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Euro-Usd-S&P Correlation Moves

The Usd traded mostly higher against the majors once the European session opened and equity markets dropped a shoe. The dollar index found support 80.05, which is a key level for the uptrend to continue all of the time that S&P futures remain below 1112 resistance.

On the 4 Hour S&P chart, below, prices broke through our support line after a double top was formed around 1112. This could be bearish and may easily push the Usd much higher against the majors, if Wall Street equities find sellers, where a move to the 1092 level will be expected.

If the S&P scenario follows through then Eur/Usd should remain below today’s 1.3691 highs. We are looking for two different wave counts on this pair. The first one is a huge triangle pattern of a black wave IV with a blue wave (NYSE:D) in process. ( )

Each leg of a triangle pattern should be structured by at least three waves, so a move lower is expected as we can only count one leg down from the 1.3691 top. A lower red wave C) will be expected if the current wave B) finds the top somewhere below the 1.3691 region. ( )

On the second wave count a black wave IV top could already be finished, which suggests a down-trend can continue in a huge wave V, if the 1.3691 top can hold.

In the near-term, a red wave 2) retrace may find its highs around the 1.3630 region, before wave 3 trades lower. ( )

Overall, both wave counts suggest a weaker euro against the Usd in the near-term with a minimum Short target around 1.3490, if 1.3691 holds as resistance.

Disclosure: No Positionj