Copper

Copper finally closed above the neckline making the case to head to the 40wema near 2.28$

US Ten year T notes

The US 10 year notes bumped down yesterday [meaning higher yields/rates], now it maybe in the early stages but we can mark waves i and ii on the chart. So iii down started. Now this usually happens when US equities are rising but that was exactly the case in 2013 as well. So this will be important. There also always a point at which a sharp continued decline in the Notes pulls down the US market down with it. So watch how this unfolds and the speed of it as well.

Dollar Index - Getting Creative

You have to have read my observations very closely to understand where I stand on the dollar and various currency pairs. I did write that the dollar would weaken and it actually showed up in many currency pairs like the CAD, BRL, MXN, IDR etc. I thought that would be a trigger for an EM rally, and barring India most of those market did bounce in Feb. We are doing now. The dollar index however does not reflect this even as the Yen has strengthened a lot because the GBP fell off the cliff on the Brexit. And the GBP is still going to fall some more till 3=1 is achieved as a target. 

That brings me to the specifics about the Dollar. Now if you are an EWI reading they are working out a triangle for the Dxy and it should remain in the 101-95 range for a while. But I am showing an upside down chart below of the dollar index to show you that it is possible to mark the 5th wave as done where wave V of 5 is an ending diagonal and truncated. Meaning that wave V did not fall below wave III. The subsequent move was wave I and II is forming. Note this chart is upside down so wave I up was the dollar falling. Wave II has retraced 70.70% and wave III up could start anytime. I am watching closely for that event to show up. When it does it would mean simply that the Dow/Gold ratio heads South. I have discussed before the Dollar topped near a 61.8% retracement mark on its long term chart. And as shown here wave 5 could have ended and the trend reversal is already underway for the Dxy. Stay tuned to this as it will be important. This time round a falling dollar is unlikely to be good news for equities or the INR.

Dax More to go

Yesterday I looked at the US indices at key retracements, but they have continued higher. The wave count is far clearer for the DAX, where after a 5 wave decline in a channel. The rise is a-b-c, and we are in wave iii of c. Wave c is always 5 waves and once complete then the next wave down to new lows can start.

Dow - A change of heart

The Dow moved higher yesterday so there is room to consider this change in wave counts. Wave 5 ending as a ending triangle and now we are going up in a-b-c. Wave c is splitting into 5 waves and we are in wave iii of c.

USDCAD

USDCAD - I got this right, the dollar was going to fall against many currencies near term. This is a deep correction and going on down to the larger rising channel at 1.323. This decline however is wave 4 of the long term bullish progression. Or it is the 8th leg of a rise from the 2012 bottom. An impulse has 5 waves or 5+4, i.e. 9 waves or +4+4 in case of extentions. So to complete 9 legs at least one more rally up to a new high should exist once this correction is over before we consider a long term wave 5. The RSI at 32 is close to the 30 mark where we have seen the USDCAD bottom before. Once this takes support at the lower channel we can consider the next wave up for the dollar pairs.

Goldman Energy NDX

I have not considered this Crude proxy in a long time. But it is coming close to the upper end of the channel for the fall from May 2015, and that could be marked as a 4th wave if prices do not breakout of the channel. Then we can anticipate the next wave down in wave 5 for crude and energy.

GBPUSD

GBPUSD - I always discuss USDGBP but the reverse was important today because first I have more historical data for this contract and second it tells us that we are approaching a point where there has been support many times in the past. At 1.36 the GBPUSD has bottomed multiple times and once slightly above it. So while I was marking the decline from 2014 down as 1-2-3 on this scale it can also be A-B-C. The reason to consider this is just the fact that somehow this level held out in the past. And so Brexit or not this might be the worst case scenario for the Pound Sterling. Also note that while many currencies are strengthening against the Dollar recently the Pound is still falling so it is all alone in this affair. But that cannot go on. Once Brexit is discounted by the markets it might join the others on their way up against the dollar. So pay attention to a trend reversal in the GBP here.

Midcaps - The first relief

The recent fall in the BSE MIdcap index maybe an ending diagonal at the end of wave C. Now either wave C is sub-dividing and we get wave 2 of C to kiss the neckline [preferred view] at 10066. Or it is an X wave that can go to 10600. Some kind of counter trend move will develop over the next 1-3 weeks before the next leg down unfolds.

Dow Gold Ratio

More recently the Dow/Gold ratio saw a steep decline where the ratio fell below a 2 year rising channel. This may mark the start of a fresh leg down. The ratio has been rising since 2011 and retraced 23.6% of the previous losses. Another leg down would be resuming the previous down trend. A decline indicates Gold outperforms the Dow.