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USD INDEXThe market's failure overnight below our 97.60 short-term risk parameter discussed in yesterday's Technical Blog finally confirms the bearish divergence in short-term momentum that defines 25-Oct's 99.12 high as the END of "a" rally. Given the magnitude of the past few months' rally shown in the daily chart below however, the past week's relapse is relatively small and may only be correcting the portion of the bull from 08-Sep's 94.46 low. The market has thus far only retraced about 38.2% of this (suspected 3rd-Wave) rally and remains above a preponderance of former resistance ranging from 25-Jul's 97.57 high to the 96.26-area that capped the market during most of Sep. This now-former range serves a new support candidate. This recent relapse has also just returned to the lower bounds of the broader 3-month up-channel.PRIVATE "TYPE=PICT;ALT="The 240-min chart below details the developing slide and, in addition to 25-Oct's obviously important 99.12 high that now serves as our new short-term risk parameter, shows Mon's 98.70 high as the latest smaller-degree corrective high and new micro risk parameter from which non-bullish decisions like long-covers and cautious bearish punts might now be objectively based and managed.PRIVATE "TYPE=PICT;ALT="PRIVATE "TYPE=PICT;ALT="From a very long-term perspective we would remind traders of the market's current position STILL ABOVE a preponderance of price action up from May's 91.92 shown in the weekly chart above. Its return to the middle-half of the lateral 20-month range could mean a departure from the past couple months' up-trendy mode and back into an aimless, whipsaw mode typical of such range-center environs. But further weakness below our long-term risk parameter defined by former 96.20-area resistance-turned-support remains required to really jeopardize the impulsive integrity of a more immediate and broader bullish count. IN effect the market has identified 99.12 and 96.20 as the key directional triggers heading forward.These issues considered, shorter-term traders have been advised to move to the sidelines following today's failure below 97.60. Longer-term players are OK to pare bullish exposure to more conservative levels with a failure below 96.20 still required to negate our bullish count altogether.PRIVATE "TYPE=PICT;ALT="EURUSDThe market's recovery yesterday above our short-term risk parameter at 1.1027 confirms a similar but inverted technical outlook to that detailed above for the Index with recent lows at 1.0936 and 1.0850 considered our new micro and short-term parameters from which the risk of any non-bearish decisions like short-covers and cautious bullish punts can now be objectively based and managed.PRIVATE "TYPE=PICT;ALT="PRIVATE "TYPE=PICT;ALT="And while the market remains below our longer-term risk parameter defined by 21-Sep's 1.1123 (1st-Wave) low and area of former support-turned-resistance, the greater challenge to the Euro is that it remains at levels that are deep, deep within the middle-half bowels of the 20-month range shown in the weekly log scale chart below that maintain the odds of aimless whipsaw risk.Our proprietary RJO Bullish Sentiment Index still shows historically bearish sentiment levels that warn of a vulnerability to higher prices within the context of the long-term lateral range. These issues considered, traders are advised to move to the sidelines as the risk/reward merits of initiating directional exposure from the middle of this massive range are poor.PRIVATE "TYPE=PICT;ALT="USDJPYPRIVATE "TYPE=PICT;ALT="The market's failure today below our short-term risk parameter defined by 19-Oct's 103.16 low confirms a bearish divergence in momentum as shown in the daily chart above. This mo failure defines 28-Oct's 105.54 high as one of developing importance and possibly the END of a clear 3-wave sequence up from 16-Aug's 99.54 low. Left unaltered by a recovery above 105.54 that now serves as our new short-term risk parameter, this 3-wave recovery may be considered a corrective/consolidative one that warns of a resumption of the secular bear trend that preceded it to new lows below 99.54.A commensurately larger-degree failure below 27-Sep's larger-degree corrective low and key risk parameter at 100.09 remains required to CONFIRM Aug-Oct's recovery as a 3-wave correction ahead of a resumption of the secular bear market. Nonetheless both short- and longer-term traders are advised to move to a neutral-to-cautiously-bearish policy and first approach pops to the 104.50-area OB as corrective selling opportunities with a recovery above 105.54 required to negate this call and resurrect a major base/reversal threat. A resumption of the secular bear to new lows below 99.54 may lie in the balance.PRIVATE "TYPE=PICT;ALT="GBPUSDFinally, Cable's recovery above 19-Oct's 1.2332 corrective high confirms a bullish divergence in momentum as shown in the daily chart above. Of course, this mo failure is of a scale grossly insufficient to conclude anything more than an interim corrective hiccup ahead of a resumption of the secular bear shown in the monthly log chart below. Nonetheless this mo failure does leave 25-Oct's 1.2083 low in its wake as one of developing importance and our new short-term parameter from which the risk of non-bearish decisions like short-covers and cautious bullish punts might now be objectively based and managed. PRIVATE "TYPE=PICT;ALT="Market sentiment remains understandably historically bearish typical of major BASE/reversal conditions and could leave this market vulnerable to a steeper corrective rebound or even a major reversal. But with the market still way, way below even key former support-turned-resistance from the 1.28-handle, let alone 06-Sep's 1,3346 larger-degree corrective high and key risk parameter the market needs to recoup to really threaten the long-term downtrend, it would certainly be premature to CONCLUDE a bigger reversal higher after such a minor pop above a piddly level like 1.2332. This said, the extent and uninterrupted nature of early-Oct's meltdown left little in the way of former technical battlegrounds that might now serve as resistance candidates shy of that 1.28-handle. So today's minor pop above 1.2332 could result in a relatively steep rebound to the 1.2800-area.These issues considered, shorter-term traders have been advised to step aside from bearish exposure and move to the sidelines following today's poke above 1.2332. Longer-term players are OK to pare bearish exposure to more conservative levels, but strength above at least the 1.28-handle and preferably above 06-Sep's 1.3446 key risk parameter remains advised to jettison the position altogether. A relapse below 1.2083 is required to confirm our suspicions that the current pop is merely corrective within the still-unfolding secular bear market.PRIVATE "TYPE=PICT;ALT=" ................
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