Fed induced rally likely trapped new buyers, and, sent some false confidence to those feeling the squeeze right now.
Rally + 100% reversal and new relative lows printed- closing on the lows of the day.
Sellers did not let up 1inch up through the close.
Point A- Key swing point
Point B- Breakout + retest of swing, plus base of leg that printed new highs
Point C- As stated above, key convergence of multiple MAs plus 382 FIB found sellers
It’s more likely we see a retest of the Point A/B level given the amount of impulsive selling and overall bearish dominance.
As the day went on, in just 10 hours time retail has continued to buy into this selling pressure.
We’re back at a reading of 6.8, which is higher than the previous extreme I posted 2 weeks ago w/ a reading of 6.2. The highest YTD reading on the Swissie was back in Feb when it hit ~12. If we’re taking that as the level that retail will capitulate at, there is clearly more room to move.
The one thing I’ve noticed about the SSI data over the years, is that 70-90% of the time it is reliable at firing off a decent input value to your trading model for consideration on taking a new position in the direction of the near-term trend. However, when it hits relative extremes, retail is actually pretty good at defining tops and bottoms. Just something to be aware of- and, I’ve even heard FXCM analysts (back in the day) talk about this phenomenon.