Technical Analysis of Financial Markets

Monday, May 19, 2008

Nikkei Elliot Wave ?

In an 8-month period between July 2007 and March 2008, global stock markets saw steep declines in realisation of an unfolding subprime mortgage crisis leading to the dispersion of credit risk causing a credit crunch. The sell-off in the Nikkei has portrayed itself in a seemingly Elliot five-wave decline. Current price action is finding resistance at the 38.2% Fibonacci extension projected from the bottom of the five-wave decline where a b-wave of a a-b-c corrective three-wave bullish formation may be commencing.

Saturday, May 17, 2008

Citigroup, Inc. (C)

Totalling a record net loss of US$10 billion in the fourth quarter owing to its subprime mortgage holdings, Citi’s stock price has declined over 200% within a 12-month period tracing out an Elliot 5-wave formation. Current price action is finding support at the 50-day moving average where a b-wave of a bullish a-b-c corrective three-wave cycle may be developing. With a crossover of oversold stochastics indicating a buy signal, a c-wave formation may see a price target of $31 which serves as the 38.2% Fibonacci extension projected from the bottom of the five-wave decline.

Thursday, May 15, 2008

Eurasian Natural (UK:ENRC)

Having rallied over 175% since IPO in December 2007; natural resources miner based in Kazakhstan; Eurasian Natural, closed today with a gain of 7% after citing significantly increased revenues in the first quarter of 2008, largely due to higher commodity prices. However, with RSI signalling overbought conditions and with a crossover of overbought stochastics, price action in the interim period may be subject to correct. Immediate price target towards the 23.6% Fibonacci retracement level of the impulse wave rally beginning May 2nd.

Example trade: enter short position at current level (1481), close position at 23.6% Fibonacci retracement level (1424). At £10 per point, yields a profit of £570 (1481-1424 * 10, excluding broker fees). Stop-loss: close above 1500 yielding a loss of ~£190 (~1500-1481 * 10).

Long-term: bullish; enter long on weekly close above 1500.