As expected, European indices fell 7-8% from where they were at the time of the last update. It appears that we are now set to base around current levels and rally towards early next year. This will set-up a top for the rest of 2012. Penetration of 25 November 2011 lows across the indices would negate the medium-term bullish view and set-up a re-test of September lows.
The rally to post-October highs in equities will likely coincide with significant weakness in USD. Below, on a four-hourly chart of USD/CHF, I expect a test of 0.83 or so, in the next 8-10 weeks.
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