Good evening to you folks,

God’s blessings to you all tonight.

The Credit Cycle Is Deteriorating Quickly

EURUSD.

EURUSD 1hr.

EURUSD 4hr.

EURUSD daily.

EURUSD has retraced higher than I expected in wave ‘i’,
but I am taking this as a vote in favor of the idea that we have finally bottomed and on the verge of a larger rally into wave (C) as I have long been waiting for.

WAve ‘i’ has traced out a larger five wave pattern into todays high now,
and I do expect the price to form a higher low above 98.63 this week.
So that is what I will be looking for over the coming few sessions.

Tomorrow;
Watch for wave ‘ii’ to trace out three wave down to a higher low in the area of 1.00 flat again by midweek this week.

GBPUSD

GBPUSD 1hr.

GBPUSD 4hr.

GBPUSD daily.

The correction in wave [iv] has done enough to complete an expanded flat correction now.
The internal pattern in wave (c) of [iv] may well extend to form a larger five wave pattern,
so I am not quite sure if wave [iv] is actually complete at todays highs.
If we do see a spike to the downside again to cross back below 1.1600 again,
that will favor the idea that wave [iv] is complete and wave [v] down is underway.

Tomorrow;
Watch for signs of a reversal into wave (i) of [v] by a break below 1.1600 again tomorrow.
If 1.1600 holds tomorrow,
that will suggest wave (c) is going to extend a little higher before turning lower again.

USDJPY.

USDJPY 1hr.

USDJPY 4hr.

USDJPY daily.

I am torn between two interpretations of the recent declines.
It is possible that wave (i) and (ii) are complete at todays high.
The rise into todays high is definitely a three wave pattern higher so it is corrective and counts well as wave (ii).

However,
the alternate view labels todays rise as wave ‘iv’ of (i).
so this idea will allow for another drop below 141.50 to complete wave (i).

Tomorrow;
Todays high at 143.48 must hold for either of these counts to remain valid.
Watch for wave (iii) down to break below 141.50 to confirm the main count.

DOW JONES.

DOW 1hr.

DOW 4hr

DOW daily.

The Dow is taking a break today after last weeks wave ‘c’ rally.
The price briefly made a new high for the rally earlier this morning,
but now again the slowing momentum is showing.

Wave (ii) has reached into the target range that I had suggested initially.
The previous fourth wave high at 32390 has been hit.
this happens to be the area of the 38.2% retracement level also.
so at the moment,
we have a completed expanded flat pattern in wave (ii).
A Fib retracement level hit,
and a previous fourth wave hit.
In my book,
the evidence is starting to build in favor of a completed correction in wave (ii) now.
I cannot rule out a further rally to hit the 50% retracement level,
this was the upper target level in my initial estimation for wave (ii).

But I think that we have enough pieces of evidence in place at the moment,
to at least begin looking for signs of a top in wave (ii) and maybe a turn lower into wave ‘i’ of (iii) by midweek.

Tomorrow;
Lest see how the price reacts to that 38.2% retracement hit.
If we see a sharp spike lower towards 31500 again,
that will be a good signa that wave (ii) is complete.

GOLD

GOLD 1hr.

GOLD 4hr.

GOLD daily.

Wave ‘iv’ has been a tough cookie to crack over the last few days.
Each spike lower has been retraced even into todays new high for wave ‘c’.
I am still reasonably confident that the whole rally into this high is a correction into wave ‘iv’.
But this evening another possibility opened up for wave ‘c’ as an ending diagonal pattern rather that a straight five wave pattern in wave ‘c’.
This pattern will require a complete reversal now to begin wave ‘v’.
and I am still looking for that three wave decline into wave ‘v’ over the coming days to complete a larger ending diagonal in wave (v) blue.

Tomorrow;
Watch for wave ‘a’ of (v) to fall back into the recent lows again at 1680.
A break of 1700 again will be a good sign that wave ‘v’ of (v) is underway.

CRUDE OIL.

CRUDE OIL 1hr.

CRUDE OIL 4hr.

CRUDE OIL daily.

I am rethinking the larger count for wave ‘2’ blue tonight.
If you take a look at the 4hr chart as a guide;
There is a clear three wave decline off the current wave ‘2’ high from early August.
If we take that August high as wave [a] of ‘2’,
then a three wave decline to a new low can be viewed as wave [b] of an expanded flat correction.
In this scenario you would expect a five wave rally back above 105 again in wave [c] of ‘2’.

I am going to keep this idea on the back burner for the moment.
I can’t rule it out,
but there is no evidence to favor this count yet either.
We will see how it goes this week.

Tomorrow;
Back to the main count.
this rally has extended far enough in wave ‘ii’ to get worried about the overall count.
The price is still holding below the 90 handle this evening,
so there is still time to turn the tide back into wave ‘iii’ of (iii) over the next few days.

Watch for a drop back under 85.00 again to signal wave ‘iii’ is underway.
The wave (ii) high must hold at 90.17.

S&P 500.

S&P 500 1hr

S&P 500 4hr

S&P 500 daily.

The S&P managed a higher retracement in wave ‘ii’ than the Dow has.
Todays new high has hit the 50% retracement level at 4116.
This was the upper end target area for the expanded flat correction that I have been working with here for wave ‘ii’.

At this point I think wave ‘ii’ has done enough to call that correction complete.
And the rally has gone far enough to unwind the bearishness that we saw at the bottom early last week.

I think we may well be back to a neutral sentiment again in the market much like the wave (ii) high.
And now I am going to begin the hunt for a reversal to build into wave (iii) down over the coming days.

Tomorrow;
Watch for a sign that wave ‘c’ has topped out.
There may well be a reaction lower after hitting that 50% retracement level.
If we see a break below 4020 again at the wave ‘ii’ high that will signal wave ‘1’ of ‘iii’ has begun.

SILVER.

SILVER 1hr

SILVER 4hr.

SILVER daily.

Todays rally has forced me to rethink the whole pattern that has played out since mid July.
The rally has gone high enough to rule out the previous wave count for wave ‘5’ down.
I am now returning to a possible continuing correction in wave ‘4’ red.
And once this expanded flat correction is complete with a break of 20.86,
then I will look lower again into wave ‘5’ down.

This new count requires one more rally in wave [c] of ‘4’ to complete with a break above 20.86 again.
Wave [c] should trace out five waves up as shown.
And todays rally is viewed as part of wave (iii) of [c].
The rest of this weeks trade will be crucial for this pattern.
If this rally fails early and breaks below 1850 again that will signal wave ‘5’ is underway again.

Tomorrow;
Watch for wave (iii) of [c] to complete an internal five wave pattern before correcting lower into wave (iv) again.