I for one , am with Mike on this one. I see the Euro in wave 2 down and believe it ended last night at 1.5820 between the 61.8% and the 78.6% of wave 1. I did post my bear count last week along with my ending diagonal count for the Aussie which has yet to be violated. The dollar in my opinion is about to take the world by storm and get a big boost which does not look good for gold. Also notice if this is indeed the right count, wave 2 ABC is alot clearer than wave 1and has played out in a clear and decisive channel very typical for correction. That is one of the characteristics I look for when trying to decipher if its an impulse or a correction. Impulses break through channels, corrections stay within channels.
Italm
Do you have an updated count for EURCHF? I wolud like to see your opinion on the pair, as it is undergoing some interesting moves last day or two.
Further, what is your opinion re USDCHF in view of the fact that you stated, i quote:
""The dollar in my opinion is about to take the world by storm and get a big boost""
I am posting 2 charts, both daily. One is the gold and the other the Euro. The Euro peaked on 4/21 while gold peaked on 3/17. The Euro bottomed on 5/07 while gold bottomed on 5/02. The Euro has since retraced between .618 and .786 of it's decline while gold has not even retraced 50% of it's decline.
Diver
Nice charts, i took the liberty of copying your gold chart and adding some comments. Definitely, to me GOLD looks like a Head and Shoulders pattern, almost ideal, with the neckline at around 845. Once the neckline is taken out, watch out below!!!
BTW: Oil is also beginning to look like a head and shoulderrs, but will need another week or two to develop further.
Take care and good luck with your gold short position. I think that you nailed it 100%!!!
Mike
Italm
Do you have an updated count for EURCHF? I wolud like to see your opinion on the pair, as it is undergoing some interesting moves last day or two.
Further, what is your opinion re USDCHF in view of the fact that you stated, i quote:
""The dollar in my opinion is about to take the world by storm and get a big boost""
Thanks
Mike
Hey Mike,
First yes, i do see the dollar about to take the world by storm but that doesn't mean it will fair well against all currencies. Im looking for a strong Yen, Swiss, ad Usd in that particular order. The rest will fall vs Usd. That's been my take for this coming recession and thus far, everything is finally going according to plan. I do believe Usd/Chf will make another low but Euro will in no way shape or form make another high. This chart in my opinion says it all. Euro/Chf seems to be making one last push toward the upper trend line of an ending diagonal C wave. Once wave 3 down begins, you will see the Euro weakness and Swissie strength really accelerate. The beauty about this chart is you can pretty much pinpoint when and where the top will take place.
Hello American
Thsi is, what i can see in the EURUSD pattern of last few months. You can see my wave count; i believe that MACD interpretation supports my argument. All i amsaying is that euro must return to the wave 4 level, befor egoing mich higher.
But, truthfully, i know that my position goes against the conventional wisdom at the moment.
The only cheerful aspect is that the forex market have notoriously high level of amnesia; tomorrow we might discover that the spanish housing bubble has burst and they will start selling euro "en masse" and they will totally forget the USD is not the most beautiful Miss of the World after all.
One time glen neely wrote in one of his interviews that there is 2 kinds of traders:
1. the ones, who are trying to be right at any cost.
2. the ones, who are trying to make money.
His comment was that the first ones always fail and end up in bankruptcy, because they try to PROVE their point despite all evidence. I hope that we do not belong to this group and that we can keep open mind at all times.
Mike
Well I don't think either of us are trying to just be right. I've said many times that I'm wrong about 65% of the time, but I use such a good risk/reward ratio, and risk such a small percentage of my overall trading capital, that I'm able to stay solvent through the worst losing streaks and make consistent profits over time. My strategy is to risk very little and try to catch huge moves. That's why I pound the table for weeks, or months, in this forum with one view until it happens, or I'm proven dead wrong. I get stopped out a heck of a lot. It's hard to be wrong that often and still stick to a strategy, like an emotionless robot. But that's why most people fail in this business. Over the past few weeks, my nerves have been heavily tested as the bearish outlook for the dollar has remained in place, yet it keeps rallying. And it has done so without exhibiting a larger bullish potential, having me conclude that it's still bearish. Because of that, I've shifted focus away from currencies and have only medium sized positions in place until the dollar bottoms and rallies where I'll then establish large bullish positions. If I deviate from my strategy and what the charts tell me, then I'm using emotion and fear to make my trading decisions, and then there's no point in having personal trading rules and strategies at all to begin with. And I can't think of a faster way to go broke.
My EUR/USD stance is subjective, due to my outlook on the Dollar Index, the USD/CHF and the USD/JPY which are objective. When I see bullish potential for the dollar I will flip my positions. Right now, I don't see it. Right now, the dollar looks clearly bearish and headed for a new low. It's just a matter of when. And I'm quite confident it's currently on its way to that new low right now.
I did not hear about the Spanish housing crisis. Was that for real, or were you just trying to make a point? I know England's housing market is now similar to the that of the US.
If anyone else wants to comment on their trading strategy or money management discipline, especially using EWP, I'd be glad to hear it. I have a little binder with document protectors where I write all my trading rules and I once in a while I'll make an adjustment. I'm always looking for ideas or approaches that can tighten up my game.
How can you not see that gold is trading the USD/CHF tick for tick?
Which is a good representation of gold trading the usdx tick for tick?
Gold isn't a commodity, it is the ultimate currency....
The dollar CANNOT make a new low without Gold...
It is a plain as night and day. You would have to keep increasing the size of your dollar shorts to make up for Gold losses for every tick gold goes up.
The differences in the eur/usd and gold relationship is that the euro is being destroyed in gold terms.
When the USDX - "the dollar" falls EVERYTHING must and will go up. Including the stock market. Carry traders pay attention to that one...it will be the USD carry trade.
You can put money into anything you want to hedge against inflation aka " a falling dollar" but the king beneficiary is gold...gold is destroying all currencies.
You said, "The dollar CANNOT make a new low without Gold..." makes me feel like you need to finish your sentence. The dollar making a new low and gold not making a new high seems unlikely, but possible. I read somewhere where the price of gold is 40% based on the value of the dollar. How accurate that is, I don't know. I don't enter trades to be right 100% of the time. I do what the charts and my analysis tell me. The way I see it, if the dollar makes a new low and gold makes a new high, I'll take my profits in my short dollar positions when they bottom and then wait for gold and silver to fall again and make money off that. The fact that I have two positions that historically move opposite each other, but the possibility of moving in tandem, makes it a very good trade because my downside is well protected. I have two trades on, and all I need to do is be right on one of them now and I break even, then I need to be right on the other one after that to make a profit. Sounds good to me. I'm not trying to hit a grand slam every time at bat. I'm playing the risk/reward game; trying to make money over time while protecting my downside.
And I respectfully disagree that anything "MUST" go up or down based on another market. When chaos and panic take center stage again in the financial markets, you can throw correlations and rational movements out the window.
But as of now, I see inflation topping. I see oil making a medium term top soon (or perhaps already done), TIPS actually had a negative yield a few months ago showing that inflation is such an overwhelming consensus that people were willing take a negative yield on their money. This type of extreme sentiment warns of a top. Gold and silver have appeared to have topped, oil is topping, inflation is the talk of the town, all while housing values plummet, people are losing their jobs, and are way overextended on their credit cards, and are now not spending money they don't have anymore. Prices will not continue to go up while all this occurs, and the TIPS data I just mentioned shows the extreme panic which accompanies a market top. Inflation itself is topping. I'm sorry, but the fear in this country should not be inflation..........the real fear is deflation. Deflation will put pressure on commodities, especially oil, gold and silver.
Well I don't think either of us are trying to just be right. If I deviate from my strategy and what the charts tell me, then I'm using emotion and fear to make my trading decisions, and then there's no point in having personal trading rules and strategies at all to begin with. And I can't think of a faster way to go broke.
My EUR/USD stance is subjective, due to my outlook on the Dollar Index, the USD/CHF and the USD/JPY which are objective. When I see bullish potential for the dollar I will flip my positions. Right now, I don't see it. Right now, the dollar looks clearly bearish and headed for a new low. It's just a matter of when. And I'm quite confident it's currently on its way to that new low right now.
I did not hear about the Spanish housing crisis. Was that for real, or were you just trying to make a point? I know England's housing market is now similar to the that of the US.
Regards,
American-T
American
i will address a couple of points here. Firstly, as i said many times before, the bigest mistake a trdaer can make is to FORCE his own worldview upon the market, in this case upon the charts/
I know that some people on this forum have blinders on their eyes and they stubbornly try to argue in favour of this or another pair, despite all obvious evidence. Obviously, this is the fastest way to the poorhouse. We all have our biases and prejuduices, but we must put them aside if we want to be successful.
Now, the fundamewntal part of the euro equation is not looking rosy at all.
There are 3 big problems facing eurozone and i will list them:
1. Spanish housing bubble
2. Greeece on the verge of baknrutpcy
3. italy on the verge of bankruptcy
Sooner rather than later these problems will come to the fore. Until now, they were swept under the carpet. In some strange way Forex market perceives euro as being a German currency, totally distorting the truth. It is the fact that Germany economy is the largest part of the euro, but the currency is in 12 countries. To make it worse, the countries with huge problems (the 3 listed above, which all happen to be in Mediterranean) have very little to say in the ECB. trichet and his gnoms are running ECB like their own private barnyard, which will bite them in the butt very soon. They cannot put a lipstick on a pig forever. At some point they will have to admit painful truth.
Here is the quotation and link re spanish housing bubble
The residential real estate bubble in Spain saw Real Estate prices rise 247% from 1997 to 2005[1]. 651,168,000,000 is the current mortgage debt (second quarter 2005) of Spanish families (this debt continues to grow at 25% per year - 2001 through 2005, with 97% of mortgages at variable rate interest). In 2004 509,293 new properties were built in Spain and in 2005 the number of new properties built were 528,754[2]. 2004 estimations of demand: 300,000 for Spanish people, 100,000 for foreign investors, 100,000 for foreign people living in Spain and 300,000 for stock[citation needed]; in a country with 16.5 million families, 22-24 million houses and 3-4 million empty houses.
I'm sorry, but the fear in this country should not be inflation..........the real fear is deflation. Deflation will put pressure on commodities, especially oil, gold and silver.
That's my opinion.
American-T
Hello American
You are absolutely correct, I see also deflation as the largest threat. Especially, since FED made the statement about "chances of being eaten by piranhas are larger than the chance of a deflation". This tells you everything.
To make it worse, i see huge inflation in the COST OF LIVING, such as the cost of food, medical services, gasoline, heating bills and other necessities of life. In other words, disposable income has shrunk to Zero for most people.
Now, add deflation in housing and deflation in credit and you will have the most perfect scenario for a disaster.
Deflation will decimate the rest of manufacturing industry, if there is any still left. Even now, the US is still manufacturing 25% of all goods in the world. After defaltion many industries will disappear altogether.
For comparison, 40% of US population were farmers in 1920's. During depression this number shrank by half. These jobs never came back.
manufacturing will be similar. It will drop by 50% and economy will slowly absorb the extra work force. After all, there will be many openings in jails, police, security guards, mcdonalds burgers flippers and walmart greeters.
(PS: Please forgive me the sarcasm, but this was not meant as a joke, unfortunately)
Hey Mike,
First yes, i do see the dollar about to take the world by storm but that doesn't mean it will fair well against all currencies. Im looking for a strong Yen, Swiss, ad Usd in that particular order. The rest will fall vs Usd. That's been my take for this coming recession and thus far, everything is finally going according to plan. I do believe Usd/Chf will make another low but Euro will in no way shape or form make another high. This chart in my opinion says it all. Euro/Chf seems to be making one last push toward the upper trend line of an ending diagonal C wave. Once wave 3 down begins, you will see the Euro weakness and Swissie strength really accelerate. The beauty about this chart is you can pretty much pinpoint when and where the top will take place.
Thanks, Italm
This is a good way to put it; i like the way you listed these currencies in order of relative strength.
The fact is that DURING THE RECESSION THE VALUE OF USD ALWAYS WENT UP. This time will be probably the same, maybe even much stronger, since this recession will be the Mother of All Recessions.
I will try to dig out the chart showing value of USD versus recessions and post it.
Mike
Thanks, Italm
This is a good way to put it; i like the way you listed these currencies in order of relative strength.
The fact is that DURING THE RECESSION THE VALUE OF USD ALWAYS WENT UP. This time will be probably the same, maybe even much stronger, since this recession will be the Mother of All Recessions.
I will try to dig out the chart showing value of USD versus recessions and post it.
Mike
I've said many times that I'm wrong about 65% of the time, but I use such a good risk/reward ratio, and risk such a small percentage of my overall trading capital, that I'm able to stay solvent through the worst losing streaks and make consistent profits over time....
Great staff AT. You made a good point here by mentioning the importance of good money management. I kinda reminded me of something I had in my computer for a long time. I thought it woulld be a good idea to share it.
It's called a Ruin Matrix. It gives you the the chances in percentage of ruin your account by taking different risk:reward trades. It's pretty much self explanatory.
For example if you have ONLY 60% winning trades and take R:R of 1.5 or better you have no chance of losing you capital. And also by doing that you'll be way ahead of the game.
Diver
Nice charts, i took the liberty of copying your gold chart and adding some comments. Definitely, to me GOLD looks like a Head and Shoulders pattern, almost ideal, with the neckline at around 845. Once the neckline is taken out, watch out below!!!
BTW: Oil is also beginning to look like a head and shoulderrs, but will need another week or two to develop further.
Take care and good luck with your gold short position. I think that you nailed it 100%!!!
Mike
BM,
You know I saw that too but I have no way (that I know of) to free hand lines on my charts so I just didn't mention it. But, I'm glad you caught it and brought it up. It is just one more negative we both see in the gold market and why it looks doomed. :-) AND thanks for the good luck wish. No amount of hard work is a substitute for "good luck!". LOL.
I just want to say that the recent posts by you guys is fantastic reading and really good stuff. It is really bringing out the best of what this chat room should be. Compliments to all. :-)
This is the chart i was thinking about showing recessions of the last half-century, shaded area.
During each recession the current account balance has improved. This time the balance has improved much more and there will be much more to come, but the Gov't did not declare an "official" recession yet. They still live in a state of total denial.
Mike
This is the chart i was thinking about showing recessions of the last half-century, shaded area.
During each recession the current account balance has improved. This time the balance has improved much more and there will be much more to come, but the Gov't did not declare an "official" recession yet. They still live in a state of total denial.
Mike
Thank you Mike...Well there you go. The media has brainwashed the general public into believing a recession in th US would not stem well for the dollar. Other recessions in the past lead us to believe thats just not true.
Let me try to debunk that theory. Aside from there being WAY too many dollar bears around and we ellioticians know the significance of that, for anyone who needs more understanding of why the dollar will go up during economic contraction, here goes: One word...SAFETY! With Gold being the popular place to store your cash, as Ellioticians, we all know "too popular" can lead to disater. AS gold begins to really start to show weakness, investors will see there nest eggs really begin to falter. If Gold doesn't work any longer (for now at least), they will look to TBills as a safe way of growing there portfolio. Its that simple. What ceases to work will lead to a new way for generating safety.
Also, this credit crisis is the result of all sorts of bubbles created by using leverage to raise prices to unprecedented levels. The trick is to find where there is a bubble and try and profit from the unwinding of that bubble. Just like Housing, Gold, Oil, and stocks (as well as other commodities) Euro is a bubble!
Finally, let us not forget that the US will not carry the burden of this recession alone. The economic contraction will be a global one. Does that mean all currencies will contract...no! Only the bubbles created by the credit expansion of the last 7 years.
Here's an update of this morning's Euro chart. We are flirting with the lower trend line of the ABC channel. We should break through it soon. for my count to be correct.
Thank you Mike...Well there you go. The media has brainwashed the general public into believing a recession in th US would not stem well for the dollar. Other recessions in the past lead us to believe thats just not true.
Let me try to debunk that theory. Aside from there being WAY too many dollar bears around and we ellioticians know the significance of that, for anyone who needs more understanding of why the dollar will go up during economic contraction, here goes: One word...SAFETY! With Gold being the popular place to store your cash, as Ellioticians, we all know "too popular" can lead to disater. AS gold begins to really start to show weakness, investors will see there nest eggs really begin to falter. If Gold doesn't work any longer (for now at least), they will look to TBills as a safe way of growing there portfolio. Its that simple. What ceases to work will lead to a new way for generating safety.
Also, this credit crisis is the result of all sorts of bubbles created by using leverage to raise prices to unprecedented levels. The trick is to find where there is a bubble and try and profit from the unwinding of that bubble. Just like Housing, Gold, Oil, and stocks (as well as other commodities) Euro is a bubble!
Here's an update of this morning's Euro chart. We are flirting with the lower trend line of the ABC channel. We should break through it soon. for my count to be correct.
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Originally Posted by italm31
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