The trendline that never quit finally threw in the towel today, thanks to some steady increases in US GDP (Advance #) and lackluster rhetoric from the Eurozone. In regards to the GDP: forget the Street expectation / consensus…it's all noise compared to the staunch trend. Just look at the major headlines and tag it along with recent moves. The front pages of every major news outlet sees this as nothing but positive in terms of growth despite Wall Street analysts stab in the “dusk”. Here's an example: http://money.cnn.com/2011/01/28/news/economy/gdp/index.htm?hpt=T2
After coming into the bottom of the October range and filling up some major gaps from Euro's recent fall-over, we finally saw a great deal of selling interest at these highs yesterday.
Here's another “nugget” many people are usually unaware of: Equity markets have continued to show strength throughout the course of the month, so what usually happens at month end when this happens? USD gains strength.
We have some very compelling targets to the downside, but never rule out a final blow to the upside if you're the type that enjoys self torture, festering over laser accuracy. In a perfect world this would be our top (nice round, symmetrical…great zone….perfect!) but we have to remain patient and see how the headlines fare along for next week. The short term objective (100% extension of the trendline break) was just fulfilled in the low 1.3620's so now we reluctantly pause for anything in terms of confirmation for further downside. Longer term perspectives sees this completely falling over, but if you're flat at the end of every day then of course heed caution and watch out for any funny money next week. Typically around these tops we see a bit of consolidation and confusion kicking in before any continuation is finally declared. We have a potential backward bounce off of this trendline lining up as well with potential confluence circa a 79% retracement of this last swing, depending on how staunchly lower we go on this break.