http://www.traders-t...howtopic=132046
Ideally, a gap up tomorrow should provide great entry for short positions.
As far as forex is concerned, something wicked this way comes ahead of the ECB rate decision on Thursday. The expectation is a 0.25% increase, which should further strengthen the Euro.
However, the behavior of the Dollar over the past few days indicates latter part of this rally is most likely NOT a currency driven event. Black circle shows the Dollar has been contained in a narrow range between the 38.2% resistance at 9600 and the 50% support at 9550. As strong as this rally has been, it could also turn out to be just a bounce from an extremely oversold condition.
Remember this chart below that I had posted here on Sunday, June 12? Almost "everyone" was expecting the market to either crash or plunge below March low while this chart indicates otherwise --- a positive divergence. That red curve dipping way below the "oversold" line was the extreme not seen since June-August of 2010.
Were that the case, then the market might've overshot in search of its equilibrium, the magnet.
