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Thursday, 13 February 2014

Retracement Targets

I gave the remaining significant resistance level on ES/SPX in the 1824-8 ES range yesterday and the reversal at 1823.5 was at the bottom of that range. Es has now broken down from both the rising wedge and the 50 hour MA and I'm expecting more downside, though I would add the caveat that at this stage in a rising wedge breakdown there is often a retest of broken wedge support or a test of the highs to establish the second high of a double-top. We could still see that happen here. ES 60min chart
The rising wedge on SPX that I showed yesterday morning broke down in the afternoon. I'm looking fora retracement in the 23.6% (1805 just above daily middle band retest) and 50% (1782 weekly middle band retest) range. My ideal target range would be the daily middle band at 1801 SPX down to the 1798 Jan 30 high. The weekly middle band is at 1789 but history suggests that will most likely not be retested. SPX 15min chart:
On the SPX daily chart the key levels are the 50 DMA at 1810, the daily middle band at 1801 and the 100 DMA at 1775. I would be taking the overall bear case more seriously if we see the 100 DMA tested, but I think that's unlikely. SPX daily chart:
How is the overall bear case looking here? Well I don't favor it but NDX made a very marginal new high yesterday and that could possibly have been the second high of a double-top. as with SPX NDX has now also broken down from a rising wedge. NDX 15min chart:
TRAN looks interesting as the possible falling channel resistance I had sketched in there has held, so for the moment TRAN has established a falling channel. Best case for bears here would be that after the current retracement SPX made a marginal new high while NDX and TRAN both made lower highs. That would leave the bears with a possible technical setup for a resumption of the downtrend. As I said though, I think that looks unlikely here. TRAN 60min chart:
On other markets oil and gold are both still testing their respective inflection point resistance levels and I'm planning a detailed look at the setup on USD tomorrow. In the meantime I have turned up the magnification on my TNX chart as it has broken back up and it has established a decent rising support trendline from the low. I have an IHS that has broken up with a target in the 28.75 area and as long as that rising support trendline holds, I'll be expecting to see TNX hit that target. TNX 60min chart:
We should see some decent two way action today and tomorrow. SPX is in retracement mode and we are likely to see more downside, though I'm not expecting the retracement to get that far or last more than two or three days.

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