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EURO Hammered, S&P Key Support Holds | Sep 4
Heads Up: NFP Tomorrow so watch liquidity in early London trading and make sure to mitigate the event risk concerns.
EURUSD – Hammered By ECB Policy
Already in a downtrend, the Euro today got bloodied every which way and loose from the ECB policy meeting today, losing over 200 pips on the day from open to close. We talked about the bearish bias and what would happen if the 1.3100 level fell in our weekly market commentary.
That day has come so where to from here? The next layer of support doesn’t come till 1.2833 and 1.27 (April-July 2013 lows).
I’m leaning towards the latter of the two before bulls even consider stepping in. Although we can obviously look for pullbacks into resistance to get short, with the close near the lows, I’m suspecting a breakout of 1.2900 in the upcoming London session.
(NOTE: Read my EURO 2014 Price Action & Ichimoku Outlook whereby we discussed the possibility of the Euro falling to 1.2100 by year end.)
Hence watch for a price action squeeze on the intra-day 4hr/1hr/5m charts to get short gunning for the downside targets. Only aggressive buying in early London would tell me to sell higher up on pullbacks towards 1.3100.
S&P 500 – Intraday Buy Setup Off Key Support Holds 3x
As we’ve been writing about in our private member commentaries, the S&P 500 has been stuck in a range between 2007 and 1995, which we labeled as an important key support level.
As you can see from the 1hr chart below, this level has now held a 3x, with each prior time bouncing back up to the 2007 level. Intra-day price action traders could have been buying off the 1995 support, having a 3 point stop, and profiting 12 points each time for +4R, so congrats to the members who’ve been emailing me their trades on this.
For now, watch this range to give you clues on the next direction, which I’m suspecting will break tomorrow after the NFP number is printed. A break above 2012 should likely put 2020/25 into sight, while a collapse below 1990 will likely cause some profit-taking, and put 1965 and 1945 under pressure.
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