Elliott Wave based intraday trading (avg +1000 pips/day goal)

Gold: Head and Shoulders; More Room on the downside

Pre-Requisite Reading: XAUUSD; Short Setup in the Money

Even though we have emphasized the bullish case for Gold in the medium-long term in this article, in tandem with our short term targets, the Yellow metal should touch the 1180.00 area before starting to rally again. We are holding a short position from April 21st in 1259.4 level, with an adjusted Stop Loss now 1270.5.

What is appealing in XAUUSD chart is the head and shoulders in H4 time frame. The signal to go short would be the break of that red dashed neckline, with a target at least 1222.0 where the lower trendline of the triangle on the daily chart is located.

A break of the neckline may put pressure on gold to retest the 23.6% retracement, and even though the bearish scenario is our most favorite for the moment with a 7/10 rank, we need to see a breach of the triangle that would pressure gold to reach yellow II.

Consider shorting below the neckline with a stop loss above 1242.10

p.s: You can read this article and much more on forexsignalsfactory.net

Pre-Requisite Reading: General Forecast (article in forexsignalsfactory.net)

We have been calling long positions in GBPUSD for several days now and in this trade setup: GBPUSD: Still Bullish!, you can see which are the levels to consider and how to play it. However there are several factors which we should consider now before opening any position. This might be a good opportunity to start and lighten up your long positions but not necessarily go short.

(Our long position is about to be liquidated very soon around 1.46 levels)

Why the rally might be coming to an end:

We are currently trading in overbought level (RSI)
Rally has become vertical (Euphoria- possible indication that retails are buying around these levels)
Important Fibonacci levels and historical resistance ahead.

GBPUSD 4H Chart - April 26, 2016

Before testing higher 1.4600 levels, GBPUSD needs to retrace around 4th wave on the above chart.

Our target for the top of 5th wave corresponds to the 100% extension of the larger A-B-C on the H4 chart and that will be a good level to consider going flat and wait for confirmation that the rally is over and it is time to initiate short positions.

Start lightening up your long positions in current levels as the situation might escalate anytime given the 3 reasons mentioned in the beginning of this article.

YES and No.

Yes, because SPX chart favors for a new move high and that ES needs to break previous highs and record new ones to confirm the bullish rally (see charts below).
No, because there are 5 clear moves up from the February low and the last days correction completed 5 moves down (see charts below).
Last Friday we wrote ES Mini: Did It Top? and discussed what the market must show us in order to consider the top:

“In order to have a high probability confirmation of a top, we need to see a 5-3 structure.” - ES Mini: Did It Top?

The 1st part of the requirement (5-moves down) is achieved and market is currently playing out in the zone of the 2nd part of the requirement (3-moves up).

ES-Mini 30m Chart - April 26, 2016

In the above chart, we see the yellow 5-moves down and the current 3-moves up in the ideal target zone for a wave 2 (50%-62% retracement levels). Above 78.6% retracement level, we might expect prices to reach for higher highs and below 2075 we can confirm the downside potential.
ES-Mini Daily Chart – April 26, 2016

In the daily chart, we can see that a 5-move up from the Feb 2016 lows has been completed but what makes us skeptical is that usually the 5th wave tries to reach the upper-bound of the channel (between wave 2-4 & 3). Note that the dashed red trendline has served as the main resistance for this wave 5.
If we observe the two circled areas, Area X and Y, we might find similarities in price action and in addition the previous pivotal (yellow trendline) served as a major support in yesterday’s bounce from the lows.
SPX 1H Chart – April 26, 2016

In the SPX chart, we see that prices broke below a major Fib-Gann Line and in case the “cash” market opens above that line, we might actually consider this correction as an inner wave 4 of wave (5). In that case, both ES-Mini and SPX will reach 2120 and 2150 respectively.
Thus, in order for the bearish scenario to play out, we need to see a move below 2075 and the yellow pivotal trendline.