Despite a higher US stock market yesterday, the other markets, like currencies, some commodities, and metals are still sideways, even after Bernanke’s testimony. This tells me only one thing; Summer trading-ranged price action due to low liquidity. With that said, don’t be surprised if market will be unidirectional for the rest of July.
On the EURUSD, we see slow and overlapping price action which we think is a corrective pattern, most-likely a triangle. If that’s the case then wave (e) will look for a support around 1.3080 in the near term. A critical level however is at 1.2986 if maybe triangle will be even more complex and longer in time.
S&P was higher yesterday, but prices sold off during the Asian trading hours. Notice that the move from 1665 was made in three legs. Three wave structures are corrections, so we think that wave 4 is still underway, which could either be a flat or maybe a triangle if the price goes sideways for the next few trading days. Support comes in at 1660-1665.