Tuesday, October 6, 2009
Watching the EUR/USD; October 6, 2009
The stock market closed on its highs with very strong internals for back-to-back days, plus today had some strong volume behind it. Usually this acts as a launching pad to shoot the market higher for days/weeks. Expect higher levels to be achieved in the coming days and the 1080 high in the S&P will most likely be broken very soon. I covered another very small portion of my long dated put options on the dip this afternoon and bought some more November call options no the SPY.
Above is an hourly chart and wave count of the EUR/USD. It calls for at least one more rally to complete a 5 wave advance. If wave 5 rallies to a new high above the 1.4843 level, then there's a good possibility that-that 5 wave rally will complete the entire rally this year and market "THE TOP". However, if the 5 wave rally fails to break above 1.4843, it means it's probably just a wave 1, and will undergo a wave 3 and 5 to probably test the 1.50-1.51 area over the next several weeks.
When the EUR/USD tops, so should the stock market.