Bullish Trends Are Still Holding Up in Risk Assets for Now, but How About October?
It's time for risk assets to start building their strength into the end of the month/quarter, right? This week has been very ho-hum, but expect some better action in the next nine calendar days. After that, however, be careful!
Risk guages like the EURJPY are correcting as well – and may have put in a lower high.
Some other risk guages that I follow are telling a little bit different story than the EURUSD – in terms of the bigger picture. The EURJPY, for example, is also pointing to more downside in the short-term. However, this cross appears to have put in a lower high (wave ii) and is in a new impulse wave lower (wave iii). That is different than what we're seeing with the EURUSD. That's OK, it's just that we must realize that not all risk guages trade exactly the same way. If and when EURUSD rallies for wave c as noted above, it will take out the wave "a" peak and make a new short-term high. That will not be the case in all likelihod for EURJPY. If I'm correct and this scenario plays out, it will provide us with a nice bearish divergence off of which we can strategize. We'll see…
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Look for the short-term moves that I've been anticipating – a bit more upside in risk assets heading into the end of the month / quarter. Then, I am calling for a correction in risk assets in general and a rally in safety assets. Who knows? Maybe October will end up being a spooky month in terms of the risk on trade. Maybe much of the spookiness will be occurring as the presidential debate season heats up and the societal acrimony that Mr. Todd Harrison frequently references heats up as well.
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