Markets are back in the range and trading sideways now after a reversal lower yesterday on US stocks. The S&P500 cash market moved close to 1538 support which of-course also pulled down the others as well, such as DAX and even NIKKEI futures. Meanwhile, we still have unresolved situation on EURUSD, where both counts from yesterday are still valid. 1.2880 remains key level for a push down to 1.2810. But as already noted few times this week; we think that sooner or later EUR will recover.
The S&P futures moved down to 1534 which now could be trading in wave C of an incomplete corrective retracement from 1558 high. If we get a bounce from 1526 support on S&P then EURUSD should find the bid as well because the correlation is tight on the intra-day basis, as shown on the overlay chart below.
S&P Futures count
S&P vs EURUSD
Generally speaking, we think that risk-on will resume, but probably next week once S&P bottoms, when also some new opportunities for USD shorts could occur. For now it's better to avoid any new positions and wait on break out of the range. Grega
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Chief Technical Strategist