- WE'RE JUST RANDOM SPECKS OF DUST IN A TORNADO TO THE MARKETS .......
- CHARTISTS MUST PUT ALL BIAS ASIDE AND LET THE CHARTS DO THE TALKING OR WE'LL SEE ONLY WHAT WE WANT TO SEE
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Thursday, 22 January 2015

The Battle of the Middle Band

I posted a couple of charts on twitter last night showing the very interesting setup here on ES and SPX. The setup on SPX is the falling wedge that I've been showing in recent days and the double bottom with a target at 2054. I mention on the chart that the target area would be a 61.8% retracement of the falling wedge and that might be the top of the rally there, if indeed this is just a rally. SPX 60min chart (posted last night on twitter):
The ES chart I posted had an almost identical falling wedge, which is remarkable given that ES tends to have different highs and lows, and traded well over double the number of hours over the period that the pattern formed. What is different though is that the rather choppy rising wedge from Friday's low on SPX is a perfect rising wedge on the ES chart. This gives that chart a rather more bearish cast as rising wedges are 70% bearish. ES 60min chart (posted last night on twitter):
Why is this more bearish? Because this rising wedge can overthrow, perhaps as high as the ES 2052 area, and that can just be a bearish overthrow before a break downwards begins. That the pattern from Friday's low is a rising wedge at all leans bearish here. These do break up 30% of the time though and if this breaks up then the wedge target would be back at the all time highs. ES 60min chart (capped before ECB):
At this stage a break below rising wedge support in the 2015 area would suggest at least a retest of Friday's lows. The main battleground today however is really the daily middle band. A fail at the middle band (2046/7 SPX area on daily close basis) today would favor the bears in coming days. a break back over it would favor the bulls for a retest of the all time SPX highs. SPX daily chart:
I'd expect a retest of the globex highs in trading hours today, though I could be mistaken. anything into the 2050-6 SPX area is fine for a bearish resolution. 2057-64 is no man's land. Over 2064 should be a bullish breakout. Under 2020 should be a bearish breakout. It may well get wild today so trade safe.

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