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Wednesday, 27 March 2013

Breakout Coming Soon

If the SPX rising channel had broken down on this recent retracement I would have little doubt that we were looking at topping action here, with a steep channel being replaced with a shallower channel prior to a significant breakdown. The rising channel on SPX has not yet broken down however, so this may just be consolidation.

On the current ES channel an RSI 15min sell signal triggered overnight, but unlike the previous seven signals this was at the test of the last high rather than at channel resistance. This should mean that we are going to see this channel break soon. If we see a break downwards then there are decent looking candidate double-tops on ES and SPX. Here's that reversal on the ES 15min chart:
Short term ES has broken back below the 50 hour moving average and is trying to hold above the 100 and 200 hour moving averages. On a break below 1550 the path is open to test channel support in the 1542.50 area:
On SPX rising channel support is now in the 1530 area and the double-top trigger level is at 1538:
SPX daily middle bollinger band support is in the 1545 area, slightly below channel support on ES:
As I was suggesting was likely yesterday, EURUSD has continued downwards after the break below 1.288. The next big support level is at 1.266, and the last foreign bank depositor to leave the Euro-zone should try to remember to turn out the lights:-)
CL broke back above 96 yesterday, which augurs well for a test of the Jan/Feb highs in the next few weeks. Short term though there is significant negative divergence on the 60min RSI, and CL may have now established a rising channel with the next obvious move being a strong retracement:
The ES 15min is currently on a sell signal and the next obvious target is a test of channel support in the 1542.50 area. If we see a break below then we may well see these candidate double-tops on ES and SPX break down and play out. Rising channel support on SPX is in the 1530 area.

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