One Step Backward

When broad indices such as the S&P 500 can be easily managed via HFT, currency manipulation, etc., capitulation is practically unheard of.  The most we can hope for is to recognize that a planned move is about to get underway.

Yesterday, our targets worked out beautifully.  Things never got out of control — thanks in large part to the carefully controlled rebound in USDJPY.   Note, however, that the well-defined rising purple channel broke down this morning…2015-0707 USDJPY 60 0600  … which means that the 15-pt ramp job in ES came undone in the last six hours.2015-0707 ES 5 0600There are two reasons this was permitted.  One: in order to relieve the pent-up selling pressure on the euro.  Note that it is closing in on our target from two weeks ago, albeit a few days late.  In our last update on the euro [see: Staying Alive] we noted:

Yesterday’s dip below the purple channel midline and today’s backtest suggest further downside.  I like the idea of it, but the timing suggests a 4th of July low.

2015-0707 EURUSD daily 0600The other reason is that once in a while you have to take a step backwards in order to facilitate the next two steps forward.

continued for members…


Sorry, this content is for members only.

Click here to get access.


Already a member? Login below

Remember me (for 2 weeks)

Forgot Password