CHOREK’S MARKET CHRONICLES

(NY dates/times)
 

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Friday, November 19, 2004

 

1:58 PM – (Chorek.com) – Crude Oil (48.25): Just a note for you Elliott wave theory students: I'm shifting down the degree of the October 25 55.67 to wave ((3)).  That means the action from there is a developing wave ((4)).  It's only important for academic purposes, and will only affect the big picture.

Take a look at the daily chart below.  It shows a wave (A) label at the recent 45.25 low.  From there, we are experiencing a notable correction within a correction, namely wave (B).  It's pushing toward initial resistance at 43.97, the .382 retracement of the 55.67-45.25 wave (A) decline.  A move above there would bring 51.69 (.618 of 55.67-45.25) into view. 

Notice the blue dotted line on this chart--it's a predicted path, calling for a wave (B) top around this second resistance, followed by a sharp wave (C) decline to complete wave ((4)).  Right now, the best target area for wave ((4)) is 43.97 (.382 of 25.04-55.67 wave ((3))) to 41.30 (previous wave (4) low.  Once it bottoms, the big bull trend will likely return in wave (5).

 

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9:07 AM – (Chorek.com) – USDJPY (103.22): Only a rise above 103.61 would put the bear on hold in the micro term.

Key points:

  1. Short-term trend—bearish (dynalibrium down, moving average Xs bearish, trendlines/channels bearish).

  2. Minute-term rhythm—bearish (hourly momentum mixed, 1-week cycle bust).

  3. Micro-term structure—wave (v) decline.

  4. Resistance: 103.61, 103.92, 104.39/42, 105.67/72, 106.23/80, 107.29.

  5. Support: 102.72, 102.00, 101.22, 97.15, 95.19, 79.75.

Insights/Observations: Like the EURUSD but in reverse, the big picture for this pair is beginning to point to the final position of the bear trend that has lasted since early 2002.  With yesterday's recovery in wave ((iv)) holding to just three pips violation of the 104.39 (.382 of 105.67-103.60) resistance, the current decline from 104.42 is wave (v).  It will complete wave ((v)) of 5, the final leg in the series from 135.16.

Where might it end?  Well there a number of nearby supports (and I've listed the next longer-term supports too):

  1. 103.08 (wave (v)=.618 of 107.29-105.12 wave (i) drop)

  2. 102.72 (wave 5=.618 of 135.16-115.43 wave 1 drop)

  3. 102.25 (wave (v)=107.29-105.12 wave (i) drop)

  4. 102.00 (March 31, 2000 reaction low)

  5. 101.22 (November 26, 1999 wave (A) low)

  6. 97.15 (September 22, 1995 reaction low)

  7. 95.19 (wave 5=135.16-115.43 wave 1 drop)

  8. 79.75 (April 21, 1995 wave ((V)) low)

We have to remember that bottoms are made on fear and Greenspan has ratcheted up the fear factor this morning, spooking the market about the US ability to continue attracting foreign capital to feed the C/A deficit.  So while everyone is talking about the dollar collapsing, we could see a bottom forming soon.

Is this any reason to stand in front of the bear trend and pick a bottom?  No way.  Let's wait for the market to tell us it's ready to revere.  I am now closely watching for clues of an upward reversal and for the micro term, it would take a pop above 103.61 (.382 since 104.42) to put this bear on hold in this timeframe.  Still only a move above 103.92 (.618 since 104.42) would signal the possibility of a minute-term reversal taking hold.  Until then, respect the bear trend.

 

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8:34 AM – (Chorek.com) – EURUSD (1.3043): The triangle pattern persists, but surprises should be to the upside.

Key points:

  1. Short-term trend—bullish (dynalibrium up, moving average crossovers bullish, and trendlines/channel lines bullish).

  2. Minute-term rhythm—bullish bias (hourly momentum indicators mixed, 1-week cycle boom).

  3. Micro-term structure—wave ((iv)) correction.

  4. Resistance: 1.3075, 1.3125/32, 1.3156, 1.3353.

  5. Support: 1.3007, 1.2979, 1.2935, 1.2913, 1.2849/43.

Insights/Observations: Wave (a) of the triangle wave ((iv)) ended up bottoming at 1.2935, just four pips below the previous wave (iv) terminus (see hourly chart below).  It fueled a sharp rise in wave (b), which is now likely in a topping phase in front of the 1.3075 wave ((iii)) high.

Another day or two of sideways swings should do it for the triangle.  Then the bull trend will likely return with a very sharp rally and push into the 1.3125/56 resistance band.

As you can tell by the predicted path (dotted blue line on the hourly chart), this next rally in wave ((v)) will be highly important.  It should complete wave 5 of (5) of ((1)).  And that means a big, big correction should follow in wave ((2)).  Take a look at the predicted path on the weekly chart and you'll see what I'm talking about.  Of course, no one can accurately and precisely predict the future (and Greenspan just said forecasting forex is the same as tossing a coin...), so I can only assess the odds.  It'll be a one-step-at-a-time dynamic process, so stayed tuned.

Getting back to the matter at hand, for the micro term, support is in the 1.3005 (.382 since 1.2935) area.  A break there would be the first confirmation that wave (c) of ((iv)) is taking hold and would target 1.2979 (.618 sine 1.2935).

 

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