Recap
The Market has been unfolding some very impressive swings during August, and it’s incredible how accurate the previously posted analysis was.
With the “Trends and Reversals – Patterns and Correlations” article posted at the beginning of August, multiple views were shared, in which I’ve been sharing some wave counts and views.
The article mentioned above reflected a short-term strengthening in the greenback (USD), with a bearish outlook for the medium-term.
With the swings unfolding, it can be noticed that the EUR/USD and XAU/USD (Gold) performed as expected, with a short-term bearish impulse unfolding, and then reversing with a bullish stance at or around the mentioned levels.
After the second part of August, more details were revealed, as the Market digested the patterns and traders took actions, thus “clearing the dust” and “unveiling” the next best interpretations.
“Reversals vs. Volatility – Forex – Indices – Metals” video acted as a follow-up and/or confirmation for the overall technical analysis shared before. In this video, many trading ideas were explained, reasoning the charting interpretations.
Throughout that period of uncertainty, EUR, GBP, Gold, Silver, AUD, and pretty much everything against the USD, was heavily being sold.
A bearish breach of the DXY was in the menu with that video, pointing towards the possibility of a softer dollar, and looking at EUR, Metals, GBP with bullish eyes.
The Fractal Pattern pointed out for the EUR/USD worked out nicely and EUR finally started recovering, showing an essential bullish impulse.
Moving towards the beginning of September, the Live Webinar “Back to School NFP Webinar” presented by yours truly, gave Orbex traders the edge needed to be one step ahead of the Market’s most probable intentions.
With the holiday season completing, so could the current consolidations.
As a continuation of the content mentioned above, and an extension of the main idea, several charts will be updated/shared below, according to the wave counts and projections.
* This article contains delicate information and should not be treated as investment advice or as a solicitation the trade. Risk must be considered.
Technical Analysis & Outlook
Summary
The overall analysis points towards the possibility of another period of uncertainty and colossal volatility most probably awaiting the trigger.
VIX – Weekly Chart
With the Volatility Index (VIX) showing a wave count in which a spike in volatility is possibly starting, markets are now looking as if it could be ready for some uneasiness.
If this would turn out to be correct, then the US Indices could deliver another big sell-off, like the one witnessed back in February 2018, when the VIX spiked and inflicted the “fear” period and sudden interruption of “complacency” in stocks longs. During those two weeks of panic and aggressive sell-off, Dow Jones and SNP500 lost 3500 points and 350 points, respectively.
Furthermore, the charts are pointing towards the following as possible scenarios:
- DXY – Short-term bullish but with a realistic chance for a USD sell-off in the medium-term.
- EUR/USD – Daily Chart
- EUR/USD – Short-term bearish but with a bullish rally expected to commence at or around the 1.1610 – 1.1500 range.
- GBP/USD – Short-term bearish and with a bullish corrective pattern expected to unfold.
- USD/JPY – Significant strength expected to reveal for the YEN during another risk-off period.
- XAU/USD – Short-term bearish, with a substantial rally, possibly occurring in the medium-term.
- XAG/USD – Short-term bearish, with a bullish divergence on the table, at December 2015 lows.
- WTI – Sell-off possibly starting soon, in which 60.50 levels could be retested before a bullish continuation for the current cycle.
- GER30 – Medium-term bearish towards a deep dive which could even reach as low as 11350.00 levels.
- Dow Jones – Complacency period expected to end soon, leaving room for the possibility of a deep and epic bearish impulse.
- SPX500 – A sharp and impressive bearish leg would be expected to unfold during the VIX spike.
- NAS100 – Technical outlook points towards the realistic possibility of Nasdaq officially entering bearish territory for the medium-term.
* This article contains delicate information and should not be treated as investment advice or as a solicitation the trade. Risk must be considered.
Wave Counts & Patterns in Focus
1. FOREX PAIRS
DXY – Daily Chart
- Minute B (red) could finalize with a rise in the short-term, with a Running Flat pattern.
- Intermediate (B) (turquoise) corrective pattern would be expected to complete with a sell-off in Minute C (red).
DXY – 2H Chart
- Minute A (red) has been labeled as a first leg within the larger degree Minor Y (purple), and Minute B (red) would be expected to finalize with a bullish Minuette (c) (orange) towards the 95.15 levels or even 96.00 levels.
- 95.15 levels reflect the 100% Fibonacci Extensions of Minuettes (a) & (b) (orange) in a Running Flat scenario.
- 96.00 levels reflect the 150-161.8% Fibonacci Extensions of Minuettes (a) & (b) (orange) in an Expanded Flat scenario.
EUR/USD – Daily Chart
- EUR/USD current structure has been labeled as a complex Double Three in Intermediate (B) (red), with a sharp decline expected before a possible rally towards 1.2000 – 1.2150 area, from the 1.1610 – 1.1500 area.
EUR/USD – 2H Chart
- Minute A (blue) has been labeled as the first leg of the overall more considerable degree Minor Y (turquoise) structure.
- Minute B (blue) can be classified either as a Running or an Expanding Flat, with 1.1610 and 1.1500 levels reflecting the 100% and 150-161.8% Fibonacci Extensions of Minutes (a) & (b) (orange), as points of interest for both scenarios and patterns.
GBP/USD – Daily Chart
- GBP/USD current sequence has been labeled as a bullish correction in Primary Y (purple), with a decline possibly pending before the pound would resume its path.
GBP/USD – 2H Chart
- Minute A (blue) has been corrected by Minute B (blue), which was classified as a Running Flat pattern, after which Minute C (blue) has been labeled with an Extension.
- Minuette (i) (black) unfolded with a sustained bullish swing, after which its support trend-line has been breached, and Minette (ii) (black) could be completing in a short amount of time.
- Minuette (iii) (black) could reflect as a very powerful rally and bull’s confidence in the pound.
USD/JPY – Daily Chart
- USD/JPY has been current structure has been labeled as a complex correction within Intermediate (B) (turquoise), with Minor Y (red) expected to be completed by significant strength in Minute C (red).
USD/JPY – 4H Chart
- Minute A (red) has been labeled as a Leading Diagonal, while Minute B (red) has been classified as a Zig-Zag, one which could find its end at or around the 150-161.8% Fibonacci Extensions of Minuettes (a) & (b) (orange), while retesting the 19th of July peaks, with a Double Top.
- The bearish divergence could leave room for Minute C (red) to start a powerful bearish impulse, one which could reflect an Expanded Flat structure for Minor Y (red).
2. PRECIOUS METALS & ENERGY
XAU/USD – Daily Chart
- XAU/USD has been labeled in a bullish corrective sequence in Intermediate (X) (turquoise), a pattern which would be awaiting a bullish rally in Minor C (light blue).
- Minor B (light blue) could finalize with a sharp decline over the short-term.
XAU/USD – 2H Chart
- Minor A (light blue) has been labeled as the first leg within the larger degree Intermediate (X) (turquoise), with the levels in focus reflecting the 61.8 – 78.6% Fibonacci Retracements.
- Minor B (light blue) corrective structure could finalize with a sharp drop towards the 1180.00 – 1175.00 points of interest, levels which reflect the 150 – 161.8% Fibonacci Extensions of Minutes W & X (purple), but also 150 – 161.8% Fibonacci Extensions of Minuettes (a) & (b) (orange).
- Minor C (light blue) could reflect as a bullish rally and future demand for Gold over the medium-term.
XAG/USD – Daily Chart
- Silver has been labeled within a complex corrective cycle, a Double Three in Primary WXY (purple). A bullish rally could start unfolding rapidly from somewhere around the 13.70 area.
- Minor C (light blue) could finalize with a sharp decline in Minute V (red) over the short-term after which a bullish stance could surround Silver over the medium-term.
XAG/USD – 2H Chart
- Declining channel under an Ending Diagonal form, with the last leg pending.
- 100% Fibonacci Extensions of Minutes iii & iv (red) could reflect as the possible support, at the lower channel trend-line.
WTI – Daily Chart
- Crude Oil (WTI) has been labeled under a complex corrective structure in Intermediate (B) (green), with a bearish breach and impulse possibly wanting to unfold under an Expanded Flat.
WTI – 2H Chart
- Within Minor Y (red) corrective sequence, the first leg has been labeled as Minute A (red), while its Minute B (red) correction has been classified as a Triple Three pattern.
- Minute C (red) could reveal a bearish breach, after which it could start unfolding on the down-side impulsively for the medium-term.
3.INDICES
VIX – 2H Chart
- VIX has been labeled as a Flat Pattern in the (A)(B)(C) Intermediate Degree (orange).
- Intermediate (A) (orange) reflects the February 2018 return of the bears and sudden sell-off in the Indices.
- Intermediate (B) (orange) has been labeled as a declining ABC Minor degree (green), with an Expanded Flat in Minor B (green) and an Ending Diagonal in Minor C (green).
- Minor 1 (red) jumped from the 10.80 levels, thus shaking the markets with the first bearish signs.
- Minor 2 (red) is showing a valuable Zig-Zag pattern, which appears to be complete, and this could pave the way for a volatility spike and a rally for this “terrific” chart.
GER30 – Daily Chart
- GER30 current structure has been labeled as a bearish sequence, unfolding under an Ending Diagonal, within a descending channel.
- Minor 5 (red) would be expected to commence and possibly complete the current corrective Cycle Wave IV (green), reflecting the last piece within Intermediate (C) (orange), but also in Primary Y (purple).
- 50% Fibonacci Retracements of Cycle Wave III (green) could align with the 100% Fibonacci Extensions of Primary W & X (purple), as a possible end of the aggressive sell-off during the volatile period.
GER30 – 2H Chart
- Minor 4 (red) could show one last rise for the retest of the upper trend-line for the channel, while a bearish divergence could be a valuable technical sign for such bearish outcome.
- 12500.00 – 12550.00 could pose as a significant resistance, as multiple Fibonacci lines are possibly lining-up for something more meaningful.
US30 – 4H Chart
- Dow Jones has been classified under a Primary Degree wave 4 (blue) degree, with a Running or Expanded Flat as probable patterns which could occur because Intermediate (B) (red) exceeded the start of Intermediate (A) (red) and created a new all-time high.
- Intermediate (A) (red) reflects the February 2018 sell-off, while Intermediate (B) (red) indicates the attempt for the complacency period to return.
- Intermediate (B) (red) has been labeled as a Double Three in Minors WXY (turquoise), with an overlapping sequence in Minor W (turquoise), and a complex correction (conflict between corrective degrees) in Minor X (turquoise).
- Minor Y (turquoise) has been labeled under a rising channel, unfolding with a Leading Diagonal in Minute A (blue), a Running Flat in Minute B (blue), and an Ending Diagonal in Minute C (blue).
- 26550.00 area would be considered as a point of interest and a vibration zone, where both bulls and bears would struggle for the title.
- 27000.00 levels reflect the 100% Fibonacci Extensions of the Ending Diagonal’s Minuettes (iii) & (iv) (black). A bearish divergence within an overshoot could reflect some valuable technical signs.
SPX500 – 4H Chart
NAS100 – 4H Chart
Many pips ahead!