US30 - DAX 30 is on verge of Completion of Elliot wave pattern @ 9465 - 9500

Elliott Wave Theory was developed by R.N. Elliott and popularized by Robert Prechter. This theory asserts that crowd behavior ebbs and flows in clear trends. Based on this ebb and flow, Elliott identified a certain structure to price movements in the financial markets. The article serves as a basic introduction to Elliott Wave Theory. A basic 5-wave impulse sequence and 3-wave corrective sequence are explained. While Elliott Wave Theory gets much more complicated than this 5-3 combination, this article will only focus on the very basics.

There are two types of waves: impulse and corrective. Impulse waves move in the direction of the larger degree wave. When the larger degree wave is up, advancing waves are impulsive and declining waves are corrective. When the larger degree wave is down, impulse waves are down and corrective waves are up. Impulse waves, also called motive waves, move with the bigger trend or larger degree wave. Corrective waves move against the larger degree wave.

From the above chart US 30 has started its upside rally from the level of 7660$ and tested the level of 8460$ which was the starting of the Wave Theory and it was the I Wave. There after minor correction was seen from 8460$ to 8090$ in the form of wave II  which was just near to 50% retracement of wave I, there after it enter in wave III. Looking at the wave III it tested the higher level of 8770$ and it has retraced by 85% of wave I from the bottom of wave II, and exactly tested the higher level of 8770$ and started its correction in the form of wave IV. Wave IV retrace by 35% of wave I and tested the level of 8490 which was top of wave I and failed to trade below the same and reverted and confirming the wave V start. Currently it is in the continuation of the wave V and is near to the top level. If we calculate 121.8% retracement of wave I which is 800 points will bring the level of 9465 which is the expected top and reversal is expected from the higher level. On higher side 9500 will be the second resistance as its 161.8% expansion of wave A-B of the Symmetrical triangle. DE30 is nearing the strong resistance around 9465 to 9500 and we might look at sharp correction in DE30 soon, which might enter in corrective wave in form of a-b-c pattern.  On lower side support is seen at 9250 level and sustain trading below the same on weekly closing will confirm the down trend and any rise near the range of 9460 will be a good selling opportunity where advisable  stop to be placed at 9600 and wait for downtrend to continue. 

EURUSD Wedge pattern formation if 1.3700 holds then target 1.3000 - 1.3100

Implication: A Continuation Wedge (Bearish) is considered a bearish signal, indicating that the current downtrend may continue.

Description: A Continuation Wedge (Bearish) consists of two converging trend lines. The trend lines are slanted upward. Unlike the Triangles where the apex is pointed to the right, the apex of this pattern is slanted upwards at an angle. This is because prices edge steadily higher in a converging pattern i.e. there are higher highs and higher lows. A bearish signal occurs when prices break below the lower trendline.

Over the weeks or months that this pattern forms the trend appears upwards but the long-term range is still downward.

Trading Considerations

Pattern Duration: Consider the duration of the pattern and its relationship to your trading time horizons. The duration of the pattern is considered to be an indicator of the duration of the influence of this pattern. The longer the pattern the longer it will take for the price to move to the Target. The shorter the pattern the sooner the price move. If you are considering a short-term trading opportunity, look for a pattern with a short duration. If you are considering a longer-term trading opportunity, look for a pattern with a longer duration.

Target Price: The target price provides an important indication about the potential price move that this pattern indicates. Consider whether the target price for this pattern is sufficient to provide adequate returns after your costs (such as commissions) have been taken into account. A good rule of thumb is that the target price must indicate a potential return of greater than 5% before a pattern should be considered useful. However you must consider the current price and the volume of shares you intend to trade. Also, check that the target price has not already been achieved.

Criteria that Supports

Volume:  Volume should diminish as the pattern forms.

Criteria that Refutes:

Moving Average: The penetration of the 200-day Moving Average by the price is a false bull signal.

Rising or Stable Volume: Volume should diminish as the pattern forms. If volume remains the same or increases this signal is less reliable.

Underlying Behavior: In this pattern prices edge steadily higher in a converging pattern i.e. there are higher highs and higher lows indicating that bulls are winning over bears. However, at the breakout point the bears emerge the victors and the price descends.

EURUSD has given a confirm reversal from the higher level of 1.3620 and if today’s closing is seen below 1.3600 will strongly give the confirmation of the down side move where 1.3530 will be the immediate target which is the rising trend line. Short term support is expected to hold the level of 1.3530 and further sustain trading below 1.3530 will give a confirmation of down trend to continue. Height of the Pole is 530 pips (1.3830 – 1.3300 = 530) and if we take 50% as first target of the pole (530 * 50% = 265 pips) from the breakdown @ 1.3530 comes to 1.3265 level and second target comes to the level of 1.0300 (1.3530 – 530 pips = 1.3000 level). To be safer side we will expect target of 1.3100 level from the current level and on higher side weekly closing must not trade above 1.3650 level and as a stop if hold one can maintain short for the given target.

Marc Faber: China could spark a bigger crisis than in 2008 : November 8, 2013, 5:07 AM

An alarming credit boom in China could trigger a global financial crisis that would make the one in 2008 look mild by comparison, says old gloomy eyes, Marc Faber.

“If I am telling you that we had a credit crisis in 2008 because we had too much credit in the economy, then there is that much more credit as a percentage of the economy now,” the author of The Gloom, Boom & Doom Report told CNBC late Thursday. “So we are in a worse position than we were back then.”

China, in particular, has seen credit as a percentage of the economy jump 50% in the last four and a half years, said Faber, the “fastest credit growth you can image in the whole of Asia.”

He’s not alone in this China worry, as lots of economists have been warning about rapid credit growth there, even as officials are trying to curb it.

Meanwhile, Deutsche Bank strategist John-Paul Smith told clients on Wednesday that China’s growth model continues to be based on “ever-expanding debt, which leaves the country and financial markets very vulnerable to any potential loss of from investors and lenders.”

That’s even though China may change forever this weekend, as the Communist Party holds its Third Plenum, widely expected to introduce lots of reforms.

In his note, Smith says Deutsche Bank has had a pretty straightforward preference for developed over emerging markets the past three years. But that that now rests purely on its negative view of EM, rather than the “positive attractions of U.S. equities, which has become a consensus call”, he points out.

“The U.S. market now appears somewhat overvalued, and vulnerable over the medium term to a shift away from capital to labor from a fundamental perspective, but could be headed for bubble territory if the situation with China and commodities plays out as we anticipate,” he said.

Faber warns that China isn’t the only problem area. Other Asian countries are also seeing big jumps in household debt.

“Government debt has not gone up that much, but household debt has,” said Faber. “In Thailand, where I spend a lot of time, we have had no recession, but we have had no growth either. It’s the same in Singapore and Hong Kong.”

Nifty One pager report forming Bull Flag Pattern Formation Top

Trading Call: Sell at the level of 5250 CMP Target of 4500 - 3800 – 3200 – 2500 levels, Resistance is seen at 6400 Closing basis.

Nifty we look at positional chart from year 2002 onwards where it was trading at 900 levels from there the rally was started and slowly and steadily it tested the level of 6340 in year 2008 starting. In the same year we have seen a massive selling from the all time high and tested the lower level of 2500 looking at the crises in the market. It remain at this lower level of 2500 for 2008 year end and first quarter of 2009 and again market picked up a rally and tested all time high of 6340 but failed to cross the same where profit booking was seen. This profit booking from 6340 brought down to test the level of 4540 where value buying was seen which again brought to 6383 just above all time high on 3^rd November which was Sunday Diwali Mahurat trading where market were open in evening from 6 pm to 7.30 pm.

Looking at the chart it is forming Two Bull Flag Patter Formation tagged as Base 1 and Base 2.

Base 1:                  Bull flag pattern difference is 5440 points

Base level of flag is seen at 2500 Nifty any trade below 3000 or 2800 will be expected entry level as one should not wait for precisely 2500 Nifty.

Breakout of Bull Flag pattern is seen at 6300

Nifty is expected to test the target of 11600 levels in period of 10 years by 2024 – 2025.

Base 2:                  Bull flag pattern difference is 3800 points

Base level of flag is seen at 4500 Nifty

Breakout of Bull Flag pattern is seen at 6300

Nifty is expected to test the target at 10100 levels in period of 10 years by 2024 – 2025.

               

Nifty if we look at the Pattern formation its getting strong reversal from 6300 level of closing basis and if sustain trading is seen below 6100 will test it straight to test the next rock bottom support level of 4500 where previous 2011 December  bottom was seen and market reverted from the same level. If on weekly closing basis 4500 is sustain then might fall further where 3800 to 3200 is confirm and might also move to test the level of 2500 which was 2008 year end Bottom level. There is a high probability that market will take a small support at 4500 and a short range bound movement is seen but if the same is broken then 3000 to 2500 is nowhere in medium term.