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Wednesday, 4 January 2017

Still Thinking About That High Retest

I was expecting a retest of the all time high on SPX last week and while SPX came close, we never saw that retest. The setup we are looking at on equity indices here might lead to that retest over the next day or two, but it's ambiguous and if we see support breaks today then it may go the other way.

On ES there is an OK looking falling megaphone that would be a bull flag on the bigger picture. The next target within the megaphone would be megaphone resistance, currently in the 2268.50 area, and on a break up we would very likely see a retest of the all time high not much higher. ES Mar 60min chart:
NQ broke up from a falling wedge yesterday and has eventually converted weekly pivot at 4902.25 to at least potentially strong support. there is a possible triangle forming with triangle support above the weekly pivot. On a break above triangle resistance in the 4919 area (breaking as I write) the upside is open, and the full wedge target would be at the all time high retest, though that's a target that is often not reached. NQ Mar 60min chart:
TF still has the strongest pattern on these three indices, though that is a very ambiguous setup. The pattern is a descending triangle that Bulkowski has breaking down 64% of the time, though most reliable when breaking up. Triangle support was not tested at the low yesterday and that is either unfinished business below at 1352.50, or on a retest of triangle resistance, it is a partial decline signalling that the triangle is likely to break up. TF has answered this question with an opening spike up through triangle resistance as I have been writing. TF TF Mar 60min chart:
If the TF triangle can hold this break up, after a likely backtest into the triangle that may go as low as the weekly pivot at 1363.60, then the triangle should deliver a retest of the all time high on TF. If we see that I'd expect to see the ATH retested on SPX as well and most likely NQ as well. That retest on SPX at least looks like unfinished business above and with luck that can be completed this week to clear the way for the decline that should follow it. I'd expect to see marginal new highs on the retest that might run ten or fifteen handles higher on SPX.

Stan and I are doing our (free) monthly public Chart Chat on Sunday at theartofchart.net and if you have any interest in whether prices are more likely to rise and fall on the 35 or so trading instruments that we cover there you are welcome to attend and you can sign up for that here. If you are reading this just because you love high quality TA, there will be plenty of that too. :-)

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