Charts I’m Watching: Feb 7, 2013

Nice little intra-day sell-off again yesterday, culminating in a last minute positive close — another shake-and-bake by your friendly neighborhood market makers to separate you from your hard-earned money. Look for more of the same today.

Today’s news is all about currencies.  Draghi’s comments are successfully taking some of the bloom off euro’s today.  The euro is up 11% since Draghi’s “whatever it takes” speech last July 26.  What has it gained them?

Oil got a little cheaper — at least through the end of the year.  Germany might not care, but  Spain, Italy and France exporters are feeling the pinch at a time when they can ill afford it.

IMHO, this will set up a battle of political wills between the haves and have nots in the EZ.  Bucking the global trend and trying to achieve nominal growth without more accommodative monetary policy is doomed from the get-go.

The EURUSD chart shows how the market feels this will ultimately be resolved.

Though the pair will likely find support right about here — an important Fib line (red .618) and the intersection of two prominent channel lines.

The top of the big falling white channel is still out there as an upside target.  Timing would determine price, of course, since the channel features a fairly steep slope.  But, the range currently includes the red .886 at 1.3995 (the top of the purple channel), the white .500 at 1.3956 and the purple .618 at 1.3832 (the purple midline.)


SPX isn’t enjoying the plunge in the EURUSD.  I’m taking an intra-day short position with the channel line cross at 1508 with a target of 1497.29 – 1499.29 — the .886/.786 of the latest run up.  Charts in a few.

60-min RSI shows likely downside to at least the red midline and white channel bottom.  This likely translates into the .886 at 1497.29, but the purple midline is way down at 1492, so I’ll give it some rope (and reconsider our upside target) if SPX dips below 1495.


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