“Strength does not come from winning. Your struggles develop your strengths. When you go through hardships and decide not to surrender, that is strength.” – Arnold Schwarzenegger
As we discussed, there was absolutely no sign of fear in the markets and expected recent lows to be taken out and we are still focused on unfinished business at yearly lows. Once again, the pivotal bull/bear lines proved to be extremely useful in assisting us and we will continue to focus on them. Naturally we would never play for any market to move in a straight line and even if we get a flush and tradeable bounce, those levels will remain our key strategic guides. Primary downside targets are still 4-6% away on most of the indices for these current moves.
We also continue to expect both Nikkei and USDJPY to catch up to recent moves and expect to see plenty of two-way trading opportunity inside these ranges on the way to the bottom-end supports.
The other key chart going into this week, ECB and the upcoming FOMC meeting will be the DXY. We would be very cautious about trying to be aggressive trying to fade ans sustained move and continue to focus on EURUSD. Don’t forget to properly understand Euro weight in this and remember that in an aggressive risk-off environment, especially in the context of China frictions, AUssie and Kiwi will struggle. No change in our base-case outlook.
