[GBLilleyUSMC]

Well, it was a very nice down day indeed wasn’t it? It is definitely the way things were pointed yesterday. I don’t think there was anyone out there really surprised by this drop at all. If you were surprised, look over yesterdays post and review what was talked about.

Tomorrow it appears that we will be light on London news. New York will have the ADP Non-Farm Employment change for us at 7:15 AM CST. Any surprising data here can certainly move the market but I would not really look for it to be a crystal ball into what Non-Farm Payrolls will hold on Friday.

Guess what we hit today folks?!?! The Weekly 21 EMA that I have been talking about for about a week now, we have arrived. Now the million dollar question is, “Can we break it?” Well, the correct answer is, “I don’t know.” We always assume that support and resistance will hold until it is proven broken. But, lets break down what we have here. We have a very clear top at the 1.6000 level that price just refused to break. We have MACD in the negative and gaining angle and separation on the weekly chart. We also have slight MACD divergence on the Weekly chart, and even slight divergence on a weekly chart is very important. So I think if we are going to break the 21, this is the most likely time for us to do it.

On analysis of the hourly chart, to day pretty much looks like a vertical red line. What do we do now? The right thing to do is wait for some type of retracement then confirmation of a continuation. Blindly shorting here could get ugly if we have some serious sellers remorse. However, with the power of this move down we had today, I would not be surprised if we don’t see a Class A retracement during the Asian session. We may just see some sideways action or a very slight retracement with a continuation to the downside tomorrow.

My overall bias for tomorrow has to be short; BUT, with us at the weekly 21, I will be cautious. We may see some ranging or chop trying to break a huge level like that so don’t be surprised. Or we could just blast on down. Whatever you do, wait for confirmation, follow your own system, never price chase and never break your own rules.