As expected, the EURUSD has turned the corner, easily topping our 1.30 target from Apr 4.
The daily RSI shows a break out through the resistance of two long-term channel midlines (yellow and white) with a third, shorter term midline to come. So, while we could see some near-term consolidation, the pair appears to have room to run.
The dollar has likewise met still resistance at the .886 Fib (83.616) we discussed a few weeks ago and turned down. Recall that this resistance also came at the intersection of two price channel midlines (red and white.)
We shorted at 1573 on Apr 2 [CIW: Apr 2 10:37 update] looking for a pullback to the .786 (1546) or .886 (1542) of the rally from 1538 to 1573.
A drop through 1548.50 would be cause to consider switching sides. But, I suspect the weakness we’re seeing this morning is continuation of the shakeout attempt from late last week — so I look at this intra-day short as a protective position that’s unlikely to register more than a few points to the bottom of the little white channel.
Stopped-out on the protective short position for no gain — will let the long position run. Note that we’re safely back in the large purple channel dating back to 1343 in November. The bottom of the little white channel is now around 1549.25, so set stops accordingly.
I should mention that we’re basically playing around in the tails of the daily candles. That is, on the daily chart all of this action will be disregarded as was Friday’s dip and subsequent recovery. So, anyone not inclined to day trade should really ignore all this stuff and stay focused on the forecast.
UPDATE: 10:20 AM
The little white channel actually looks better with this drop down to 1548.63. Looks like a good place for SPX to make a stand. Perhaps a run up to 1558-1560 now?
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