When unexpected unpleasantness unfurls, you can count on central banks to pull out all the stops. Such is the case with the British election results which, like Brexit, have wreaked havoc on FX markets.

EURGBP, having broken down from its rising red channel dating back to mid-2015, was well on its way to a perfectly nice backtest at .80ish. Instead, it’s backtesting the broken red channel itself. Hence…the stop pulling.It should start with nice bounces from USDJPY and CL — which, as discussed yesterday, have already reached interim bottoms — and, of course, a sharp plunge by VIX.

Look for USDJPY to pop through its SMA200 for good measure… …and CL at least hold its own in the midst of strong selling pressure.

continued for members…DXY suggests it might have also put in a bottom.  But, I continue to believe this could be the calm before next week’s storm.

If so, EURUSD is a strong buy here at 1.1172……and, DXY is a strong short. I’d want to aggressively short any drop through the red TL and SMA20.On the equity side of the house, ES is holding its own, back above its IH&S target after an astounding 12 tests in the past week.If it breaks down, SPX will have a shot at a backtest of the yellow channel at 2420-2421 (the white dot.)  But, note that the SMA10 is now up to 2425.71, which could serve as the target for any decline.  The falling purple channel, while not necessarily completely trashed, has been pretty thoroughly thrashed.VIX has continued to fall in the white channel, though it has potential fan line support if they choose to let SPX backtest. The only issue with it continuing to fall at this point is that there won’t be much room left for a sharp plunge after next week’s FOMC meeting.  Maybe just enough to produce a new high…UPDATE:  9:33 AM

This is pretty much where it needs to turn if it’s going to. SPX is only a couple of points from new highs, and has already tested and reversed from its white .886.USDJPY broke through the SMA200, but has run into channel resistance.My vacation continues today.  I’m going to turn my computer off and actually take the day.

UPDATE:  10:30 AM

Okay, so I haven’t turned off my computer just yet.  Here’s the next opportunity for SPX to top out if it’s going to.   Note that ES has also reached a key Fib. I believe it’s worth taking a shot at a short with tight stops.