I’m keeping trailing stops fairly tight on this ramp after going long at 1431.50 yesterday for a bounce. There’s a good chance it won’t last. More after the open.
UPDATE: 9:40 AM
New channel for the leg down?
More in a few…
UPDATE: 9:55 AM
Here’s one problem. The EURUSD, after completing a Crab Pattern at the purple channel line as we anticipated, reversed and broke the channel it’s been in since late July 24 (in red.) It’s back-testing the red channel now, and is unlikely to retake it.
This doesn’t mean it can’t move higher — on the underside of the channel. I wrote about this a few days ago, noting that the channel would run out of room prior to the election, but TPTB would likely seek to keep it afloat until after Nov 6.
These back tests sometimes go on for quite some time, so I don’t see a clear signal from the EURUSD just yet — other than the possibility that this morning’s rally is done (hence closing the long position.)
The dollar, meanwhile, broke out of the channel it’s been over the same period. It hasn’t completed a back-test to the same extent as the EURUSD — but there’s a good possibility it will, ramping equities a little higher in the process. So, why not just stay long?
Since it exceeded the previous high of 80.25 yesterday, the downside case presented by the purple grid is damaged somewhat. Doesn’t mean it can’t go down, but there’s no harmonic case to support it at present.
Here’s the scenario I have been expecting for the past several weeks…
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