Corcoran Technical Trading Patterns For October 21
Several themes touched on in yesterday’s column have delivered the anticipated results and the general tone to today’s trading in Europe suggests that the usual favorites of the high-risk appetite brigade are looking a little stretched and tired.
The chart below captures exactly the move that I anticipated in yesterday’s GBP/USD discussion and even included the cute false breakout highlighted in yellow on the chart.
The DAX index is beginning to show some intermediate-term topping characteristics and could be about to drop below a key support level.
The sterling bears who had set the targets on parity with the euro are now facing a break below a critical level which could see a lot of traders having to cover short positions in sterling which could also help to propel the British currency ahead in other cross rate trading.
The currency pair which I have mentioned a lot recently, AUD/JPY, is making larger moves and the range expansion with a negative tilt in yesterday’s trading was coinciding with some S&P 500 weakness.
It will be worth watching this important carry trade pair for signs that the support level around 83.45 will be tested, and possibly have to be ratcheted down, in today’s North American session.
Clive Corcoran is the publisher of TradeWithForm.com, which provides daily analysis and commentary on the US stock market.
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