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Tuesday, 4 June 2013

Bounce Resistance Levels

I was talking yesterday morning about the possibility of a retest of broken triangle support and we didn't see that then. We're more than likely going to see that today however and I've been considering whether the bounce is likely to stop there. Very possibly not I think.

On the ES 60min chart there was clear positive RSI divergence at the low yesterday. An IHS has formed with a target in the 1657 area on a break over the Sunday overnight high at 1639. ES is back over the 50 hour MA and now testing 1640 as I write, so that target should be borne in mind, though the initial targets are the ones on the SPX chart which I'll post second today. First the ES 60min chart:
On the SPX 15min chart you can again see the positive RSI divergence at the low yesterday. These signals tend to be reliable in retracement phases and unreliable in impulse moves. A rather ugly W bottom formed and broke up with a target in the 1653 area. The resistance levels to watch are broken triangle support in the 1645 area and declining resistance in the 1650-2 area. On a clear break above, say past 1655, the path would open up for a retest of the current highs. SPX 15min chart:
I gave three support levels to watch yesterday and SPX didn't reach the highest of those. Another I had marked in but didn't mention was the broken rising wedge trendline from 2011 and the bounce was there. I'm not expecting that to hold long but that's worth noting here. What I would mention from the daily chart below is that the daily middle bollinger band is now at 1646, and that should be decent daily closing resistance. SPX daily chart:
I'm running late today so I'll finish with just two more charts. The first is USD where I was considering the possibility of a major trend reversal the other day. With the level of the last high now clear the pattern from the Feb 2013 low appears to be a rising wedge. That makes holding rising support in the 82.2 area important and that may well be tested soon. If that breaks there is then very strong support around 81.4 that is both possible channel support and a possible H&S neckline. USD daily chart:
The last chart for today is the AAPL chart where the slightly downsloping IHS is now almost formed. If we see a higher high over 463 I'll be expecting a move back into the 500s. AAPL daily chart:
The short term pattern setup on SPX and ES looks stronger than it should here, and it's possible that a low was established yesterday that could lead to a test of the highs. I'll be watching the SPX 15min chart carefully today for signs of negative RSI divergence on that chart. If we are still in retracement mode then that signal should deliver a high. If we see a break over 1655 SPX then there is a very real chance of a retest of the highs and shorts here should bear that in mind. Overall however the bearish setup on Dow, TRAN and RUT that I posted yesterday are still all very intact so until we see that break up on SPX, the trend should be assumed to be downwards.

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