If you’re a bear, the good news is that markets fell out of bed overnight — with the e-minis down 19 points as of a few minutes ago. The EURUSD plunged from 1.3082 to 1.2916 in a matter of hours…
…and DX just peaked at 80.135.
The bad news (if you’re a bear) is that the damage was done overnight. And, each is due for a reversal in the coming hour.
The EURUSD reached an important channel line of support — the red channel that has caught this particular falling knife many times since the July 1.2041 low. While the pair might drift slightly lower, it is more likely to head higher throughout the day.
And, the dollar has completed a measured move higher, retracing 88.6% of its decline since the Oct 10 high of 80.295. Look for a reversal here that will build a base for a eventual higher prices.
The good news for equity bears is we’re likely to hit the 1.272 Fib at 1415.06 (or, nearby .786 at 1413.24) on the opening, and maybe even complete the Bat Pattern at 1405 we’ve been talking about for the past week or so.
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