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Wednesday 11 December 2013

Ongoing Retracement

Looking at ES the retracement from the high on Monday is most likely still ongoing, though there is clear positive divergence on the 60min RSI warning that it may not go much lower. The reversal at the 50 hour MA overnight kept ES on the bear side of the MA, and if the retracement continues today the obvious target is the weekly pivot at 1796.20, which should be strong support as the daily middle bollinger bands on both ES and SPX are in the same area. I have the retracement pattern as a 70% bullish (ultimately) falling wedge and I have wedge resistance just over 1805. The main bull/bear line for today is at 1808 as that was the overnight high. ES 60min chart:
On the SPX daily chart the middle bollinger band is currently at 1795.41, and if we see a break up today the upper bollinger band is at 1816. SPX daily chart:
I am very definitely leaning towards a bullish resolution to this current retracement, but obviously there is a possible double-top in place which I will start considering seriously if we see a conviction break below the weekly pivot at 1796.2 ES. SPX 60min chart:
I'm not seeing a lot of support for a bear resolution this week but there is a rising megaphone on RUT that could support it on a break down today. I'm watching that with interest. RUT 60min chart:
CL has reached a possible IHS neckline, and so far that is holding. I have a possible scenario where a right shoulder forms here with an ideal low in the 96 area at a retest of broken falling channel resistance before the IHS completes and breaks up with a target in the 106.5 area. Watching to see how that develops. CL 60min chart:
I've been posting the GBPUSD chart every so often with the comment that if it broke back up over the multi-year triangle there I would have an upside target in the 1.97 area, and it has now broken up. I have to say I don't trust triangles as they have a very nasty habit making a false break in the wrong direction before then resolving in the right one. However in this case that false break has already happened so I am taking this target seriously. For lack of an established name I'm calling this setup an overthrown triangle, and am compiling stats on their performance when I see them. GBPUSD weekly chart:
There is an even larger possible triangle on EURUSD that I am watching here, and the next obvious target within that is triangle resistance in the 1.395 area. That may well be the target for the current move up. EURUSD weekly chart
I'm leaning towards seeing some more downside today but if we see a conviction break over 1805 ES that will become much less likely. If we then see a move over 1808 then the retracement should be over. If we don't see a break up I am looking for a retracement low in the 1796-8 ES area.

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