<span style="text-decoration: underline;"><strong>A USD BLOODBATH:</strong></span>

Looking at the markets it looks like the USD index could be at the start of a huge breakdown. The next trend line (240M CHART) support has given way and horizontal support lies at around 78.50. After this it could get ugly.

In the FX market the tight ranges have been blasted apart and what wrote about yesterday regarding the behaviour of the USD/JPY is <span style="text-decoration: underline;"><strong>NOW</strong></span> in play. This currency to break the FX levels wide apart. The big momentum moves have taken place, pulling stops etc, but there has been no pullback.....we are consolidating. This would normally mean we will move again after a period of consolidation.

Looking at the USD majors here are were I see todays moves, extending to maybe even further: -

EUR/USD: 1.4000
GBP/USD: 1.7000
USD/CHF: 0.8700
USD/CAD: 1.0850
AUD/USD: 0.9400
NZD/USD: 0.8850
USD/JPY: 101.20

No one is finding value in the USD at the moment...very, very shallow pullbacks if any. I think if the momentum starts again, these targets are possible and maybe even more. I do not think that this is a time to pick tops, but having said that shorting the EUR/USD at around 1.4000, just over to allow for stops could make sense intra-day.

I have a few ideas and I will tweet these when I complete my chart analysis. I would like to enter on pullbacks to go in the direction of the momentum moves already seen, and it difficult I think on trading days like today to get a reasonable 45 minute pullback to make the entry.

I think that we should also be aware that there are many big news events this week, and, we should not get carried away with too heavy a position initially. We can always add to profitable moves.

I am thinking of small positions prior to the US equity open that can be added to and then review at the European close later.  Remember, US equities never go down and it is a Tuesday after all, as CNBC will no doubt state repeatedly over the next 7/8 hours.

Scott