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Thursday, 16 June 2016

So Here We Are

Yesterday played out as expected, with the intraday high as expected at 2085, at the retest of broken floor support and the daily middle band, and ES has made lower lows against Tuesday's lows overnight. I'm looking lower again, though there are now possible double bottom setups on all of ES, NQ and TF, and on a break back over 2085 SPX the retracement low would likely be in.

On the 15min chart a decent falling channel was established at yesterday's high, and channel support is currently in the 2050 area, though obviously that's dropping fast. Short term support is at the 61.8% fib retracement of the rising wedge from the 2025 low at 2062. SPX 15min chart:
Support on the daily chart is at the daily lower band at 2039, possible double top support at 2025, and the 200dma at 2016. The minimum retracement I would normally expect after a channel break like the one we have just seen is at the 38.2% fib retracement of the thrust up from the February low at 2001, and the double top target on a sustained break below double top at 2025 would be in the 1930 area, just above the 61.8% fib retrace target at 1929. Does this mean that I'm no longer expecting a new SPX all time high soonish? No, I'm still expecting that, but SPX may need to retrace to that 1930 target first. SPX daily chart:
Looking lower on ES, but as I mentioned, there is a possible double bottom setup here. ES Sep 60min chart:
Today and tomorrow are both cycle trend days. If SPX is doing requests, then mine is a trend down day today into a target in the 2025-40 area, then a trend up day tomorrow to retest yesterday's high at 2085 and possibly go higher. That would generally start with an AM high this morning, and as I write there is a promising little nested double bottom setup on ES that may deliver a retest of obvious resistance at the monthly pivot at 2064.5 (2073/4 SPX area). We'll see how that goes.

Stan and I are doing a free educational webinar tonight at theartofchart.net on drawing and trading with trendlines. Being able to draw a decent trendline is very important for assembling patterns and trading with them, and decent trendline work is strangely rare, so if you would like to see how Stan and I do them, you can register for that webinar on this page here.

I was asked where I stood on Brexit yesterday and in case anyone is interested I'm posting the text of an email that I sent to a family member on the subject this morning, with the link to the article I was talking about here. Also a useful read if you are wondering why there is so little affection for the EU in the UK. Email text as follows:

'Hi (pro-EU family member)

You've sent me quite a few articles on the Brexit vote, and when I read this I thought of you. Both articles well worth reading, but the second one, by Ambrose Evans-Pritchard, a lifelong europhile, explaining why he's voting for Brexit, particularly so. 

There's something else to mention too. Almost everything I've seen from the Remain campaign has focused on the dangers of leaving Europe, of the negative economic impact of leaving the EU (though that's actually hilarious given that the EU is the slowest growing big region on the planet, and has been for a while now since being overtaken by Africa). While they may have some decent points, and the unknown can be scary, it does also tell us that even they can't really think of much to say about the advantages of being in the EU. If they could then fear of the unknown would not be the main plank of their campaign. If this referendum was about joining the EU rather than leaving it, then it would be hard to imagine them getting many votes at all with this campaign, which might reasonably be compared to trying to scare a battered wife into staying with an abusive husband for fear that the alternative might be even worse. 

I'm not criticising them for that, I can't think of much to say about the EU that is positive either, and neither can our europhile friend Ambrose below, as he details the main ways in which the EU has failed to deliver for the citizens of the member states for a variety of reasons centred round arrogance, complacency, lack of accountability, and a very deeply held contempt for the democratic process. 

Food for thought :-)


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