06/11 - EUR/USD stalls at key moving average

The EUR/USD has recovered from fresh cycle lows on the back of bullish diverging daily studies. The latest rebound has reclaimed the June 1st swing low at 1.2110, altering the current (elliot) wave count and has helped neutralize the gloomy short-term outlook. The rejection at the key 14-day MA average, however, leaves this pair susceptible for a bearish resumption. Losing daily RSI (9 & 14-period) trendline support will shift focus to the 2005 lows in the mid 1.16 region. Meanwhile, above the 14-day MA signals relief towards 1.2214/1.2325 (04/03 June highs).

06/03 - Critical juncture for the EUR/USD

The EUR/USD & US Dollar Index failed once again at the 14-day MA on Thursday, setting up the latest retest of the critical 1.2132/1.2155 & 87.45 region. The 1.2132 level marks the 50% retracement level of the 2000 to 2008 bull campaign and the 1.2155 level is a monthly trendline that originates off the all-time lows. In both cases, these key levels for the EUR/USD & DXY have been tested three times and generally the fourth attempt carries a high probability of breaking through these critical barriers. In the event of a clean break, the EUR/USD's first downside target lies near the 1.18 handle. If, however, these key levels hold (or are only marginally broken), then focus shifts back to the key 14-day MA.

05/27 - EUR/USD's key retracement & trendline remain intact

Guided by bullish 4-hourly diverging studies, the EUR/USD was able to dodge a major bullet overnight. Euro bears got dangerously close to testing the May 19th low of 1.2139, which is very near the key 50% retracement level of the entire bull market move from 2000 to 2008. With only one day left in the month of May, it looks like a key monthly trendline that extends off the all-time lows will also remain intact. The next hurdle for the EUR/USD's recovery comes in form of the 14-day MA (now at 1.2442). Above this pivot, along with a bullish breakout of weekly bear RSI trendlines (9 & 14-periods) would indicate that a sustainable recovery is in place.

05/20 - GBP/USD maintains key Fib support

The GBP/USD has maintained support at a key Fibonacci retracement level on a closing basis for the fourth consecutive day (1.4294 = 78.6% of the rebound off 1.3500). Hourly, 4-hourly and daily bullish MACD divergence hint at an overdue correction. A break above daily RSI trendline resistance should trigger a corrective rebound towards the resistant 10-day MA (now at 1.4619). A daily close below 1.4294 or a sustained loss of the 1.4238 level, suggests that market bears remain in firm control and would refocus the 1.41 handle initially.

04/27 - Dow fails at key Fib

The Dow Jones Industrial Average has likely put in an intermediate top. Monday's failure at a key Fibonacci retracement at 11245 (61.8% of the 2007 high to the 2009 low) managed to form a doji candlestick, which indicates indecisiveness at an overbought juncture. The Dow now looks to have completed a 5 of a 5 (Elliot Wave), which suggests a pullback to the previous 4th wave base located just below 11,000. Also, volatility has picked up according to the VIX and the US Dollar Index remains strong. In the event that EUR/USD breaks solidily below a 3-month RSI uptrend, look for extended Dollar strength towards the 1.28 level (EUR/USD).

04/15 - Dow Jones in a 5 of a 5

The Dow Jones Industrial Average (and S&P 500) is forming the fifth wave within a five-wave up-move off the March 2009 low. According to Elliot Wave International, bullish sentiment has reached an extreme with roughly 92% of participants bullish on equities. Bearish MACD & RSI divergence is evident on hourly, daily & weekly charts, which indicates that there is only a small margin for error for stocks. I anticipate the formation of either a rising wedge or a blow-off top. In the event of a bullish exhaustion, a key Fibonacci level at 11250 could be tested (the 61.8% retracement of the entire bear market decline). Moreover, the VIX is exhibiting bullish MACD divergence, which hints of false-break of the 16 threshold and more importantly a pickup in volatility.

04/07 - 5 REASONS EQUITIES SHOULD STALL/CORRECT

1. The Dow Jones Industrial Average just confirmed a 2-day double top (Monday/Tuesday's highs) and negative diverging daily oscillators should continue to weigh. Losing 9-day MA support near 10900 suggests a broader correction is in play.

2. The VIX is pausing at a familiar level near the 16 handle and could potentially mark a double bottom base. Above the resistant 30-day MA confirms a base in volatility.

3. Treasury yields (which tend to reverse trends before stocks) have shown a failure at a key psychological level, namely the 10-year yield at 4.00%.

4. The 2010 sector leader (XLY) is losing leadership (to XLE) according to a relative strength comparison.

5. The US dollar has remained strong and it's inverse correlation should provide a headwind to equities. The EUR/USD has rejected at a key bear trendline & remains capped below the key 10-week MA.