Charts I’m Watching: November 21, 2011

UPDATE:  11:50 AM

Watching the falling wedge set up on EUR/USD:

The Butterfly I’ve been watching overshot the 1.272 extension, but the decline seems to be running out of steam.  We’ll see if the 1.618 extension at 1177 has any better luck.  That would also mark the 2.24 extension for the Crab pattern.

We’re also seeing divergence on the 5 and 15-min charts.  I took a stab at a few OTM calls for what could be a nice snap back.


If the cash market opens where the futures currently are, we’ll complete both the Butterfly and Crab patterns I pointed out last week.  If they play out, look for a strong rebound over the next several days.

To be clear, I would view such a move as leg C in a corrective 2nd wave, not the resumption of the bull market.  In fact, even though these patterns are clear and incontrovertible, there’s a pretty good chance that they produce a hiccup rather than a full-fledged reversal.

Any reversal should run its course within the next two weeks — most likely by December 2-5.

The Butterfly (in red) finishes at 1198.52 (the 1.272).  The smaller bullish Crab pattern (in purple) completes at its 1.618 at 1201.71.  

Potential Targets:

Butterfly:     .618 – 1246 
                   1.272 – 1298                 
                   1.618 – 1325

Crab:           .618 – 1242
                  1.272 – 1284
                  1.618 – 1307


Charts I’m Watching: November 21, 2011 — 2 Comments

  1. The volume in today's selloff is not as high as before, even volatility didnt pcik up. Do you see it as an exhaustion of selling or buyers are not stepping in to pick the bottom yet, and we are to see more downside before buyers emerge?it seems that eveywhere i read, everyone is expevting a rally during the shortened traing week. Do you think everyone will be surprised? USD seems to want to run higher…