The action into the close will be telling. And keep in mind, it's the last day of the month so end of month trading can make things a bit whacky. I have a feeling this week could get pretty wild as November gets underway, and it's a month that has been particularly brutal to the euro in past years which could be reflective of what will happen to stocks.
Free Trader's eBook Until November 7th, 2011 from EWI
And speaking of the euro, here she is. On the daily chart you can see the top from last week took place at a very convenient spot, the 78% fibonacci retracement level. If the big bearish candlestick on the day holds into the close, I will definitely be taking another stab at the short side on this pair.
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In addition to the reversal right at 78%, the euro declined from the high in five waves. This in-and-of-itself is enough to get EWP bears in on the short side in my opinion. I'd like to get a nice bounce from here to give me better positioning on the short side though. And when you combine this with the fact that November, and especially the Thanksgiving US holiday, tend to be very bearish for the euro, it definitely has me salivating to short this pair soon.
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.
2 comments:
Todd - I see many stocks are making outside bullish reversals on the monthly charts. Isn't that type of action inherently bullish overall?
In and of itself, yes. But the core of my analysis and outlook is on the wave count, which is bearish. If the core of your analysis is based on those types of reversals then that should be your focus. But for me, it's EWP primarily, and with 5 waves down from the high on the year - I'm bearish as long as that high is intact. My opinion.
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