The first chart for today is the daily BBs and MAs chart on SPX, where we saw SPX close slightly over the 100 DMA and testing the current rally high and the upper daily bollinger band. Obviously there is significant resistance in this area:
- Failure here to form a double-top with a target back near the early June low.
- A move to the IHS target in the 1403-5 area to peak in the 1400-45 area to form a much larger double-top with a target slightly above the October lows.
- A breakout over the 1441 pivot towards the 1500 level and a possible test of the 2007 highs.
The last scenario only really makes sense if we see a major QE push in Europe, but as I was saying in my weekend post, the chances of that happening increased significantly last week at the EU summit. Failing that the second scenario is my preferred one unless we see SPX break back below 1335:
EURUSD has failed to make a higher high, has broken back below 1.2625 and is retracing. My big picture EURUSD chart is below and that looks extremely bearish. I was commenting at the weekend that if there's no big QE push in Europe then the outlook for EURUSD looks bearish as sovereign debt troubles will most likely continue, and that if there is a big QE push in Europe then the outlook for EURUSD looks bearish as QE is effectively a method of devaluation. Either way more downside looks likely for the Euro.