EUR/USD & GBP/USD Rally's Resistance Ahead

Market looks very short the contis and that is reflected in those over-extended moves in the EUR/USD and GBP/USD. It might be short covering and stop hunting.


Just as a reference we have solid Resistance areas ahead and majors are very close to these inflection points.


> Resistance layer on EUR/USD is between 1.3836 (July Low) and 1.3855 (50% of 1.4560-1.3149).

> Resistance area on GBP/USD Res at 1.5778 (July Low) and 1.5837 (Upper Bollinger Band).


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Daily ranges are over extended based on historical averages so I'm fading these moves with low leverage.

History repeats itself

If you ever wondered if it is true that History repeats itself, check this out:

On Oct 3, 2008, SPX closed at 1099.23.

On Oct 3, 2011, SPX closed at 1099.23.

The Pound's trend is intact - GBPUSD immediate target at 1.68

Stochastics and trend channel all point to trend continuation with an immediate target around 1.68.

Crude oil - Gold Spread at Historical High

Spread is going big - something has to give.

Dr. Copper & Emerging Markets

The tightest correlation of Copper is with the S&P and Brazil looks like digging deeper after the yesterday's market rout.

BRICs Update: Multi-speed growth and trend dispersion

BOVESPA sitting on significant long term Support.

Russian RTS is trending higher Supported by the rising 21-Week SMA.

India's SENSEX is slowly approaching the flat Support at 18100 with a bearish 21/55-Week SMAs cross.

China's Shanghai Composite is in a long term range consolidation with a downside bias as the index is trading below all important Weekly SMAs. Critical Support lies at 2400 level.

Global Macro Update: Gold - EURUSD - Euro Stoxx 50 - 10Y Bund

Trend Channel Upper line shows 1645 as a potential target. First Support lies at the 1578 previous High in confluence with the 20-Day SMA.

EURUSD is trading right on the middle ground of the recent 1.40 - 1.46 range Supported by the converging 20 & 72-Day SMAs. Downside the 200-Day SMA holds the key at the major psychological 1.4 level.

DJ Euro Stoxx 50 Index is trending down with scope of 2599 Lower Channel trendline.

10-Year German Bund is trending up amid growing economic concerns and US and EZ Periphery Debt problems. Previous High at 131 is an obvious target for the current directional move.