Well, it appears that we have a bit longer to wait until risk starts to sell-off. I suppose by that time "recession is over" will be all we hear.
I will start with the USD, which is breaking down through widely watched levels. The internal structure of the Australian against the American dollar looks fairly clear, and calls for a few, relatively short "strikes" to the upside, which I expect to finish around 0.87 by the end of the week.
Another clear structure has unfolded in the EURO against the Australian dollar. I expect one more move to the downside, following which a recovery will begin. I expect that recovery to signal a medium- to long-term base, and the see the cross 10-15% higher in a short while. As I expect EUR/USD to trade down, this implies a collapse in AUD/USD, which would likely coincide with a fall in equities.
On the last point of correlation between fortunes of the AUD and equities, the following is a chart of the AUD against the EUR, in red and Nasdaq100 futures, in black. I don't think there is much hope for either, beyond 2-3% of upside.
And finally, the DAX. Well, it looks like it finished waves 1-3 of its ascending structure. What remains, before a correction of at least 2-3% are waves 4 and 5. I expect wave 4 to form through today and perhaps tomorrow, falling towards 5450 or so. Penetration of last week's lows puts us back onto the bear count.
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