- 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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Wednesday, 24 November 2010

Selling the Rips

We saw some major trendline breaks yesterday, and while I don't entirely trust this decline yet, the obvious next move for SPX seems to be towards the 1130s and there's a significant chance that this could go further. On the USD chart the declining channel was broken with considerable confidence yesterday, and the next triangle target is in the 85 to 87 area. There is a potential reversal area in the 80.5 to 81 area, and if USD starts to look really bullish, then the next reversal target would be at 83.5, for the neckline of a potential H&S pattern:


There are still a couple of key levels I'd like to see broken to complete the short term USD bull, equities bear picture. USD has broken declining resistance but EURUSD has not yet broken rising support. That's in the 1.323 area and may be tested today, as EURUSD has dipped below 1.33 while I've been writing. I can't capture a chart for that today but I'll be watching that level for a reversal.

The other level I'd like to see broken is the lower trendline of the rising channel on Nasdaq. This has been tested hard in recent days but has held so far. I'd like to see a move below 2100 in trading hours today ideally:


On SPX the rising channel is now broken. There's a neckline for a possible H&S in the 1173 area but I wouldn't necessarily expect a bounce there as the H&S would complete on reaching it:


I posted some charts of individual stocks at the weekend to illustrate how significant the resistance level at the last high was on many charts. One of those was AMZN, and the chart gives a sense of how far this retracement could go if it picks up some speed. Thought-provoking:


Hard to say how much further downside we can can expect in the remainder of the week in this holiday trading. I'd be expecting serious falls to happen next week. If so then we may well find that both EURUSD and ES bounce if EURUSD hits support today.

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