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Wednesday, 4 September 2013

Important Day

SPX had a weak day and filled the very large opening gap in the afternoon. That was weak and bearish action, but while it weakens the idea that a full retracement low is in, it doesn't rule out a rally going higher in a continuing downtrend. Looking at the daily chart the last four trading days have been crawling up the key rising support trendline from 1343. The rally targets that I was outlining in Sunday's post require only that rising support from 1343 is not broken and that a lower retracement low is not made. As long as that remains the case that rally scenario is still very much in play, and the obvious upside targets on the SPX daily chart are the 50 DMA, currently at 1661.5, and the daily middle bollinger band, currently at 1663. SPX daily chart:
On ES the reversal at the high yesterday was at declining channel resistance, and the double-bottom may have failed, which isn't encouraging for further upside. However as ES stands now it is still making lower lows and highs and that remains the case unless there is a break below Friday's low. If we see that today then the downtrend will have resumed. ES 60min chart
COMPQ failed at gap resistance and the 50 hour MA yesterday, but as with SPX and ES has still made marginally higher highs and lows in the last week. The upside target in the 3680 area is still very attractive. COMPQ 60min chart:
Dow broke and retested the perfect falling channel yesterday which is bullish there. INDU 60min chart:
The most bullish index chart I was looking yesterday was the Nikkei, where a bullish falling wedge broke up hard. That's not necessarily going to have an impact on US indices but looks nice as a standalone long either way. NIKK daily chart:
I've been posting the GBPUSD chart a lot recently but today I'll post the EURUSD chart, where weeks of chop in a fan eventually established a rising channel and then broke down. A double-top has broken down there with a target in the 1.295 area, though there is some positive 60min divergence which is suggesting a rally soon or possible the failure of the double-top. I'm leaning bearish under 1.331. EURUSD 60min chart:
I'm short on space today so I'm going to post the CL and ZB charts on twitter later. What I'll show instead are the SLV and GDX charts to show the strong resistance areas they have reached and may make significant reversals at. On SLV declining resistance and breakaway gap resistance are being tested and are holding so far, though an IHS may be forming. SLV 60min chart:
GDX is testing declining channel and gap resistance there, and may also be forming an IHS. There is also the possibility of strong reversal there though i would note that the weekly positive RSI divergence on GDX is something most often seen at major trend reversals. At the least though SLV and GDX are reversing so far at major resistance and that should be borne in mind:
The big question for today is whether my rally scenario into the 1660s on ES and SPX will play out or fail. I am still leaning towards this rally going higher, and if ES can make a higher high with any confidence then I would expect a move into the 1660s. If last week's lows are taken out then the downtrend will have resumed. For today there is strong support in the 1630-2 area, strong resistance in the 1640-2.5 area, and bulls need to recover over the ES 50 hour MA, currently at 1642.5.

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