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.)

While, daily RSI shows a conflict between a long-term midline (yellow) and the inclination to tag the lower bound of the rising purple channel.

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.

The market slightly overshot those levels on Friday, but remained north of the Mar 19 low of 1538.57 — thus completing a Bat Pattern.  So, we went long at 1539.86 [CIW: Apr 5 9:33] with tight stops.

I remain long, but will take an interim short position on the drop through the channel midline at 1551. Stops right there.

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.

UPDATE:  10:05 AM

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?

Keep an eye on this channel, as any departure is cause to hedge or play the downside — at least on a short-term basis.

continued for members…

UPDATE:  12:20 PM

The channel just broke down a little, so I’ll open a ST short position here at 1551.33 and see if it plays out.

The resistance seems to be coming from the TL connecting the Apr 3, 4 and 5 highs.  Might just be a backtest of the broken red channel line, in which case it should hold 1549.40 or so.

UPDATE:  12:45 PM

False alarm… another shakeout attempt.

UPDATE:  1:55 PM

The rally is coming along nicely, but faces another line of resistance in the form of a red channel line where it intersects with the white midline — around 1556.80. This is also the .886 of the drop from 1560.26 on Apr 4.

Watch the white channel for signs of anything more than a pause.  A break up through this level should speed the market on its way to 1558-1561 — as no other red channel lines (subdivided by white) will stand in the way

BTW, natural gas (NG) has had a nice move over the past couple of months — recently breaking out above long-term resistance.  I’ve taken a crack at some charts, available HERE.

Next, I’ll update the SPX forecast with a focus on how this latest test of the purple channel bottom affects our forecast.  Stay tuned.

UPDATE: 3:30 PM

Assuming SPX reaches 1559.95 – 1560.61 in the final hour, we will have the makings of a nice Crab Pattern up to the 1.618 Fib at 1594.77 — which intersects with the TL connecting the 2000 and 2007 tops in the next week or so.

UPDATE:  3:37 PM

Close enough.  Closing my long position here at 1560.15 for a 20-pt gain and will try a short, with stops at 1562.50ish.  Might be a point or so early… the green .618 is at 1560.61.

Note that a pullback here to 1552 or so would be a nice start to an IH&S pattern targeting the green 1.272 (1582.95) or the 1.618 (1594.77.)

Though, a turn at the .886 of 1569.77 would look just as good, and would target only the 1594 level — right there with the TL from the 2000 & 2007 tops.

Obviously, there’s no guarantee we’ll ever reach that TL.  There’s plenty of resistance between here and there.  But, we’ve set up some pretty solid looking patterns that could/should be able to do it.

Keep an eye on the channels and keep stops where you’re comfortable.

I’ve updated a few other items this afternoon: RUT, USDJPY and (new coverage) NG.  I’ll do more later if I have time.

GLTA.