EUR/USD & ES Update

With NYSE short interest at highs for the year and probably then some and more importantly, non-commercial Euro short interest at record levels, there's not separating the currency market from the equities/futures market. A short squeeze in the Euro will have dramatic implications for the market, along the lines of the market averges' positive divergences we have witnessed building.

Here's the FX/ES update

 EUR/USD 30 min chart-as you know a rise in the EUR and fall in the $USD is market supportive as well as most commodities, since Friday when the SPX broke the 200 m.a. the Euro has been trending up, major resistance is seen above at the trend line. I'm sure we are seeing some short covering now, but crossing that resistance area will really get shorts hurting and momentum in the market flying. Expect some game playing around that area.

 This is the Sunday night open for the pair on a 5 min chart, excellent momentum today, very parabolic suggesting short covering, especially as the Greek election polls went radio silent last Saturday, which is what many EUR shorts are depending on, a Syriza win and a New Democracy/PASOK loss which will totally change everything that has been done in Greece so far by thr Troika and could lead to Greece exiting the Euro and thereby stiffing hundreds of EU banks, Germany most of all (among the countries) as well as the ECB, I doubt they'll stiff the IMF a they'll need at least 1 friend in a continent where they find themselves without friends-(should Syriza win, put together a coalition government and follow through on some of their threats).

 Here's the 9:30 US open, note the momentum as soon as local resistance was crossed, that's no coincidence, that's short covering, it looks just like it.

 The 3C Euro/ (FXE) chart-30 min, we see the distribution at the red arrow of May 1, confirmation of the downtrend at the green arrow, remember on the 15th we noticed unusual activity, my post was titled something like, "What so they know that we don't?". Around that time, 3C went leading positive (the stronger of the two divergence types) in the white box and has remained leading positive since, especially at the recent lows (buy on the cheap).

 The intraday 2 min Euro/FXE  chart (for newer members this shows more intraday or day to day changes, but the 30 min chart shows the major trend, there's no comparison between the importance of the 30 min vs the lower timeframes) showing a positive divergence (white arrow) at yesterday's lows and in a flat price trend (we often see divergences in a dull, flat market), confirmation at the green arrow and a negative divergence intraday, this is a big gain for the Euro so quickly, profit taking is to be expected and we don't know what Smart Money may be up to.

 The $USD/UUP should look exactly the opposite on 3C for confirmation on this 30 min chart, we see accumulation at May 1 (white arrow), trend confirmation at the green arrow and a nasty leading negative divergence starting around the 15th when we first noticed something was up. This is confirmation of the Euro 30 min.

$USD 1 min intraday isn't showing a positive divergence, in fact since going negative around the 29th -June 1 , the USD has gone leading negative in the red box.

The trading desks know what's going on in currencies, so it's not surprising to see this 1 min negative divergence in ES, since capturing this ES has started to pullback. As I always mention, intraday trade doen't bother me, there's a lot of game playing, specially early, but on the other hand we have large gains near a resistance area so it's not surprising wither. When in doubt, check the longer term charts and don't get lost in the lines.

It's time to check the sectors as well as Context and our Risk Asset Layout.