Yesterday played out as expected, with a stop-running exercise that set a new high as we discussed last week.
But, this market is far from unrigged. Predatory HFTs use traders’ expectations of reversals at Fib levels to set them up.
It has already played out once, suckering those who bet on any kind of a reversal along the way since the 1871 bottom (there wasn’t one.) It may yet sucker in those who go long once 2020.86 is broached.
USDJPY closed outside the Pennant Pattern yesterday for the first time since its inception on August 24. Furthermore, it tagged our initial downside target overnight. From yesterday’s members section:
The BoJ would love to morph USDJPY’s fluctuations into a rising channel, but that means including some tags on the lower Fib levels such as the red .618. They’re more likely to chicken out at the rising red TL and purple .236 at 119.27 — especially if SPX is tanking.
By waiting until after the cash market closed, most of the damage to stocks was avoided. But, with 15 minutes until the market opens, I suspect SPX will reach yesterday’s downside targets with little trouble.continued for members…
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