Yesterday action in markets made lot of technical damage.

USD down, US Stocks down, Gold and Silver - down !?!?!
All this because Global Worries and 8% crash in Chinese markets.

The upper trend line was eighter broken, or moved.
We could have false break too, since today price went bellow the line again.

Today price pared the loses from yesterday, but we will see what the future will be ;-)


Today Gold spot hit 21 year high against Japanese Yenn.
Yenn sucks ;)


Looking at HUI:GOLD ratio, we can see that Gold still outperform stocks,
but stocks heading up. This means that gold stocks are still relatively cheap.
EUR / USD view.
Even Gold and Silver are the most important topics from last week, I made relatively good percentage of profit on EUR / USD, so here you are an update on what is going on on currency market:

As we can see, EUR is trading very close to upper triangle line, but it did lower high, even close price in friday is higher close for the week.

We also can see, how the EUR bounces from middle line, which obviously act as support.

What to expect now - I believe now there are 2 scenarios:

  1. EUR will fall sharply to 1.31, and will bounce again, at least to 1.3160.
  2. EUR will fall, but very sloooow, and close to upper resistance line.
  3. Third (backup) scenario - EUR will fall sharply to near 1.30 and will bounce from there.

I believe, in all cases, EUR will fall, but this fall shall be very welcome, so you will be able to "cover the shorts" (buy USD back), and to buy positions for next BIG leg up.

Happy trade.


The latest developments in EUR/USD :
EUR bounced from blue line, and looks like it will not be broken.


EUR/USD pattern I described on 17.FEB is still active.
It is developing around upper boundary line.
Price defenetly go down (USD - bullish), but very slow.

Fundamentaly, USD must be affected from Gold, but no such thing yet, probably because of upper boundary line :)

Till now the analisys has proven to be correct.

Passions is everything :)
Dow bubble?

Dow is "collection" of 30 shares. This way they call it Dow30.

As you all know, back in 1999-2000 the Dow hit all time high.

Recently, Dow hit again, and made new all time high.

However, if we study carefuly the market price on each company in Dow back in 1999-2000 and now, we will see something strange.

Only 10 companies now are traded at higher price than in 1999-2000, and one (MCD) is on similar level.

Here is the list:
  1. American Express Company
  2. Boeing Co.
  3. Citigroup, Inc
  4. Caterpillar Inc
  5. Johnson & Johnson
  6. 3M Co
  7. Altria Group Inc
  8. The Procter & Gamble Company
  9. United Technologies Corporation
  10. Exxon Mobil Corp

And finaly MCD:

  1. McDonald's Corporation - at about same level

So hows that? 1/3 of the index is going, but then, this means 2/3 is down. So then why Dow is up? Probably because of capitalization and so on.

I am very curious about S&P 500, but this has to be made with a program and I have no time of it right now.

So, today, finaly, the Gold bounce.
Gold is $679.50, GLD is $67.30

However, I wroted something for Dow, and will post it in a moment :)


$670 looks like act as a support for Gold.
See the similarity in EUR/USD pattern I show on 2007-02-17 with IBM post from today.

It is the same!!!

So then don't explain me about the market that "This time is different" is all the same, always.
Note on IBM.

I read "Cult of the bear", but honestly, I don't get any idea what Clive Droke means there,

I noted following divergence in IBM:

IBM created a perfect triangle back to .COM bubble, and currently is on the top resistance line.

I especialy checked for similar pattern in DJ, but there are no such thing (else everyone will write about it.

So speaking about the bear cult, could it be, that the fall in IBM will drag whole DJ down? :-)

If the price fall to 75-76, and hold, I am buyer.


Here is latest EUR/USD chart. Here instead of channels, we show only major resistance and major support - red lines. It's a triangle. There is also the broken short term support - blue line.

From now there EUR should decline. There are two possibilities we see,

  • EUR will decline to blue line, and the line will act as support. Then the EUR will consolidate a bit, and will break the upper red line. Time frame - next week.

  • EUR will decline, the blue line will be broken, and decline will be till 1.2950-1.2960. From there will consolidate up-down, and finaly, will broke the upper red line. Time frame - 2-3 weeks.
Once the triangle is broken, EUR will raise to ~1.3280 - top from JAN.2007 and then to ~1.3350 - top from DEC.2006.

p.s. There are cup and handle pattern forming recently. Current we have just the cup, but as we think, price will go down and will form the handle:


Housing Construction Plunges in January

AP - Construction of new homes and apartments plunged by 14.3 percent in January, the Commerce Department reported Friday. The bigger-than-expected drop left construction at a seasonally adjusted annual rate of 1.408 million units, the lowest level in nearly 10 years.


EUR/USD - short support and resistance update

Currently, there are two channels EUR/USD is in.

First, is short term channel. Accordung to it, the EUR falling since the top in DEC.2006 Currently, we are at the very top of the channel. I believe the channel will NOT be broken today.

Second we have major support, as there is a long term bullish channel since SEP.2006 or so. Because the EUR/USD is far from the bottom line, I think, the EUR/USD will fall today or tomorrow to at least 1.3020.

Currently I have small order that actualy shorts the EUR, I do not recommend this to anyone, but if you want to do so, I will recommend to keep STOP order very close by, because if the resistance is broken, then fo sure we will have big advance, at least to 1.3280 (JAN.2007 top).


Some charts on EUR/USD

Long term chart. The EURo go close to the support line. From here, I believe, it will fell more, to the line, and then will go up.

Short term, is mess. I hope there will be bounce next week to 1.30++, but I am not sure, because the support I show is short term. Fall to 1.29 is possible, if the price continue to fall, it will fall below the price envelope (price channel). There is also major support at 1.2890.

So happy mess next week.

Some charts:

HUI/Gold - except the intraday pick, in friday, things are unchanged.

EUR/Gold - Gold outperform in general, but last friday - EUR...

EUR index/USD index