With that said, I see some big picture signs here that may mean that this downturn is more than just a simple one or two week event. For the short term I posted the breakout levels I see are important to watch. A solid break above 1359.44 should signal a shot higher to new highs on the year soon after. But a solid break below 1329.51 should signal an acceleration of the current downtrend for at least a few weeks. And by "solid break" I mean a break that lasts more than a few hours and with strong internals.
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Earlier I mentioned bigger picture signs that something big might be unfolding to the downside. One of the reasons I said this is because of the weekly momentum picture as seen here through the RSI and stochastics. Both diverged from price at the latest high, the stochastics have now crossed and are trending down nicely, and the RSI has turned down as well. The larger the time frame, the more reliable I see these indicators, and right now, both of these indicators have lots of room to run to the downside on their weekly charts before reaching oversold. So the market is sure primed for a selloff to last at least a few more weeks.
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So the market hasn't yet given us any conclusive signs of a major top that will last several months or even years, but the door is certainly open for that to occur in the coming weeks. As a trader, until that happens I'll continue to the play the short term as I see it. That means I'm watching the breakout levels I posted above and will play the market accordingly to what happens to those levels in the coming days.
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The euro top is looking good here. We had several daily dojis occur that was followed by sharp selling in an impulsive manner that suggests a major top might be in. I'm playing the short side every chance I get. Today's rally allowed by to start getting my feet wet on the short side.
PLEASE NOTE: THIS IS JUST AN ANALYSIS BLOG AND IN NO WAY GUARANTEES OR IMPLIES ANY PROFIT OR GAIN. THE DATA HERE IS MERELY AN EXPRESSED OPINION. TRADE AT YOUR OWN RISK.