Technical Analysis

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TradingLounge’s Peter Mathers Technical Analyst outlines Technical Analysis and Trading Strategies using the Tradinglevels Pattern Recognition Elliott Wave as Trading Education.
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News
Stocks slid, sending the Standard & Poor’s 500 Index lower for a third day, Treasuries rose and the euro weakened as Greece tangled with European officials over terms of a second rescue package. Italy’s bonds slid and costs to insure Portugal’s debt rose to a record.

Commodities

US Gold CFD: 1732
Technical Analysis:
TradingLevels: Subgroup1 (SG1) 1710|1720|1730 if the price finds support on top of SG1 1730 then expect the price at 1750, if the 1720 (pivot) becomes resistance expect the price back at 1700
Elliott Wave: The bullish count, a pullback to 1700 then up. The bearish count, a top in place
Silver: Same as gold, with the bullish and bearish count, this is also the same for US Indices, we expected a selloff we can’t confirm if the selloff is a change in trend or a correction
Oil WTI: 99.10
Technical Analysis:
TradingLevels: Long with a break above 101 and short under 98.
Elliott Wave: The pattern we have been tracking is still working its self into a corner and will make a break this week either way. The last move down from 101 to the current low can be an abc correction, so any move up of this low try and work out if it’s impulsive (five waves) but the long trade is safest above 100 and the short trade is the 98 as the retested resistance. the wave count should now line up with US Indices
Base Metals

US Spot Prices (in l/b)
US Copper: Last: 3.82-
US Nickel: Last: 9.63-
US Zinc: Last: 0.95-
US Aluminium Last: 1.00+
Copper CFD: 380
Technical Analysis:
The trend up is seeing its first and expected weakness under 400 (ML4) it can come back to 372 as a wave four and wave fours can get complicated, so we should expect more than three swings, we are only seeing the first down now.
Forex

Question of the week: Will Eur and Gbp be a good sell this week, or Cad and Aud a good buy?
Hard to say right now, but it’s interesting how the price action unfolded through recent weeks and days. Both, cable and Euro could be topping out soon, as first impulsive wave (A) of II is looking for a low on dollar index. Well, on the other-hand Aussie and Cad are showing only three waves of retrace from recent extremes, so this pull-back could easily be part of a larger trend (lower USD).

US Dollar: 79.30
Technical Analysis:
As you know we have been tracking the Wave A (of an ABC correction) down, this Wave A has five smaller waves and the current bounce off 79 may be the end of the Wave A down, if this is the case then 80 will be retested. The bounce off 79.00 would be at minimum a small abc rally in three waves. Finding support on top of SG1 7930 is the key for any upside to SG2 7972|7980.
The Euro is doing the opposite and in line with SP500


EURUSD 1.3127
TradingLevels: A larger corrective patter is emerging across 130
Elliott Wave: The Wave A up is looking completed and the Wave B down is underway
Trading Strategies: Expect a bounce of 131 as it retests 132. Support on 13130 (Group1) would create short term longs to the Midpoint 13150 where the supply is, so exit, if the Midpoint becomes support then go long off that to SG2 13172.
AUDUSD 1.0580
TradingLevels: The price is working with 106. IF support is found back above 106 then you can think long and scale in above the 106 through the SG1 (10610|10620|10630) if the price can develop support on top of SG1 the 10630 then the price can lift higher
Elliott Wave: The pattern coming down across 106 can be the ABC corrective pattern but if this is the case it must now trade above 106. The Flip side is it takes out the last low around the 10530 then the price will get trapped into 105 creating a much bigger corrective pattern
Trading Strategies: Long above 106 with targets above the 107 in five waves up.
Indices

Dow Jones CFD 12,576
Technical Analysis
TradingLevels: While the price is above 12,500 the market is supported, when a price reacts from 12,800 then 12,500 is the first support, its simply working with the Fibonacci ratio 1,2,3,5,8 so we can say if the second strongest number 5 cannot support the price then its back to 3 and if its back to 3 then it’s a part of Group1 and a part of the closest largest number and that is 12,000 but as far as the levels are concerned that would be the MediumLevel 11,500 (ML15) so the 12500 is stopping the price dropping to 11,500
Elliott Wave: The move down appears in nature to be impulsive, with its sharp move and thus creating the top.
But also technically it can still be a corrective move too and ABC pullback. That is why I mentioned the support at 12500 last time, the 12500 as resistance certainly puts a dent into the trend up.
Trading Strategies: Day Trading - Long if 12,600 finds support.
S&P500 CFD: 1307
TradingLevels: Larger pattern unfolding into 1300
Elliott Wave: We have to follow two wave counts, one is a top is in place and the market will roll over down and the other is a larger corrective pattern across 1300 (and below) in three waves ABC and then move up making new highs
Trading Strategies: Its normal to see buyers sitting on 1300 and creating a bounce that will hit supply/sellers in the 1310 – 1320 range with the sellers probably wining and seeing the price back and below 1300, the 1290 is the 38.2% retracement level so expect the price to bounce around between the 1290 and the 1300, the price also test lower to 1280 the first level of SG2
FTSE 100 CFD: 5670
TradingLevels: 5650 (65) support resistance 5700 then 5720 supply
Elliott Wave: The FSTE has displayed the most weakness in the move down, as its move the furthest, passing the wave four of one lesser degree at 5700. So there is more evidence here for a top being in place and therefore we should follow a more bearish count, the impulse wave . but technically counting the structure down it can be and abc, with the current low in at 5650, we just have to wait and see for more development, but this is a good reflection of the Euro talks on debt.
Trading Strategies: Expect a retest of 5700 from 5650. IF the 5700 cannot find support then look for a short there, if support is found then scale in long

DAX CFD: 6462
Technical Analysis: Same, Give the price a few sessions at 6500 MediumLevel, lets simply see if this level develops support or as resistance. The real support is still at 6400, so above this the Dax is positive below negative


SPI CFD 4264
Technical Analysis
TradingLevels: 4300 is the top of MinorGroup1, the resistance. The price has reached 4300 the other day and its normal for it to react, the reaction has found support at the first volume demand level at 4230 SG1 and will now retest supply starting at SG2 4265|4272|4280 it’s the 4272 as support of resistance that a trader can work from
Elliott Wave: Can take the price to 4500, that’s if the US Indices are only correcting a small correction and the Dow stays above 12500 and the Shanghai builds above the 2300 (group1) support. And of course the price needs to find support on the 4300 to create a long trade to 4500 where it is then expected to roll over down
Day Trading: Use 4272 or the Midpoint 4250 as support or resistance, be on the right side of these sublevels. Basically you have to work SG2 4265|4272|4280 with 4272 being the important pivot as support or resistance, being long with 4272 as support is much safer than being long under it.
Summary

US Indices The moves are governed by the European mess.
I don’t know if the current moves down are just bullish corrective or the start of the bear market for the US and Euro zone. The patterns are still too small to offer evidence. The 12500 on the Dow is the short term support floor. The SP500 will see at least a corrective pattern, but the question is will the price end up having the 1300 as support or resistance, this can take all week to develop, its simply a guessing game as I can see both counts bullish and bearish, but cannot give a clear answer, so we simply should wait until we are sure and then trade that direction.
Europe It appears the officials are debating the bond debt yields, this would be expected negations as the ECB would only want to give closer to 3 where the buyers would want closer to 4, the outcome of this discussion should see a bounce, but as you know the Greece problem is only 2.5% of the Euro output, but a blue print for Portugal, Spain, Italy..
The pattern across the MediumLevel 6500 for the Dax is unfolding and as long as it stays above the support 6400 then the Dax is positive. Their neighbours the Britt’s, don’t seem as confident as the FSTE traded sharply lower than other markets presenting a more bearish impulse wave.

China The Shanghai, 2300 as support is all we need to know about, the more this can develop as support the more positive Asia in general is.
Australia The Shanghai support 2300 is critical and the 4300 as support for the ASX200 is the next positive step to watch for, IF this is found then the 4500 is the target. The base metals that have been part of the driver has met supply just under 400 and is having its correction, I think its just a correction and that the price will push higher, this can be seen in the US BHP at 80 (TL8) so Australia can expect corrective consolidations before another push higher. I did place out short trades in the ASX Robo to hedge this corrective situation

Trading Quote
Most of the time common stocks are subject to irrational and excessive price fluctuations in both directions as the consequence of the ingrained tendency of most people to speculate or gamble... to give way to hope, fear and greed. Benjamin Graham

Today's Financial Events
Time Currency Detail Forecast Previous

Tuesday, January 31, 2012

8:45am NZD Building Consents m/m -6.4%
10:15am JPY Manufacturing PMI 50.2
10:30am JPY Household Spending y/y -0.1% -3.2%
10:30am JPY Unemployment Rate 4.5% 4.5%
10:50am JPY Prelim Industrial Production m/m 2.6% -2.7%
11:01am GBP GfK Consumer Confidence -31 -33
11:30am AUD NAB Business Confidence 2
11:30am AUD Private Sector Credit m/m 0.4% 0.3%
|4:00pm JPY Housing Starts y/y -1.4% -0.3%
6:00pm CHF UBS Consumption Indicator 0.81
6:00pm EUR German Retail Sales m/m 0.9% -1.0%
6:45pm EUR French Consumer Spending m/m 0.3% -0.1%
7:55pm EUR German Unemployment Change -8K -22K
8:00pm EUR Italian Monthly Unemployment Rate 8.6% 8.6%
8:30pm GBP Net Lending to Individuals m/m 1.2B 1.0B
8:30pm GBP M4 Money Supply m/m 0.3% -0.6%
8:30pm GBP Mortgage Approvals 53K 53K
9:00pm EUR Unemployment Rate 10.4% 10.3%
12:30am CAD GDP m/m 0.2% 0.0%
12:30am CAD RMPI m/m 0.2% 3.8%
12:30am CAD IPPI m/m 0.1% 0.2%
12:30am USD Employment Cost Index q/q 0.4% 0.3%
1:00am USD S&P/CS Composite-20 HPI y/y -3.2% -3.4%
1:45am USD Chicago PMI 63.2 62.5
2:00am USD CB Consumer Confidence 68.4 64.5
Australian Corporate Calendar

Panoramic Resources Limited (PAN.AU) December Quarterly Report
Cudeco Limited (CDU.AU) Quarterly Activities Report
Bathurst Resources Limited (BTU.AU) Quarterly Activities Report
Dart Energy Limited (DEGEF) Quarterly Activities Report
Rex Minerals Limited (RXM.AU) Quarterly Activities Report
Integra Mining Limited (IGR.AU) Quarterly Activities Report
Ramelius Resources Limited December Quarterly Activities Report
NOTES:
1. Check the ASX Dividend & Reporting section in the Member area 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.
Good Morning & Good Luck!