ORIGINAL POST:  7:45 AM

I’ll likely fade this rally.  The prospect of a breakout is there, but there’s just as great a chance that it falls back.  Best to follow with tight stops and see where it takes us.

EURUSD has reached our targets (C? and d? below) two days ahead of schedule, but has also reached serious resistance just beyond the .886 of the decline since the 5th and is bumping up against the long-term channel.

The dollar has also reached a potential turning point, the .786 of the rise since the 5th for a potential Gartley — though the potential exists for a Bat completion down at 79.309.UPDATE:  9:50 AM

We’ve reached the top of the former red channel and the white channel midline.  If we break through here, look for at least a back test of either/both.

The currencies are standing back and watching, meaning this rally is nearing a pause at least, and likely needs to gather more strength before advancing any further.  I’m guessing this is about it for now, and am raising stops to 1449.

UPDATE:  10:05 AM

Just topped 1450 and the .500 Fib of the 1474 to 1425 drop.  This would be a likely spot for the market to turn.   If it pushes any further, the .618 is just ahead at 1453.61.  Raising stops to 1450.

EURUSD just tagged the original apex of the rising wedge from last week — still hasn’t broken through the last high and is beginning to look quite extended.

DX hasn’t quite reached its .886/1.618 channel back-test at 79.309.  However, it did also reach its apex from last week.  It’s not only not moving inversely to equities at the moment, it’s actually strengthening.

When SPX turns, don’t be surprised if we get a back-test all the way to 1443-1445.

UPDATE:  11:05 AM

This is likely the final thrust.  Two .618’s just ahead:  the .618 of 1470-1425 drop @ 1453.61 and the .618 of the 1474 to 1425 drop is 1455.80.  The .382 of the 1430-1470 is right in there, too, at 1455.46.   The higher target level of 1455ish is therefore the more likely.

continued for members…

We probably need a pull-back first to gather strength.  SPX is running on fumes as it is.  Yet, there’s still no negative divergence to be seen on any time frame.  So, if/when we pull back, the prognosis is for more upside.

Haven’t decided yet whether to play the expected pull back from 1455 to 1434ish.  Probably so, as the last time SPX tagged a .618 after a big ramp like this (morning of Oct 1, retraced .618 of 1474-1430 on its way to completing a Bat at 1470) it tumbled a good 18 points.

That .618 tag, by the way, came up .57 short.  With this one, don’t be surprised if we also turn before quite reaching it.

UPDATE:  12:10 PM

We just tagged 1455.51, which is good enough for me.  I’m taking profits on the longs we established last Friday at 1426.  I’ll also try a little short position to play the downside over the next day or two (tight stops, though.)

More in a little while…