The dollar is digesting its gains of the past three sessions and could backtest the midline of the potential channel at 81.55ish.  Note the small scale .618 tag, clearing the way for the next interim target at 82.243 (red .786 and white .618) or 82.414  (red .886 and the purple .382.)

The USDJPY has completed the backtest of the white channel and the purple channel midline as expected and should head back down now.  Next target 95.44 or 94.66 — and, soon.  The last such drop — from Aug 2 — accompanied a 27-pt drop for SPX.

The eminis are trying to turn positive by the opening on very little positive news, but are running into resistance from two different channel lines.  We could see a breakout, but for now the trend remains down.  I’ll remain short.

continued for members…

UPDATE:  10:52 AM

We could get a bounce here at 1687.  I’m taking a protective long position, tight stops.  Charts in a few…

The issue is which channel system will dominate in the short term.  If the small red one, then the drop to 1687 is a back-test.  Anything else, and there’s much more downside.

I have to run out for a bit.  Be back in an hour.

UPDATE:  1:42 PM

Back in the saddle, and not much has changed.  But, SPX just broke 1687, so I’m switching back to the short side here.  Stops around 1689.

But, there’s a good possibility that we’ll get a reversal at 1684.24, so keep that in mind if you’re not an active trader.  The real line in the sand is 1682.62. And, even then, the purple .886 at 1678 is technically still on the table.  Keep an eye on the smallest falling red channel for clues.

I’ll explain.  In looking at the purple grid, the price action since Jul 26 indicates either a Crab Pattern targeting the 1.618 at 1655 or is a garden variety .786 wave 2 retracement.

I don’t pretend to know what the wave action from 1709 means.  There’s a pretty clear 5 waves down from A to B.  And, it looks like 3 waves up from B to C.  From there, though, it starts to look more like a leading diagonal — which doesn’t bode well for the move down from 1709 being impulsive (any EW geniuses, please chime in any time…)

But, that’s okay.  I’m just looking for 1655-1660.  If that’s all we get, SPX completes a little H&S, a Bat Pattern and a .382 retrace of the rise since 1560 — then bounces a little before finally tagging the bottom of the yellow channel and midline of the big purple channel at 1555-1560 on or around Aug 26.

All I know is that there is enough of a right shoulder now to complete the larger of the two H&S Patterns (neckline = the lower of the two dashed purple lines above.)  A drop to 1683.50 or so would complete it.  A close below that level would confirm it.

I’m going to consider the momentary spurt above 1689 a stop clearing exercise, as it lasted no more than 13 1/2 seconds.

UPDATE:  3:55 PM

Even though it feels a lot like pushing my luck, the charts still suggest a sizable downturn over the next day or two (at least 30 pts)  and an even bigger sell-off after that (70-110 pts.)  I’m holding short overnight again.