Friday, August 3, 2012

A Bet against the 1%

Anyone who has been following my work over the past three months knows I have been keeping a close eye on the Aussie as it works its way across the SPX topping pattern from last year. It has been a moving target to appraise, but did point out in April where the lows would be made in June and now appears to be pointing to another inflection point here in August. For a quick explanation of the methodology used in this comparison, see Here.  


Using the 2011 SPX model's proportion of a 98.9% retracement of the intraday high would generate an equivalent target in FXA of 105.90. Considering FXA reached an intraday high of 105.73 today, puts us in very close proximity of finding the next pivot - which would be lower. The same could be said of the SPX. 


 Swarts' 1st Law - A fractal in motion will remain in motion.

This set-up presents an excellent opportunity to position yourself on the short side, considering that the respective markets are positioned so close to where the pattern would be considered broken (>100% retracement). 


As always - Stay Frosty - and look sharp, should you decide to bet against the 1%.