The markets have been trading within very complex structures within the month of July, and it now seems that August may just be the month when multiple sectors could be poised for significant changes and/or reversals.
The Trade War talks and Earnings Reports have driven US Indices towards a complacency period, with Dow Jones, Standard & Poor’s and Nasdaq rising up to expectations and delivering solid gains, as mentioned in the previously posted “Trade War Sentiment – Volatility Spike – Technical Analysis” article.
Another important detail which was mentioned multiple times in the previous articles would be the possibility of the Volatility Index (VIX) starting a sustained rise. If such a spike would occur in volatility, then this could result in major losses for the US Indices and a shift in trends for multiple markets.
During the “Markets Vulnerable – Reversal Patterns – Bearish Sentiment – Divergences” video, a general technical analysis perspective has been shared, where multiple markets were examined, and impressive forecasts are now living up to the expectations.
The scenario in which the VIX could commence a spike has been explained in detail with the “VIX Spike & US Indices – Bears Territory” article. Since the time of the post and until now, the patterns do seem to be lining up for such possibility and more details on this topic will be shared in the lines to come.
As a preparation tool for such a shocking spike in volatility and a return of the sell-offs, the “Market Flash Crash? Risk-Off Events?” article could provide such information. So far, it seems like the analysis presented could be on the right track, as all sectors are presenting correlations and could be synchronizing for something greater.
A detailed explanation of the bigger picture has been painted during the “Prep for the Non-Farm Payrolls – LIVE with Richard Tataru” live webinar, where the NFP event was successfully analyzed, and swings unfolded as expected.
Currently, the Market seems to be preparing for a greater stage. The month of August could bring the bears back, as the complacency (greed) period could be exceeding the speeding limits.
As a continuation of the above-mentioned articles, and a continuation of the main idea, several intraday charts will be updated below, according to the wave counts and projections.
* This article contains delicate information and should not be treated as an investment advice or as a solicitation the trade. Risk must be considered.
Elliott Wave Technicals & Wave Counts
- VIX is pointing towards the possibility for the volatility spike to commence, as the Fibonacci Extensions have been met and the current position could reflect the final stages for the down-side. Such a spike would be expected to match or exceed the February 2018 uncertainty effects.
- DXY has been labeled within an Ending Diagonal of larger degree Corrective Pattern. A final rise would be expected and then be accompanied by a Bearish Divergence, in an attempt to commence a powerful Bearish Impulse at or around the 96.00 levels.
- XAU/USD could finalize the current down-trend at or around the 1195.00 levels, as that zone reflects multiple Fibonacci measurements and the lower trend-line of the Descending Channel. A successful bullish reaction to those levels could even send Gold towards the 1280.00 / 1300.00 next crucial stage.
- XAG/USD would be expected to show further weakness below the 15.15 support and until the 14.75 crucial zone. Silver could bounce off the 14.75 support line with an impressive bullish swing, once which could reflect the 16.15 levels.
- WTI could be trading within a Complex Corrective Pattern in Minute B (blue) and would be expected to complete this pattern with a bullish swing. Further weakness could be felt for WTI, as the 71.00 levels do reflect multiple reversal signs.
- EUR/USD would be expected to complete the current Corrective Pattern with one last bearish leg towards the significant support at the 1.1500 levels. A powerful bullish impulsive swing would be expected at or around the 1.1500 levels.
- GBP/USD is expected to present further down-side risk before possibly reacting from the lower trend-line of the Descending Channel with a bullish Corrective Pattern.
- USD/JPY would be expected to complete the current correction towards the 112.00 / 112.75 area, after which it could commence a powerful Bearish Impulse.
- USD/CHF could finalize the current pattern with a bullish swing towards the 1.10010 levels, after which it could start a down-trend in a sustained manner.
- AUD/USD might continue with further losses towards the 0.7300 levels, where multiple Fibonacci measurements could reflect a completion of the Minor degree corrective structure. A Bullish Impulse could begin at or around the 0.7300 levels, towards the 0.7570 vibration area.
- EUR/GBP could finalize the larger degree Complex Corrective Structure which is developing within the Rising Channel. The 0.9050 / 0.90750 area could reflect as Points of Interest, and a Bearish Divergence could aggressively push this pair towards a red 3rd
USD/CAD would be expected to retest the lower trend-line (red dotted), and a breach of it could indicate that the larger degree correction would be complete, thus resulting in the possibility for this pair to suffer significant losses, up to 1500 pips.
- GER30 is indicating that one last bullish move could occur, before an aggressive sell-off would take place, along with the projected volatility spike. The 12850.00 / 13000.00 area could reflect as a decisive Resistance, and should it hold, then GER30 could even show a loss of approx. 1350 units.
- US30 could be rising for one last time in order to complete the larger degree Corrective Pattern. Significant Fibonacci measurements are located around the 25850.00 / 26050.00 levels, where the entire structure could finalize. If this scenario would synchronize with the mentioned VIX movement, then DOW30 could take another big hit, such as the one witnessed in early February 2018, when it lost 3500 units in just one trading week.
- The Flat Corrective Structure in Intermediate (B) (red) could finalize with a bullish move towards the 2875.00 vibration zone, where SPX500 would be expected to react. Should Intermediate (C) (red) start unfolding, then SPX500 could start falling aggressively until the projected 2500.00 levels.
- NAS100 would be expected to lead the US Indices into another bullish stance and an extension of the green period. The 7650.00 levels could be treated as a significant Resistance, as it reflects multiple Fibonacci measurements, but also important trend-lines.
Many pips ahead!