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Thursday, 12 September 2013

SPX Daily Upper BB Hit

SPX hit and closed at the daily upper bollinger band yesterday, and may reverse there to retrace into the 50 DMA in the 1670 area or the daily middle bollinger band in the 1655 area (long shot). The falling megaphone target is at the 2013 highs so it's possible that SPX will ride the upper band into that target, in which case the upper band can rise by 5 to 8 points per day in a strong uptrend as long as it is under the weekly upper bollinger band, now in the 1715 area. If we see that happen today the closing range should therefore be in the 1694-7 area. SPX daily chart:
On the 60min chart, as I mentioned, the falling megaphone target is back at the August high. I need a decent retracement to get any kind of decent pattern for the current move but in support of a retrace to test the daily middle bollinger band I do have both rising support from the low and broken megaphone resistance in the 1658 area at the moment. That seems a really long way down from here but I'm mentioning it as a technical possibility. SPX 60min chart:
The next few weeks are critical for USD direction and there are very mixed signals here. These signals are best exemplified by GBPUSD at the moment, and on the 60min 1Yr chart GBPUSD broke up from a W bottom yesterday with a target at 166.9. That would be fairly bearish for USD of course. GBPUSD 60min chart:
Pull out to the weekly view on GBPUSD though and you can see that we are approaching a second retest of broken support on a multi-year triangle that broke down in early 2013. If GBPUSD doesn't break back up, and that does happen sometimes with triangles, then upside is very limited and the outlook extremely bearish back into the long term support zone that held the 2009 lows. That is a big move but seems much more credible than the bullish target back over 200, a level that would most likely crush the now recovering UK export sector again. We'll have to see what happens at broken triangle support. GBPUSD weekly chart:
CL has formed a perfect and shallow rising channel from the recent lows. Until demonstrated otherwise, a channel like this after a steep decline is a bear flag. CL 60min chart:
GC broke down overnight from the rising channel from the low. this doesn't yet eliminate the bullish IHS scenario but it weakens it a lot. I'm leaning short on gold here. GC 60min chart:
I won't show the ZB chart today but it managed a slightly higher high overnight so the prospects for a decent bonds rally are improving. EURUSD broke up through declining resistance yesterday but then established a declining channel overnight on negative RSI divergence, so the double-top scenario into 1.295 is still in play. Not convinced by the downside scenario here but leaning towards it at the moment. EURUSD 60min chart:
I'm rooting for a retracement today as I need one to get a decent support trendline on SPX and ES and start identifying a possible pattern for this move. Overnight action is mildly supportive of that and SPX has closed higher seven straight days so we're due for a negative close soon. That may not happen today though.

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