going long is waiting for retested support on 1280
Elliott Wave: The 1 hour SP chart states the pattern up nicely
Trading Strategies: Must have 1280 as support before being long for the short term to 1288
FTSE 100 CFD: 5637
TradingLevels: The number 56 is subtle but quite strong and in this case the 5600 so your ability to recognise support on this price the better. In the bigger picture the pattern from the year 2000 to now is simply working sideways with 5000 as the pivot, so the price being above 5600 delivers an overbought scenario in the bigger picture, so we will look for a top from 5650 to 5800 Elliott Wave can help refine this. I think the FSTE250 is also worth a look as it is dragging down the FSTE100 you can see this on the Daily chart, as the 250 has refused to move higher with the 100
Elliott Wave: Targets 5772 - 5800
Trading Strategies: I would be looking to sell short around the 5772 – 5800 but of course we don’t do that, we wait for the turn down and then study the retest, the retesting price and the volume to confirm the price action

SPI CFD 4113
Technical Analysis
TradingLevels: While the MediumLevel ML4 | 4000 is support the market is supported, however the larger pattern is presenting a bearish pattern, this would be confirmed if the price touched the 4000 or technically 4037
Elliott Wave: The move down from 4200 to 4100 is either the wave 1 or A, this is the same for the AUDUSD
Day Trading Strategies: If the top of Group1 4130 developed support then go long you could also start scaling in off the 4120 as retested support and trade to 4150 otherwise it’s a choppy ride into 4100 (Retail Figures 11.30AM)

Technical Analysis Summary
US and European markets are edging higher and China Shanghai are still in a solid trend down and Australia is stuck in the middle moving sideways and everyone is simply wondering if Australia will break to the upside or the downside?
The Australian market has psychological support on 4000 and this is the line in the sand, I say this basic observation because the current sidewards pattern sitting on 4000 since August 2010 is looking more like a Triangle pattern which, if so, would break lower through 4000, we can see many of our stocks are also trending down, there are some that are holding up like CBA but there are not many trending up like TLS NWS there is a general pressure building on 4000, the main catalyst for any rise would have to come from the Shanghai finding a low now, any break lower will create a lower low on the ASX200.

We do feel that the US and European markets will creep and struggle higher but any upside is limited, the Xmas Retail Figures for most countries are out this week, this would have been partly the driver for employment in most countries but once this is done and dusted further upside would struggle.

Our trading strategies would be trade smaller position sizes and shorter time frame such as the Daily Robo and be on the defensive side rather than the aggressive side when using the Daily Robo, meaning all the little aspect, such as if the closing passes the opening reduce and make that 30 rather than 25%

Notes on using Elliott Wave;
It’s important to trade what you see, rather than getting opinionated and fixed on a certain market directions with Elliott Wave, sure Elliott wave can be extremely helpful but it can be dreadfully wrong, I have understood this point well and this is why I place support and resistance i.e. tradinglevels first in my trading decisions, I have been using Elliott since 1983 and I have only met a few traders that can consistently take money from the markets using only Elliott analysis. If you’re patient and wait for the right set ups using Elliott then fine, but if you’re trading a lot using Elliott you are playing the guessing game and guessing the direction every day is not an easy task. If you can combined the Elliott theory pattern recognition with the tradinglevels and read the volume, then you are on the right track in developing confidence in what you see. You need to know and understand the exact price points for the entry, stop and exit before you place a trade, the more you can remove the guessing game and the emotional factor the more consistent your trading will become.

Trading Quote

Losing is lonely, but it can be the easiest way to get to know yourself.
It builds a base in which we never have to go below again.


Today's Financial Events
Time Currency Detail Forecast Previous

8:45am NZD Trade Balance -294M -282M
9:30am AUD AIG Construction Index 39.6
All Day JPY Bank Holiday
Tentative AUD HIA New Home Sales m/m 5.5%
11:30am AUD Retail Sales m/m 0.4% 0.2%
5:45pm CHF Unemployment Rate 3.1% 3.0%
6:00pm EUR German Trade Balance 12.6B 12.6B
6:45pm EUR French Trade Balance -5.8B -6.2B
7:15pm CHF Retail Sales y/y 0.6% -0.2%
8:30pm EUR Sentix Investor Confidence -23.5 -24.0
10:00pm EUR German Industrial Production m/m -0.4% 0.8%
12:30am CAD Building Permits m/m -3.1% 11.9%
2:30am CAD BOC Business Outlook Survey
4:40am USD FOMC Member Lockhart Speaks
7:00am USD Consumer Credit m/m 7.2B 7.6B
NOTES:
1. Check the Dividend & Reporting section for your stock on this site before trading
2. Prices may change as this Technical Analysis report is written from 3.30 – 6.30AM
3. Always think things out for yourself, we are only here to bounce ideas around.