EURGBP , EUROSTOXX, SP500 .

A couple of weeks ago I did an analysis of EURGBP, (that can be viewed by clicking here) . I concluded that EURGBP was probably heading lower medium term, though short-term there was a possibility of a deeper correction higher, but that the correction could end anywhere in the 0.8400 - 0.8800 zone. -  Since then it has corrected lower (Currently .8270), I now believe there is a strong possibility that the correction higher and re-test of the breakout of the large 2 year reversal triangle may be complete. (The chart below shows this).

The next chart shows the action since the early year breakout in closer detail. The re-test move through May to July appears to have unfolded as an 'Inverse Head + Shoulder' pattern. However the move over the past couple of weeks, suggests this is a failed Head + Shoulder pattern, with today's move below the low of the Right Shoulder strongly favouring a move lower if it can be sustained.  - In addition the pattern over the past month has also unfolded as a Head & Shoulder top pattern, which has broken down today. --The conjunction of these two patterns, the 'Inverse H+S', and the 'H+S top', could inject some dynamism into this move lower.  (See chart below).

Looking at equities now. Last Thursday and Friday morning's move lower appears to have been completely retraced, as I write (Pre-US market open). The first chart below is the Eurostoxx 50 (current level 2790), last week I commented that a breakout of its Symmetrical Triangle pattern would favour a move to the early year highs (that chart can be seen here). The breakout occurred, though I probably should have given more credence to the resistance from the May and June highs and the 200 day sma, which coincided at around 2793/2800. However, the move at the end of last week re-tested the Triangle breakout, and the stoxx50 is now again pushing up to critical resistance at 2800. This is the key pivot, and a break and close through here could be very bullish. (See chart below).

Moving on to the S&P, last week's move appears to have been a re-test of the Bullish falling wedge. The low was almost exactly at the same level that the index broke up through the falling wedge upper line (See chart below). Assuming last Friday's low is not broken, I feel the S+P500 should continue moving higher for now, with a re-test of the June high at 1130 a good possibility this week. A break above there, should see further gains, although how dynamically this possible move unfolds is likely to be the clue as to whether the S+P sees significant gains back to at least the April highs. The other alternatives currently under consideration, and which remain possible are:
a) A stumbling move back to the mid to upper 1100s, before another relapse:
b) Prolonged sideways actions around recent levels, with a resolution being a breakout of any extended sideways range.
c) Another failure below 1130, and a break through last weeks lows, which favours a re-test of July's 1010 low.

One final point. My current favoured view of further S+P gains, does not appear to sit comfortably with the USD index analysis I posted on Friday which suggests a possible reversal of the USD index lies ahead. That is a circle which may need to be squared. However, a look back at recent history suggests it may not be such an unrealistic possibility. November 2009 through to April this year, the USD Index post gains of about 10% whilst the S+P posted a near 20% rise. - Something to watch....