- 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, 17 August 2011

NQ Wedge vs EUR Triangle

I'm still bullish this morning on the basis that we had a confirmed Vix Buy Signal for equities at the end of the last week, and that we haven't yet reached the 1243 SPX target on last week's diamond bottom. Having said that, the trend is down, and this rally is a counter-trend move, so any surprises are likely to come from the downside, and all bull setups have a higher chance of failing.

We didn't see any serious support levels broken yesterday on equities, but I'm more concerned than I was about the rising wedge on NQ, which is of reasonable quality. Rising support is at 2183 and an hourly close below that would look very bearish:
On ES we've been seeing a sort of topping rectangle, though the trendline hits aren't good enough for it to be a proper bullish rectangle pattern. Nonetheless an hourly close above 1202 would be bullish and an hourly close below 1178 would be bearish:
TF has been holding the support range that  was looking at yesterday. If that should break then rising support from the low is now at 688. If we see another day of trading sideways then TF might hit that rising support trendline without breaking the support range:
If we are to see this rally extend upwards then I have a support trendline on the Vix 15min chart that will need to break. I've drawn this up as a sort of falling wedge, but the upper trendline isn't strong enough for it to be one (yet).
Possibly the most interesting thing going on today however is the very nice looking triangle on the EURUSD daily chart. I saw this yesterday and posted it on twitter. The triangle is breaking up at the moment (since I capped this chart), though as I've mentioned before, triangles are well known for often breaking one way and then playing out in the other direction, as we saw with the NQ triangle at the beginning of last week. The obvious next target on EURUSD is rising support in the 1.386 area and EUR may reverse to hit that next. Short term however, this break up looks bullish for equities:
That just about wraps it up for equities today. I'm leaning bullish but waiting for a confirmation break to the upside, which I'm expecting today or tomorrow. I'm watching support on NQ particularly for a signal that the bulls might get a nasty surprise here. I have some more charts looking at bond yields and Japan that I was planning to add to this post but on reflection I'm going to write those up in a second post for later today.

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