USDJPY--Thursday Morning, June 19, 2008
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June 19, 2008
June 18, 2008
USDJPY-Wednesday Morning, June 18, 2008
Yesterday's chart pattern continued:
June 17, 2008
USDJPY--Tuesday Morning, June 17, 2008
Resistance at 2.058. Fell back to 1.618 and then up again. More back up before a burst towards the 2.618 target?
Tuesday Morning, June 17, 2008
Shocks to the Euro fail to provide any heavy downside action.
This morning the ZEW report came in signficantly weaker than expected, falling to -52.4 from -41.4 in May. The consensus expectation was for a slight fall to -42.0. And then there was the Irish no vote on Lisbon EC treaty. The Euro suffered a bout of sell on the rumour last weej, buy on the fact this week. Since then it has been strenghtening. An article in the NYT deals with the view that there is increasing sentiment that European monetary union does not depend on the greater political union the treaty provides. It seems the majority of Europeans might favor this state of affairs. But is it workable in the long term.
From the NY Times:
"...these deepening differences within Europe could still pose a long-term threat to the euro, said Paul De Grauwe, a Belgian specialist on the currency.
“In the very long run, a monetary union must be embedded in a political union,” said Mr. De Grauwe, a professor of economics at the Catholic University of Leuven. “Sometimes there are shocks that are so strong that without a close political union, it can lead to a breakup.”
And Gideon Rachman in the FT explains how the treaty might mean less democracy not more democracy in the EC.
Also from the FT: Some Fed officials sending warning that markets are "getting carried away" with their expectation of rate hikes any time soon. "They do not dispute that the next move in US interest rates is very likely to be up. But they feel the market may be pricing in too much tightening too soon."
June 15, 2008
EURJPY, Sunday Evening, June 15, 2008
June 11, 2008
S&P 500 -- Wednesday Evening, June 11, 2008
Following up on the last chart of the March 29, 2008 post
The question which ended that post seems in the process of being answered in the affirmative. We are falling towards the 23.6% level, after having topped out at the 61.8% level on May 19th. The market fell from that level back down to the 38.2% level, then ranged between 50% and 38.2% before finally breaking through the 38.2%support level last Friday (June 6).
The next support should be roughly at 1325. The low on April 15 was 1324.4 The 23.6% line comes in on the chart at 1327.5.
A MORE BEARISH SCENARIO
The monthly chart, showing the impulsive move from October 2002 low to July 2007 high, with the following irregular correction ending in mid-March 2008 with a 38.2% correction of the entire move.
What if the pattern ending at the 38.2% retracement level in March was only the first leg of an extended correction?
If the lows of March are taken out, the next support would be at the 50% level around 1160, and then the 61.8% level around 1060 (returning to the lows of August 2004).
USDJPY--Wednesday Morning, June 11, 2008
An update to this entry from last month (May 7):
June 4, 2008
Euro--Wednesday Morning, June 4, 2008
June 2, 2008
Euro--Monday Morning, June 2, 2008
While there is increasing commentary about a top in the eurusd rate, here we consider what is becoming a minority view, that the euro rally has more to go. As John Percival has pointed out, these market views of incipient change in a trend often jump the gun. The euro rally obviously will end at some point, but there seems to be too much complacency about the view that we have reached that point.
A monthly chart, showing the December 2004 top as alpha and the November 2005 low as beta. The high last November at 1.4966 can roughly correspond to the 1.618 delta project.
The "target" here would theoretically be around 1.6950, but it could go above 1.70. (If we take 1.4966 as delta 1.618, the 2.618 projection comes in around 1.7020.)
Looking at this second chart (but the first, with a target of 1.6950 would work the same way) we see the following.
1. From the beta low there is a move up (somewhat impulsively) to the 0.618 level of the alpha-beta base. (Shown in a weekly chart from the end of September 2006.)
2. Then a leveling off and slow steady grind up to the original alpha level in a 3 wave pattern. Notice that the slope of the rally is the same as that which brought the market up to the 0.618 level around 1.29. (Weekly chart from late May 2007.)
3. A period of volatility as the sub-prime credit crisis story begins in the summer of 2007. A sell-off, a new high, and then an even sharper sell-off.
4. Then a very sharp rise in the euro through the Fall of 2007. In this next chart--from the end of November 2007--the rise is much more severely inclined than the previous rally up to the alpha level. It occurs in a 3 wave movement, with a very small and brief retracement once the 1.272 level had been achieved. (In this chart the delta 1.618 level has been moved up to the actual high in November at 1.4966.)
5. Which brings us to the present: another impulsive move after a 3 month period of consolidation, beginning in late February, hitting the 2.058 level by the third week of March, then a struggle to move higher--a struggle marked by an initial sell off, then an irregular back and forth move to a new high, breaking 1.60 on April 22.
Which raises the question whether that 1.6018 high can be seen as part of an irregular correction which began with the 1.5904 high on March 17 (which also corresponds to the culmination of the credit market panic with the fall of Bear Sterns). And indeed when we project the move from 1.5904 to 1.5340 on March 24 as an X wave in a correction (or A if you prefer Elliott), and the new high on April 22 as a Y or B wave, then projecting the length of the X wave from the top of the Y wave, we get a (1.618 times X) target for the Z or C wave at 1.5292. 10 pips above the actual low at 1.5282.
