As the reader can see, the risk on trade has continued to move higher, despite some head-fakes to the downside over the past month.
At this juncture, we wonder how much more risk the system can absorb?
A cross below the 1.42 level could be a sign of reversal. Note how close we are to a cross down on the MACD. Stochastics are poking below 80 for the first time in a month.
Another sign could come from the gold market. So far it has performed horribly and has now reached oversold conditions. Every time we thought it could not go lower, it has surprised us to put it mildly.
What is required at this point for a correction to begin is some type of catalyst. Perhaps some poor economic figures and suspension of tapering. Or an exogenous event. One I am watching for is related to cyber security - that could certainly strike some fear into the digital world. More on this subject another time.