Charts I’m Watching: Oct 2, 2014

SPX hit both of our next downside targets yesterday: the SMA100 and the .618 at 1948.51.  The key continues to be the USDJPY, which — along with NKD — had its most significant sell-off in months yesterday.  It moved below the acceleration channel midline, and could fall to the white .786 before the channel is in danger.

2014-10-02-USDJPY 60 0600

The close-up shows the immediate target of the .618 at the SMA20 9108.05) and the bottom of the channel at 107.50.

2014-10-02-USDJPY 60 0601

If the pair is allowed to settle further, there is easily more downside potential in SPX.  It closed well below the SMA100 and just below the .618 — ending up at a TL connecting the 6/24/13 and 2/5/14 lows. The 2/5/14 low was, IMO, an aberration — reversing before it should have thanks to a similarly (seemingly) unimportant TL.  Though the charts would clearly indicate further downside to the white .786 or even .886, I wouldn’t rule out a 2/5/14 type reversal here — particularly if bonds and the yen are monkey-hammered into submission.

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