S&P 500 - target reached, now what?

After the buy signal 3 weeks ago, the target area 1 375 - 1 400 for S&P 500 has now been reached. At this point, there's reason to be cautious. As illustrated on the chart below, a rising wedge could be in the making, and if this pattern breaks to the downside, things could get pretty nasty.  S&P 500 needs to hold the rising trendline, currently at around 1 340, which also corresponds to the 50-day moving average. I'm bull above 1 340 and bear below 1 340.

DAX

Stochastic gave a sell signal from overbought levels today. I'm targeting 6 400.

EUR/USD - in bear territory

The euro got hammered today. In yesterday's post, I was leaning to the bull side, but wrote that a break above 1,26 or below 1,25 would lead to the next big move. 1,25 was broken hard today and so far we've reached as low as 1,2360

EUR/USD is just bearish. Next important level to watch is 1,23, the price low from early June.

EUR/USD

For stocks to continue rising, it's crucial that the euro also moves higher. Looking at the EUR/USD monthly chart, you can see that we have reached important levels. Positive momentum divergence is a positive sign.

Daily chart. After Friday's big move, there's been a pullback this week and today we reached 1,25. This could be the low for this pullback. It we continue below 1,25, we'll switch back to the risk-off mode again, with lower stock prices as a consequence. I'm leaning to that this is a bull flag pattern that will resolve to the upside. The daily candlestick also has a bullish tail. We'll see. Look for a break above 1,26 or below 1,25 for the next big move.

Zooming in on the hourly chart, it shows that a break above 1,26 would signal that the next upleg is underway.

Time for a short pause

Bullish action continues as expected, but now it's time for a pause, here illustrated by Germany's DAX index, which reached resistance at 6 560 today, and it's also extremely overbought. Look for a minor pullback.