Elliott Wave - GOLD, USD/JPY

Euro and gold traded higher yesterday after central banks cut interests rates. In response the euro still did not reach the 1.3882 resistance, discussed yesterday. The price structure is still looking as a correction movement due to the amount of overlaps, indicating lower prices may follow after the top is achieved. Until then it may be better to stay aside. Gold bounced lower after prices hit the resistance area around the top at $ 925, and it looks like the pullback we mentioned yesterday is the case here.

Today's Charts

Gold

On the four hour chart below, we can see that the prices made a complete five wave move up in wave i), and this could the reason why we saw a pullback back bellow $900. After every five move the market should make a three wave move of the retrace. Prices currently bounced from the first 38.2% Fibo support of wave i); which means from the same area as previous wave 4. If this support really holds then we can expect higher prices in the today’s sessions, if we consider that once the wave two is done, the market should be trading higher; approach to wave three. Some traders may have already jumped in long in this 38.2% support area, but maybe is not the right time. The correction in wave ii) looks to sharp and very short at the moment, and that could be the key for longs somewhere around the 50%. This is close to $865 where a better entry may be seen if the prices in wave ii) did not hit the bottom yet. The wave iii) will be confirmed when the market pushes prices above the top of wave i). If we look at the whole price structure from the September 18th until now we can see that the market is still very choppy, in a fair reflection of the fundamental chaos that is being seen right now.

Usd/Jpy

The daily chart wave counts could tell us that the new lows on this pair will soon come, especially if equity markets move higher. The prices bounced lower from the very strong monthly trend line resistance in the middle of August 2008, and continued the approach to 100. We can see that prices bounced from the 76.4% support area in black wave III yesterday, which may technically be very hard to break. If the wave counts are correct, then the market could be currently trading in the correction of wave IV with the next 38.2% retracement level on the way up. We could see a turning point in this area, and break to new lows, but we will probably see a lot more complex black wave IV correction then is now, so its better to wait on more data.

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