- WE'RE JUST RANDOM SPECKS OF DUST IN A TORNADO TO THE MARKETS .......
- CHARTISTS MUST PUT ALL BIAS ASIDE AND LET THE CHARTS DO THE TALKING OR WE'LL SEE ONLY WHAT WE WANT TO SEE
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Thursday, 1 July 2010

SPX Feb low broken - looking for the next low

I'm been so busy with offline stuff that I'm taking a week or three out, but we're seeing some very interesting stuff happening on the markets. The Feb low on SPX was decisively broken yesterday and my key target for the summer at 870 was confirmed with it. In the shorter term though, RSI is low enough on the ES daily chart that we should now be looking for the next interim low, and there is significant positive divergence on MACD to suggest some caution on the short side here:


Looking at the ES chart I see that we bounced off a significant support level at 1017 ES overnight, and that could be the interim low, but as well as a solid downtrend resistance trendline we also have a much sloppier downtrend support channel and we haven't hit it yet. I'm expecting a hit further down at either 1000 ES or the next important support level at 990 ES. If the current bounce breaks the important resistance level at 1033 ES though, the short term low may be in.

I'm not sure that the USD inverse relationship with equities is worth that much at the moment, but FWIW, EURUSD is in a clear declining channel and as I write is testing the top of that channel in the 1.234 area. If it breaks up as far as 1.237, then the chance that we have seen a significant interim low on ES will be high IMO:



GBPUSD bounced off the lower trendline of the solid rising channel overnight and has since bounced a cent back towards the top of that channel. That is a reflection of the sound money policies of the new coalition government IMO, and I'm expecting the channel to get us at least to strong declining resistance in the 1.53 area, where this GBP uptrend will face the first major test:

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