JPY and NIKKEI show signs of pause in market sell off.

Κυματική ανάλυση για το Χρηματιστήριο Αθηνών
April 14, 2014
S&P Elliottwave analysis
April 21, 2014

Last week I posted my analysis regarding my bearish view for April and early May for the markets. The market sell off and mini crash I was expecting looks like is being put to a hold and today we might see an upward bounce in the markets. If markets bounce upwards today my strategy will not change. On the other hand, since my first target of 1810-1800 target was reached in pre-market during late Sunday’s open in S&P futures, I will now wait to re-sell the bounce near 1830-35 in ES June futures or near 1835-40 cash index price.

Last week we saw both DJIA and SPX move lower as expected by our latest analysis posted here in through my twitter account @alexanderyf. With a fake break out and a strong reversal I’m positioned ready for more downside this week. My thoughts were explained in last weeks post and I now look for a move in SPX near 1770 and in DJIA near 15400.

SPXD

dowdaily

With S&P and DJIA between the 50% and 38% Fibonacci retracement support is strong in this area and so a bounce is in the works if we take a look at the early price action in futures after the gap down open. My main view remains bearish as some technical levels in longer-term charts have given me sell signals.

SPXLONGTERM

spxweekly

The start of the week will be bullish but I do not expect the current low to be held this week. I expect new lows before Good Friday. However what makes me believe that the markets are not yet ready for a continuation of the sell off are the signs I get from USDJPY and Nikkei futures. Both are holding above support levels and generally seeing JPY not break down is not a risk off signal. USDJPY holds firmly above 101 support which is not only short-term daily support but also weekly long-term support. If broken I would expect the USDJPY pair to push lower towards at least 97.

USDJPY

NIKKEI futures have come back above 14000 and trade above critical support levels. The bigger picture in NIKKEI is not if but when will this break down towards 13300-13000 points will happen. I feel very confident that both Nikkei and US indices will be put under heavy pressures this week.

nikkeifut

The structure of the NIKKEI chart I believe is preparing for a huge break down towards at least 13000. But for now, prices are being supported and this might be a good opportunity for US markets to make a final upward bounce and a last sell opportunity. Critical level for the US markets are the recent highs at 1900 and 16631. A break above these levels will cancel my bearish scenario and will confirm that the correction is over and we should expect a strong bullish move. Until then I remain bearish looking for another opportunity to re-sell and add to my short positions.

Trading2day subscribers have been informed since Friday that we have closed half of our short position in ES futures but we still hold our long VIX options for May. Through our exclusive twitter account @trading2day, we provide our trades in real-time as they happen and at the exact moment we place an order in the system. For more help trading European or US indices, visit our Premium services page a choose the service that is best for you. If you have any question regarding our services, don’t hesitate to send us an e-mail at support@trading2day.com.

As always, thank you for taking the time to catch up on my thinking.

Alexandros Yfantis
Alexandros Yfantis
Fascinated by financial markets, studied International Securities Investment and Banking in the UK, works as a Portfolio Manager in Greece and runs a technical analysis website. Enjoys travelling and spending time with his family and preparing for the black belt in Korean Karate.