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Tuesday, 20 August 2013

Ho Hum

This has been an irritating decline so far because of the lack of bounces. Without retracements there are no trendlines, and without trendlines there are no wedges, channels etc and it becomes very hard to make out the structure of the decline. All we can definitely say so far is that the decline is a strong one.

SPX traded entirely below the daily lower bollinger band again yesterday, and closed ten points below the band and well below the 50 DMA. Next obvious support on the daily chart is the 100 DMA at 1632, with the 50% fib retracement from the 1560 low at 1635. SPX daily chart:
The support trendline I was looking at on the SPX 60min yesterday morning broke at the close. That may have been a bullish underthrow but for that to be a real possibility we would need to see a strong bounce today without undercutting yesterday's low by much. The low yesterday was at 1646, the double-top target is at 1642, and as I mentioned the 50% fib retracement is at 1635. It's too late for a retest within this double-top move so I would favor some more downside to make a low in the 1630-42 area before a serious bounce. SPX 60min chart:
There is a possible bottoming setup here on ES though as a possible double-bottom has formed after yesterday's close and that has broken up with a target in the 1655.50 area. There was no positive RSI divergence however and I'm a bit doubtful about it this close to the open and a possible gap fill. If ES can make it back into the mid-50s though there is also a possible IHS neckline at 1657.50 so a larger reversal pattern could form there. ES 60min chart:
I was scanning through other indices this morning looking for directional clues and workable trendlines and TRAN was interesting. There the decline is in a nice looking declining channel and TRAN has just broken below a decent quality double-top with a target not far above the June low. I'll be keeping an eye on that and the next obvious move for TRAN is a small bounce into channel resistance. TRAN 60min chart:
The other one that was interesting was NYA, where the topping H&S made target yesterday but I was considering the possibility on that chart that the last three days trickling down had been establishing a resistance trendline rather than a support trendline. if so the next move would be a sharp acceleration of the decline to establish the support trendline. I think that's unlikely with everything looking pretty oversold here but without decent trendlines it's hard to say for sure. NYA 60min chart:
On CL a very strange looking but still valid H&S has formed with a target in the 105 area. CL 60min chart:
GBPUSD has been drifting sideways to up within the large rising wedge over the last few days. I am concerned that it may break up, and unless that was a bearish overthrow, such a break up could be a very strong signal that USD is now back in an overall bear phase. Watching this carefully and at the time of writing there have now been four tests of the wedge resistance trendline. GBPUSD 60min chart:
There's really not much to see in terms of trendlines here and as I've said in previous trends where that was the case, that may well be because the trend is too young to discern the pattern. That suggests that we may see a lot more downside before we get a definitive low. Short term SPX is very oversold, and NYMO closed yesterday at a shade above -100, so I'm expecting a bounce soon. There is a lot of support in the 1630-40 SPX area and I'll be looking for reversal there if the current bottoming setup on ES doesn't play out. The ES 50 hour MA is now at 1650 and the bounce yesterday failed at the test of it yesterday so that is the first resistance level to watch today.

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