Taking Cue from the Euro

Ok then... after both houses of the Italian Government ratified the proposed austerity measures over the weekend, and Prime Minister Berlusconi resigned and Mario Monti was appointed as the Prime Minister-designate (ahead of forthcoming elections), let's notice that the Euro has taken a nosedive from Sunday evening's (euphoric?) high at 1.3815 (off of last Thursday's breakdown low at 1.3480).

The resumption of Euro/USD weakness keeps intact the Oct-Nov topping pattern that identifies 1.3815/80 as the upper resistance zone of the "Right Shoulder" and 1.3520-1.3480 as the lower support zone of the initial breach of the "neckline area" originally at 1.3660/10.

Whichever side of the new demarcation zone is violated and sustained has the potential to send Euro/USD either to 1.4300 or 1.3000 thereafter.

As for the e-mini S&P 500, it continues to take its cue from the Euro/USD, and this morning we notice has reversed from its Oct 27 resistance line at 1270.50, which so far has pressed the index beneath key near-term support at 1256.