EUR/USD - Might have peaked just under my target-zone between 132.72 - 132.92, however as long as support at 131.71 stays intact we could see one last rally into the target-zone. A break below 131.71 will confirm that wave 2 is done with and renewed pressure to the downside has begun.
VIX Index - We saw a firm close inside the Bollinger Bands yesterday and we should see a continuation higher towards the mid-band at least. However it will take a close above the mid-band to challenge the upper Bollinger band, which is where we will find strong resistance.
Megaphone tops:Description: A Megaphone Top is a relatively rare formation and is also known as a Broadening Top. Its shape is opposite to that of a Symmetrical Triangle. The pattern develops after a strong advance in a stock price and can last several weeks or even a few months.A Megaphone Top is formed because the stock makes a series of higher highs and lower lows. The Megaphone Top usually consists of three ascending peaks and two descending troughs. The signal that the pattern is complete occurs when prices fall below the lower low.
The creation of the pattern reflects a period of time when bulls and bears are battling to gain control of the stock. The pattern occurs after the bulls have been charging and driving the stock price appreciably higher. During the formation of the Megaphone Top, however, bears are exerting increasing influence on the stock and causing it to set a series of lower lows. The increasing volatility eventually creates a sense of uncertainty, leads to profit-taking, and deters some of the bulls from making any further commitments.
The bears eventually triumph.
Dow Jones Industrial Index: Are we looking at a major Megaphone top? If we are we need to break above the 2007 top at 14,198. The way DJI have behaved until now we can't exclude that possibility. The Central banks play their part in this too. They have thrown a massive amount of money into the economy in the hope, that it will bring the economy back on track. Even though we have seen some improvement in the global economy it's not at all to the degree the central bankers had hoped for. Much of the money seems to have found the way into the equity markets and might be one of the reasons that this rare formation might be building.Time will show if this is the case and for now it clearly is a possibility.
The Shanghai Composite: Wave 2 of [C] might just have ended at 2,478 if this is the case we should soon see pressure building to the downside as wave 3 down takes hold.
The Shanghai Composite: Wave 2 of [C] might just have ended at 2,478 if this is the case we should soon see pressure building to the downside as wave 3 down takes hold.
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