• While the medium term relationship between EURUSD and stocks is generally not good, when we concentrate on the top right of this chart we see that both have been moving in line in the short term.
• So far the Dow Jones Industrial average, the S&P 500 and the Dow Transports have all posted bearish daily reversals at the trend highs, and now we have a bearish weekly reversal at the trend highs on Dow Transports.
• If in the SHORT TERM the relationship above is going to stay in place and we get a move down in equities as indicated by the daily reversals, then it we will see a correction down in EURUSD too.
EURUSD
• The 76.4% Fibonacci retracement against the highs on EURUSD (log scale) comes in at 1.5074 which is so far limiting the rally.
• Short term consolidation / correction down would not be surprising. Near term support comes in at 1.4968 followed by 1.4845.
• A firm close above 1.5074 would be a bullish development.
U.S. stocks and EURUSD
Linear Mode
