The Euro Needs To Hold

Because virtually everything is tied to the Dollar, this daily chart of the Euro (6E Z0-D) makes me nervous. Significant support lies above -4% below the current price. A correction like we saw in August cannot be ruled out and may actually be the more likely path right now. The S&P 500 corrected -8% in August. So you know there is significant potential risk right now.



The S&P 500 (ES Z0-D) is still holding daily support.



Yesterday I noted that the S&P 500 broke out of a 7-day trading range but that it had the reversal pattern, so I expected it to pull back. It did pull back, but still remains above daily support. The first real risk of a correction occurs if the uptrend of the last 3-days fails (Pink Line). I know this is micro-managing, but you will see the markets start to fail on the lower time frames first and I don’t want to miss it.



Gold (GC Z0-D) has corrected sharply and is now at potential support. The 30-minute chart currently has Gold at resistance, with the 127% extension at $1,311. So that $1,310 range will need to hold.



You can see the reversal pattern setting up on the Gold Stocks ETF (GDX). Maybe the little 3-hour bounce is all GDX gets, or maybe it becomes something more significant. Regardless, you can clearly see how the uptrend (Blue Line) has broken and how the gap on Tuesday would have caused you to stop out with a -3.5% loss from Monday’s close. Gold seems to make most of its big moves over night, so you are very vulnerable to big losses below your stop losses on GLD and GDX.



I am still very nervously Bullish, but the Euro causes me great concern for a sharp correction at any time.