SPX reached our second downside target from Apr 30 yesterday [see: While Investors Are Away], tagging the SMA100 on the dot before rebound as expected.
It was aided by USDJPY (which has slightly overshot its own SMA100 before rebounding two sessions in a row, now)…
…and, EURUSD, which shot past the large scale .618 to complete a Crab Pattern overnight at the white 1.618.
Both are slipping this morning, but there’s a third lever that should drive stocks’ next move.
continued for members…
CL, which reversed at the 1.272 as expected, will reach the bottom of the proposed purple channel shortly.
It has already reached trend line (TL) support, but should continue on to 59.50 or so. If stocks are still on the rise, it might even drop to the previous high at 58.56 — which would be a bullish backtest and would keep the red channel legitimate with a tag of its midline.
Recall, it’s my belief that CL is being extensively used to keep stocks out of trouble until USDJPY’s SMA200 arrives on the scene to drive — per our analog — the next leg up for stocks. As such, if/when USDJPY takes over primary levitating duties again, CL will be free to drop back to acceptable levels. In fact, it will need to in order to maintain buying power in the face of Japan’s dropping yen.
UPDATE: 11:30 AM
SPX has reached the SMA50 as CL is backtesting the bottom of the (broken) purple channel.
Should see a retreat here — at the euro close — that will permit CL to complete its backtest of the red midline at 58.56 and USDJPY to retreat to the SMA100.
Likely targets include the purple midline at 2072.51ish — a .786 retrace.
UPDATE: 2:30 PM
SPX isn’t showing much of a reversal — yet. CL reached the 58.56 target and reversed, which is providing some props.
While, USDJPY hasn’t yet reversed at the white/red channel intersection (but, should.)
The delay will probably reduce the retracement. But, I’m still looking for one before prices move higher.