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Thursday 26 May 2011

Bull/Bear Lines

Mixed picture this morning and I'm very torn here about direction both today and for the next few weeks. We need to hit some confirmation levels either way. On the ES 60min chart the break down on Tuesday night could have been an overthrow. We need to see what happens at declining resistance, currently in the 1336 area, if that is reached, and that is my main bull/bear line in the sand here. Having said that, when a wedge breaks you often see a break back into the wedge, and that retracement will generally NOT reach the upper wedge trendline. If the ES falling wedge is breaking down therefore, there is no reason to expect that declining resistance would be tested again:
On the bull side I posted possible rising channel support trendlines for NDX and RUT yesterday, and here's how they look this morning. Here's the RUT daily chart:
On the RUT 60min chart the move up has reached a gap resistance zone and it could reverse here:
NDX hadn't quite reached my possible channel support trendline when I posted it yesterday, but it opened at the trendline and moved up from there, giving us exact hits on those previous theoretical trendlines on both RUT and NDX. That is something to think about and until we see those trendlines break that looks guardedly bullish:
On the NQ chart, which is still very weak and not leading any bounce here, we have reached a retest level for two trendlines and both have been touched yesterday and overnight. A break up through them would suggest more upside, but this is an obvious reversal level unless those are broken:
There are a number of reasons I've given above for thinking that this is an obvious reversal zone, if we are to see more downside. There are more though, and another comes from silver. I've marked the gap resistance zones on the SLV 60min chart and you can see that the last SLV bounce failed at a gap resistance zone. SI (silver futures) have hit the 38 target I gave the other day and reversed slightly above in a gap resistance zone created on the last move down. You can see that the combination of the two zones gives formidable resistance for silver here. The lower blue trendline on the chart is equally formidable support:
I posted a possible EURUSD declining channel last week showing an theoretical upper trendline that I was expecting to be resistance if we are to see more downside on EURUSD. The small rising wedge then broke down before we reached that trendline but EURUSD has rallied off the last low to reach it overnight. This is an important level, and if it is broken, then I would expect a move to the possible IHS trendline at 1.434, which has been the level for the last two highs. A reversal there would target the 1.414 area for a right shoulder to form. That would look ominously bullish and the best bear scenario sees a reversal on EURUSD here for obvious reasons. :
For my last chart today I thought I'd post the 60min chart for the Transports index, mainly because it's pleasing to the eye and there's a nicely formed declining channel on it. The obvious next channel touch would obviously be a touch of the lower channel trendline of course:
I'm waiting for direction here and we'll see what happens today. I'm very busy offline so apart from my morning posts I'll be occupied elsewhere most of the rest of the week & only taking trades if they look particularly inviting. 

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