Something tells me there are some very surprised FOREX traders out there. After Draghi announced negative (yes, negative – – – our world is so insane now, it doesn’t even register anymore) interest rates, the Euro plunged…………..then started zooming higher. Welcome to the other side of the looking glass. Here’s the EUR/USD from this morning:
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The level of bear despair yesterday was impressive, and the percentage of bulls is now 62.2%, as compared to previous highs at 61.6% at the end of 2013, 62% in October 2007, 62.9% in December 2000 and 60.8% in August 2007. All of these previous readings were signals that large rallies were ….. um …….. ending, and that significant highs were being made.
I was delighted yesterday to identify the pattern for the current move, when the low yesterday established a perfect rising channel from the last lows at 1862. This is excellent news as we now have a clear marker for when the current move is ending at the break of channel support there. That break will signal that this move is topped or topping, though a retest of the highs would be routine after such a break, so it would be important not to jump on that break too hard when it happens. SPX 5min chart: (more…)