Down Move Not Finished Yet

After yesterday's recovery and gap fill there was more more weakness on ES and EURUSD overnight. It seems likely that there is more downside coming because EURUSD is still well short of the channel target in the 1.36 area. I had drawn a trendline for a likely interim bounce from EURUSD overnight and so far it has bounced 55 pips from the hit there so I'm expecting EURUSD to bounce a bit more before the decline resumes. I'd normally expect to see a small declining channel on a move like this and if so, the short term target will be in the 1.39 area if hit today:

On the basis that the current EURUSD move doesn't look finished, I'm also expecting to see further weakness in ES this week, though with EURUSD bouncing in the very short term, it's possible we may not see much more downside today. On the ES 5min chart I'm looking for a bounce that could reach the 1182-4 area in the short term and then another move down, possibly towards 1167, to complete the head on a possible head and shoulders pattern:

That 1167 target isn't quite as speculative as it might seem from the ES chart. A natural support level for a retracement is the SPX daily 20 SMA and that was at 1167 SPX at the close yesterday and is rising of course so it will be a little higher today and more so tomorrow so if we hit it tomorrow the ES and SPX targets will be close to each other. On the SPX 60min chart I'm seeing support for the current (green) rising channel in the 1175 SPX area and that is the minimum target that I'm expecting to see hit:

One thing that we've not been seeing on any weakness in recent days is a flight to treasuries. Just the opposite and it is very clear now that we're seeing a significant correction on long treasuries:

Why have treasuries not been boosted by any weakness in ES? Well bonds tend to trend down as equities trend up and equities really have been trending up for a couple of months now. I've been saying for months that any substantial QE2 push would be likely  to send bonds trending sideways to down while equities trend up and the direct effect of QE2 on bonds, if any, will be only to cushion any fall.

There's also the fact that the technical position for equities looks so strong here that people are viewing any dip as a buying opportunity rather than a cause for alarm. Even the bears are mostly just looking for a dip towards 1130 SPX here, and there's every reason to think that might happen, with USD having bounced off strong support and commodities looking ripe for a correction. I was looking at the CRB chart yesterday and it is looking very toppy. It has also tracked EURUSD closely over the last few months so a correction in EURUSD should deliver the same in commodities: