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Await fresh signal.
Bouncing on support at 1.2875.
• EUR/USD has successfully tested the key
support at 1.2875. Resistances for a bounce are
given by 1.2973 (07/12/2012 high) and 1.3046
(04/12/2012 low).
• The underlying trend is negative (see the
succession of lower highs since May 2011 peak).
Therefore we expect limited upside potential
given the strong resistance at 1.3172 (17/09/2012
high) and the overall overbought conditions.
Testing support at 1.2875.
• EUR/USD has weakened after failing to break
the resistance at 1.3140 (17/10/2012 high).
Monitor the test of the key support at 1.2875. An
hourly resistance is at 1.2973 (07/12/2012 high).
Another support can be found at 1.2834
(intraday low).
• The underlying trend is negative (see the
succession of lower highs since May 2011 peak).
Therefore we expect limited upside potential
given the strong resistance at 1.3172 (17/09/2012
high) and the overall overbought conditions.
My preferred wave count is similar to the idea I posted some weeks back on the DAX and that I suspect the SPX is inside a 5th wave for an ending diagonal so likely to chop higher into Jan-Feb period next year before a meaningful high. It would need a seriously strong break below the 200DMA on the SPX before I would switch to an alternative bearish idea, whilst this market continues higher I still prefer the bullish option over the bearish option.
Although I am certainly no perma bull and calling for SPX 2000 or anything like that, recent price action over the last few days suggests the market is simply correcting the advance from the Nov 2012 lows and likely to push higher once the correction has finished.
When you look at other US markets we can clearly see the same sort of shape, especially markets such as the NYSE. The last decline from the September 2012 highs was a 3 wave decline as we can clearly see the NYSE is pushing higher as I suspect it would, but is lacking the new high it needs to complete its idea.