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Thursday, 23 October 2014

Another Educated WAG

At the point where SPX broke hard through the 50% fib retrace the overall trend shifted from bear to unknown in my mind, and it's still in unknown territory now. I'm not assuming that this will resolve in either direction until I see some stronger evidence, but I'll be calling the shorter term likely moves, which at the moment look a decent fit with either bull or bear overall trend.

Looking at the pattern setup at the close yesterday, and the recovery overnight, I have a new educated guess for the direction on SPX over the next few days. I'll lay that down here and we'll see how that goes.

  1. We see a retest of yesterday's high or a marginal new high today to make the second high of a short term double top
  2. SPX then (38.2% fib) retraces to retest the 1900 area and the 200 DMA just above at 1907
  3. SPX then moves up further to retest the 50 DMA in the 1967 area and possibly make an IHS target at 1976
  4. At the test of the 50 DMA we see whether SPX fails hard there into at least a retest of the recent lows, or breaks higher into new all time highs

SPX daily chart:
Every one of my seven US optic run indices broke rising support from the lows yesterday. I'm looking for reversal patterns to form and then fib retracements of this move up from the lows across the board. The stall at this area on SPX is close to the 61.8% fib retrace target. SPX 60min chart:
The pattern on SPX was unclear yesterday morning but resolved into a very decent rising wedge that has broken down. A small H&S broke down with a target in the 1910 area in the afternoon, but I think SPX is likely to retest the highs this morning to develop a better quality double top that will almost exactly target the 38.2% fib retracement at 1900. SPX 15min chart:
NDX was the last to break down yesterday and may or not manage to fill Tuesday morning's gap close to the 38.2% fib retrace target. NDX 15min chart:
I posted this EURUSD chart early last week looking for a retrace to retest the 1.25 low, and that's going well. I'm expecting EURUSD to make the second low of a double bottom there before a larger rally begins. EURUSD daily chart:
There's been a lot of talk this morning about the strong futures overnight meaning that another leg up is starting. The pattern setup here says that's unlikely (though as always still possible), and a retest of the highs on this pattern setup is generally an excellent short entry level. Once we see that or a marginal new high in trading hours, I'll be looking for a retest of the 1900 area.

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