The dollar’s falling wedge is breaking out as expected.
SPX will likely take a run at the .886 at 1693.92 on the opening, but should fall back just as quickly. I don’t believe it’s worth chasing unless it breaks above 1700.
UPDATE: 9:45 AM
So far, so good.
Interesting development on XLF… A few days ago, we discussed the test of a key channel and another larger channel’s midline as well as the approach of some key Fib levels.
XLF reached two key harmonic levels in the past month, and nearly completed the 1.618 Fib (21.06) of a large Crab Pattern set up by its 2011 decline.
XLF didn’t quite reach 21.06 (yet), but it did fall beneath the channel midline (purple) and, this morning, it lost channel support (red) and horizontal support (the 20.35 high from May 22.)
If it doesn’t find some help in the 199.97-20.15 range, it could easily drop to the bottom of the purple channel — a correction of nearly 8%.
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