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Wednesday, 19 September 2012

Possible Rally Here

SPX closed under the daily upper bollinger band for a second day. The upper bollinger band is now at 1468 so we could well now see a test of the highs this week that stays within the bollinger bands. A move back well above the daily bollinger bands at this stage wouldn't be unprecedented, but would be most unusual:
On the SPX 60min chart SPX hit the short term support trendline I looked at yesterday morning and if we are to see a rally within the overall retracement I think is likely here, then this is the most likely place to see that. If we see that rally here, then that might well retest the highs to form a short term double-top and set up the main retracement:
On ES the support trendline has not yet quite been hit, though ES is closer to that hit than it was when I capped this chart. As with SPX we may see a bounce from yesterday's low here and I have marked that in as the potential valley low of the possible double-top that may then be forming:
EURUSD bounced at the rising support trendline I was talking about yesterday morning when it was hit yesterday afternoon, and then broke it overnight. EURUSD is now testing the strong support level at 1.30 that I also mentioned. Again we could well see a bounce here and if we do then there is currently slight positive divergence on the 60min RSI. Now or later I am expecting a break back below 1.30 to retest the 200 DMA and broken rising wedge resistance in the 1.28 to 1.282 area. My apologies for this practical but visually unappealing chart. Not up to my usual aesthetic standards but I needed to use the daily chart to show the 200 DMA target:
I mentioned strong resistance in the 1800 area on gold, and it looks as though a short term high may be setting up somewhat below that. On a break below 1750 the double-top target would be in the 1725 area, and I have current rising support then in the 1705 area. Overall I remain very bullish on gold, which I would regard not so much as appreciating in dollar terms over the course of QE3, as remaining static while USD declines against it. We may well be near the start of a very impressive bull run on gold:
If we're going to see a bounce to form a double-top then this is the most likely place. If we see yesterday's lows broken then I would see that then as much less likely. Either way I'm thinking that we are starting a retracement that should test 1420 or 1400 on SPX, though it might possibly find support at the broken 1440 pivot of course. Leaning bullish today unless the support trendlines on ES and SPX are broken. Any rally scenario on SPX would obviously be assisted by EURUSD holding 1.30 support today and it will be a warning signal if EURUSD breaks below that.

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