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Wednesday, 16 January 2013

Upside Opening Up

I posted a chart of the daily SPX early last week with the observation that of the last twenty times that SPX closed more than ten points below the daily upper bollinger band, support at the middle bollinger band was hit sixteen times before the upper band was hit again. To that extent the odds are still with the bears for the moment. Middle bollinger band support is now at 1447 and still rising, and it therefore isn't far now to reach it either. While we watch this sideways action however, the potential upside within the SPX rising channel and below the upper bollinger band is opening up, and resistance on those is now in the middle to high 1480s. That needs to be borne in mind from a risk/reward perspective:
ES broke back up through the 50 hour MA in the afternoon yesterday but that didn't hold overnight and has now turned back into resistance. The 50 HMA has crossed below the 100 HMA which is a decent short term trend change indication. However on the bull side I have found a shallow rising channel on ES for January trading so far, and that will need to break down to see any further retracement. Channel support is in the 1458.5 area this morning. Channel resistance is just under 1480, and that's a worryingly good fit with the larger channel resistance on SPX:
If we do see more retracement the key pattern to watch is the nicely formed potential double-top on NDX. The technical setup for further retracement there looks compelling and the target on a clear break below 2703 is the 2656 area, not far above rising (possibly wedge) support now in the 2635 area. I'm still thinking there are decent odds that we will see that happen before the next move up:
Other markets aren't that encouraging for the bear side this morning. EURUSD has made the little double-top target area, retested it on some positive 60min RSI divergence and is clearly trying to make a low, so the immediate retracement low on EURUSD may well be in. If EURUSD is still in a downtrend then the 50 HMA should be decent resistance and that's very close to broken support in 1.3333 area. If we see a break over that I'll be expecting the retracement low to be in:
CL is still chopping around in the 92.65 to 94.8 consolidation range. Main rising support is now in the 92.3 area and will rise to within that consolidation range within a few days.We may well not see significant further downside on CL before the next decent move up:
I posted the gold chart a few days ago, highlighting the bullish W bottom setup on positive daily RSI divergence. The uptrend there has continued and the resistance levels to watch are first the 150 DMA at 1678, at which gold both opened and closed yesterday, then the last high just under 1700, and a break above that triggers the W bottom target in the 1775 area of course, and declining channel resistance, which I have in the 1710-15 area. If we see breaks over these then I'll be looking for a retest of the serious resistance in the 1800 area:
Overall I'm leaning somewhat towards the bear side this morning, with the caveat that the rising channel on ES will look bullish until it breaks downwards. A clear break below 1458.5 will kill that off, but if we see a clear break back over the 50 HMA, now in the 1463.5 area, then we could well see a move to channel resistance in the 1480 area. I'll be posting a couple of AAPL charts on twitter later on to show the two key support levels that AAPL is now getting close to testing. My twitter handle is shjackcharts if you want to see those.

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