Short term

We went into this week looking for a short term top for wave [iii], the late day spike on New Year's eve appeared to give us the small spike from a small triangle, so it set up for a reversal this past week for wave [iv]. My preferred idea is that this is still in wave [iv] and a new high is still to come, although there is an alternative count that suggests the peak is in place for wave [v] of 5, however I would need to see a strong decline under 16200 to suggest a reversal.

So going into next week I am still looking a bit lower for wave [iv], where we will look to get long for a move higher once the market meets our targets.

Before

After

We are still targeting the 16300 area for wave [iv], so a bit a more downside is ideally seen early next week, then setup for a move higher for wave [v]. Although I am still looking for a major peak, I would prefer to see a minor new all time high first before setting up for a large decline.

Long term

I am still working 2 ideas from the March 2009 lows, both ideas suggest a short term top should be close and set up for a large move lower towards to at least 14000-14200. The bullish idea shown in blue suggests a pullback for a large 4th wave, the bearish idea suggests the move from the March 2009 lows is coming to an end, although at wavepatterntraders we focus on actually trading to make $$$ not hero calls, whilst I am a fan of having some long term plans, the real trading is still done on 60 and 240 min charts.

In my last article I wrote about the potential for the JPY carry trade to unwind. The past week we saw some weak price action on the JPY pairs, if a peak is in place on Japanese stocks and the JPY pairs then I suspect that is going weigh heavily on US stocks. So it's important to watch the Japanese markets over the coming days & weeks.

This past week we finally saw some decent moves in the markets, if our ideas work out the way we want things are just getting started and a significant move lower is expected.

The moves we saw on US markets, EURJPY, GBPJPY and USDJPY are nothing compared to what I am expecting over the next few months, I am looking for some huge moves in the markets, exactly the conditions traders need to make $$.

Until next time

Have a profitable week ahead

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By Jason Soni AKA Nouf

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Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

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