UPDATE: 11:50 AM
Watching the falling wedge set up on EUR/USD:
The Butterfly I’ve been watching overshot the 1.272 extension, but the decline seems to be running out of steam. We’ll see if the 1.618 extension at 1177 has any better luck. That would also mark the 2.24 extension for the Crab pattern.
We’re also seeing divergence on the 5 and 15-min charts. I took a stab at a few OTM calls for what could be a nice snap back.
ORIGINAL POST: 9:15 AM
If the cash market opens where the futures currently are, we’ll complete both the Butterfly and Crab patterns I pointed out last week. If they play out, look for a strong rebound over the next several days.
To be clear, I would view such a move as leg C in a corrective 2nd wave, not the resumption of the bull market. In fact, even though these patterns are clear and incontrovertible, there’s a pretty good chance that they produce a hiccup rather than a full-fledged reversal.
Any reversal should run its course within the next two weeks — most likely by December 2-5.
The Butterfly (in red) finishes at 1198.52 (the 1.272). The smaller bullish Crab pattern (in purple) completes at its 1.618 at 1201.71.
Butterfly: .618 – 1246
1.272 – 1298
1.618 – 1325
Crab: .618 – 1242
1.272 – 1284
1.618 – 1307