Here is the latest post from guest blogger DV 34

Doing the weekend scan on the higher timeframes I thought it would be good to recap some older posts to see how they are progressing in real time

Also, during my weekend review I noticed two European indices that look like they could be entering a PRZ (Potential reversal zone)

A couple of months ago I looked at a possible Fibonacci cluster level on the French CAC-40 index which was looking interesting. At that point we had no indication that the price would reverse - with no clues on the lower timeframes or clear signal - the trade was not taken, (sometimes the best trade is the one you leave alone…!)

Coming back to it again a few months later we have a similar development occurring now.

(Please note these charts are from the 22nd April and the current monthly candles are yet to close so will change in the next week)

CAC-40 Monthly Chart

France CAC 40 Index Click to Enlarge France CAC 40 Index
Click to Enlarge

Similar to the last post on the CAC-40 here it has a similar structure to it, namely:

  1. At the long term trend line from the 2000 peak
  2. Has a long term bearish gartley pattern at 70.7% retracement
  3. A clear 5 wave structure shown in the red lines

5 wave structures are often related to trending/ impulsive moves according to Elliott wave theory… which suggests that any pullback is likely to be limited to the downside in a 3 wave correction of some type or a 3 wave flat sideways correction

  1. This 5 wave structure has the “rule of alternation” shown between wave 1 and wave 3

This rule basically states that if the first wave is retraced by 61.8% (point 2) then point 4 is likely to end at 38.2% of the 3rd wave or vice versa - which it clearly has here

Eurostoxx 50 Monthly Chart

Euro 50 Index Click to Enlarge Euro 50 Index
Click to Enlarge

The monthly chart for the Eurostoxx 50 index a 5 wave advance into:

  1. A long term horizontal support resistance level going back 15 years + origin of last major decline
  2. A long term bearish gartley pattern at 70.7% retracement
  3. A clear 5 wave structure shown in the red lines with a 5th wave cluster level coinciding with the 70.7% decline
  4. Similar to the CAC40, this 5 wave structure has the “rule of alternation” shown between wave 1 and wave 3
  5. At this stage the current monthly bar is showing as a bearish pin bar but it is yet to close so TBC

If this does indeed close as a pin bar at the end of the month, it could offer a nice R;R position short trade early next monthReview of Oil and Russian RTS Market charts posted here

Review of Oil and Russian RTS Market charts posted here

US Oil Monthly Chart Update

As noted in the last article I noted a large scale Bullish Bat pattern (in blue) now we have hit the 23.2% retracement of the C-D leg after a 38% move off the low in 6 weeks and clearly formed an important low,

Saying this I believe there is significant resistance here and we may see a short term resumption of the downtrend for reasons shown on the next chart

US crude oil monthly Click to enlarge US crude oil monthly
Click to enlarge

US Oil Weekly Chart

US crude oil Weekly US crude oil Weekly

Reasons that make me want to short this rally now….

  1. We are at a major long term level from 2006-2007
  2. This level is also clusters with a 23.2% retracement of the steep decline from 2014,
  3. We are trading with the trend – likely around a 20 period EMA
  4. We have a supply level present exactly at this zone
  5. There is a bearish shark pattern shown in orange
  6. The current weekly candle gapped up and if it closes below last weeks close it will form a bearish dark cloud cover candle formation (nice to have… but only noting because it’s there…)

It is worth nothing that shark patterns typically aim for 50-61.8% targets of the last leg (into a bullish 5.0 pattern) or in this case basically $50.00 or slightly above so if this month moves too much the R:R may not be worth it unless you can get a shorter term entry/ tighter stop loss

Russian RTS Index Monthly Chart Update

Russian RSTS Monthly Russian RSTS Monthly

The Russian RTS Index performed as expected but is now running into resistance levels as well, the move here doesn’t look like much but it was an 86% move off the low in 17 weeks or 56% from the end of the D point shown.

Similar to the US Oil market I expect it to meet some sellers soon as it hits these key Fibonacci levels

Hope this helps and all the best

DV