As US equity markets (NASDAQ and NYSE) remained closed again on Tuesday due to Hurricane Sandy, the FX market, as usual, remained operational. Here's a quick market update and some suggested courses of action:
EURUSD: While the Euro is currently short from two system signals, the currency has held support (CYAN system dotted line on the daily graph below) for now and will likely have at least a nice bounce.
ACTION 1: Should today's US session high be exceeded, we would then expect a potential run up to somewhere in the range of 1.3002 (potential reversal point) to 1.3106, where the upper resistance trend-line of a possible TRIANGLE pattern is currently located. A further breakout up past 1.3138 (another point to ADD to your position) would likely lead to much higher prices.
ACTION 2: Conversely, if the Euro only pops up to the 1.2990 to 1.3020 potential reversal area, and then falls back 40-60 pips, the new trend will then likely be lower. Should today's GLOBAL session low of 1.2886 be broken to the downside, then 1.2603 becomes the lower target, and would very much clear the picture.
Until either scenario is resolved, its best to go for short-term profits in EURUSD.
S&P500: The SPOOS have held support after a slight break lower and then a reversal up. That is usually a sign of a several day bounce. The NASDAQ also appears to have made an almost double bottom and reversal higher. NOTE: The PURPLE MID-LINE TREND INDICATOR HAS TURNED LOWER (see the daily S&P chart below). This tends not to be a good sign for market bulls. Like the Euro, go for short-term profits for the next day or two.
ACTION 1: Should the SP500 take out Friday's high of 1412.13 (give it to 1413.20), then the market would likely pop up to 1426. At that point, if long, consider pealing off 1/2 your position with stops at breakeven. From there, it will be tricky unless it blows through that area – at which point we'd then look for new highs above 1475.
ACTION 2: Should the SP500 reach 1426, then have a daily reversal bar lower, the trend would then likely be lower. Should today's GLOBAL session low of 1393.13 be broken to the downside, then the crash scenario once again is on deck.
OIL: Crude oil appears to be in a terminal pattern of this down move. It will either make one more thrust lower to complete the bear correction of this leg, or it will break above 86.40 and run up to the 88.75 to 90.50-a-barrel area.
ACTION: If the market breaks to the upside, either get long on the breakout point of 86.40 and/or buy the intra-day pullbacks until 88.75 to 90.50 is reached, where we'll reassess (240-minute chart on crude with analysis is provided below).
Traders in New York and other states in the East Coast of the US, please be safe.
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