Currencies Hold Up Well After The Greek Disaster


Nothing has changed for the Dollar Index. The move up from the 93.56 is now five waves and should correct soon. The DX is still expected to get up to at least the low 97s for the triangle D wave I have been posting. The count you see in this chart is an alternate that I am starting to favor now because of Greece. However, I am watching the 97 level for a reversal on the hourlies. If the index makes it above the 97.75, this count here in this chart takes precedent. Although unlikely, if the DX is to roll over from here, past the 94.18 should warn of a fall to the 91. A break of the 93.13 will confirm the move. However, a drop should find support at the 95.30 level. From there, the index should bounce towards the 99.46 Green B wave high.


Crude Nymex Mini failed to break out of the contracting structure it has been carving out since the 62.57 May high leaving behind a Black D at the 61.82. However, with the recent drop down to the 58.77 stopping short of the 58.72 C wave low and the subsequent move up on the hourlies the commodity could be staging another attempt at breaking out to the upside, which if so could take price as high as the 70 mark. From there we can expect a move back down to at least the 55. Keep in mind that price just above the middle of this zone leaving the possibility open price dropping down a bit more extending this contraction more into a larger triangle pattern as in the count in this chart. However, I do not think this likely because the commodity is way past time ratio proportions with the swings up from the March 17 low. Crude has been true to form following rates. If the US 10 year moves up in a 3rd wave run now breaking above the 2.489 it tested Friday, crude could have very well put in a bottom at the 42.02 March 17 low. This would make this contraction a B wave counter corrective. The longer the commodity stretches out this triangle, and if US rates shoot up, we could see oil move up—all very bad for the stock market.


The CBOE US 10 year yield spiked up to test the 2.48 Black B high Friday in what should be its black 3rd wave run to about the 2.65 here in this chart. Rates have been moving up globally since April and are at either at corrective ends or about to run up in 3rd waves after a series of 1-2s from their perceptive lows. If rates move up, look for the benchmark to move up swiftly gapping up above the 2.5% in a 3rd wave run to the 2.73 161.8% Magenta 3vs.1.


The SPX failed to make a to new highs Monday only to roll over dropping down to the 2094 in what looks like five waves of a leading diagonal series. If so the index should be pulling back now in its counter corrective Black B wave. I do not expect this B to get much further than the 2105 before it gives way to more downward movement completing this 3 wave drop for Magenta 3 at larger degree. Notice the head and shoulders pattern now formed on the Daily. However, given the move down from the 2129, the index should move down through the neck line trend line to at least the 2.69 for Magenta 3 of the larger leading diagonal possibly forming down form the 2137 all-time high. From there the index will be expected to move back above the neck line trend line then acting as resistance to form Magenta 4. The process should repeat itself once more in Magenta 5th wave down to about the 2060 and back up in a Blue 2 at larger degree to about the 2090 neck trend line. The ensuing drop should be deep and painful (see weekly chart).


Gold, after moving down in five waves from the 1205 Red 4th wave high the metal shot up testing the 1187 50% and is now trading at 1186. This move up is not a game changer by any means. The pressure is still down for Gold and Silver. This move up was expected anyway and could carry as high as the 1197 78.6%. If the index moves past the 1200, the metal might be heading up with rates and Oil. The intermarket picture is starting to fragment. Gold and the Dollar have been bucking the norm. Bu this is not strange when you think in terms of a deflationary environment. Demand is now weak and will stay this way no matter how much they keep buying bonds and keeping rates at these extreme artificially low levels.

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