ORIGINAL POST: 10:15 AM
Friday’s action wasn’t terribly reassuring for bulls or bears. SPX’s dip to 1373 on the opening was largely a carry-over from Thursday’s decline. And, from a technical standpoint, remaining above the May 2011 high of 1370.58 was net positive.
The subsequent surge to 1391.39 seemed to ease traders’ fears, but they quickly returned when SPX erased most of the day’s gains by the close. A break out of the falling wedge would be more convincing if SPX first completed a bullish Bat Pattern down at 1375.12, but it’s not necessary.
As SPX is poised for a bounce, so is the dollar poised for a dip — having already reached our Point D target, but still lingering. While the larger trend remains positive, we should see a pullback to at least 80.30-80.40, with greater potential down to 79.55.
And, the EURUSD is likewise almost due for a breather. It has completed a small Butterfly Pattern to the 1.272 at 1.2711 (the red pattern), though a dip to the 1.618/.500 combination at 1.26 — in the proximity of the red channel bottom would make for a much stronger case for a reversal.
Our forecast remains on track, with a high probability of some consolidation in this price range before the next big move — which will likely catch many off guard. But, it’s the move after that one which will pack a wallop.
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