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Tuesday, 16 April 2013

EURUSD Breaking Up

My sympathies this morning to the victims of the bomb blasts in Boston. A particularly contemptible act by deranged and hate-filled idealists seeking to make the world a better place through indiscriminate murder. As far as I've been able to ascertain no group has yet claimed responsibility, but I'm sure the full power of the US is bent towards identifying the perpetrators and bringing them to justice.

SPX fell heavily yesterday and closed well below both the daily middle bollinger band and rising support from the November low. I'm pretty certain we are making or have already made the Spring interim high here and we should see an H&S or double-top form here, though it isn't clear yet which we are going to see:
I was looking earlier this week at the SPX 60min chart and talking about how sometimes a rising channel forms shallower channels as it is topping out. I drew in a candidate new channel then and while SPX didn't quite hit channel resistance on that at the 1597 high, the low yesterday was at that channel support trendline:
ES has been bouncing overnight and there is obvious resistance in the 1565-70 area as marked on the chart. The bounce looks too steep so far to make a decent bear flag:
EURUSD has been unimpressed by my arguments on the last couple of mornings in favor of a strong reversal down from here and has been forming a bull flag, finding support yesterday at the 200 hour moving average. Since I capped this chart EURUSD has broken up and it testing resistance at 1.313 and I'm expecting that to break too. The next big resistance level is in the 1.33 area:
The CL bounce yesterday morning was just a retest of broken support at 90 before CL continued to plunge through the late 2012 lows to find support in the 86 area. Positive RSI divergence grew throughout the day and CL is now bouncing strongly with the obvious target for the bounce at on of  the broken support levels at 90 and 92.
The plunge on precious metals yesterday was a very good example of what can happen when a strong and longstanding support level is broken. Gold fell almost to the next big support level at 1330, which I was already doubtful about holding and am now even more doubtful. If that breaks the next big support levels are in the 1150 and 1000 areas:
Silver plunged too and made it halfway to the next big support level at 19.50. That may well hold, but if that breaks the next big level is in the 16.25 area:
Yesterday was a trend day down on SPX, and we would normally expect today to close up or flat after that. I'm not expecting to see a down close today but if we do I'll be looking for the low near the possible H&S neckline in the 1539 area:

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