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Wednesday, 8 February 2017

Working Title

I mentioned the somewhat bearish opening setup on SPX/ES yesterday morning and that's still looking somewhat bearish. On the bear side on SPX, though the hourly RSI 5 sell signal has now reached target, a small double top has broken down with a target in the 2276/7 area and that could be the target today. On the bull side though .......

Stan & I are starting work on the book we are writing and Stan and I both have a few pattern setups to name as we write them up for the book. One of those for me is double tops and H&S reversal patterns that break support and then fail into trend continuation. These tend to fail hard into a high probability target at the top of the failed pattern (at highs, vice-versa at lows). These happen a lot and longer term readers will recall me mentioning these many time over the last few years. My working title for these as continuation patterns is a 'Jack In The Box' Continuation. We may well have one of those here and, if so, that would set up the full all time high retest that we are expecting this week.


SPX 60min chart:
The key on ES this morning is the test of the weekly pivot at 2282.75. That needs to be broken AND successfully converted to resistance to open up the double top target in the 2271/2 area. So far this morning it has been broken once but no sign of conversion to resistance so far. On ES the 60min sell signal has not made target but has so far perfectly reversed at the support trendline on the hourly RSI (name pending for this setup). Very possible support there too obviously. ES Mar 60min chart:
NQ has pinocchioed rising wedge support and rejected strongly there so far. We are looking for one more full ATH retest and at that stage we will have a very decent looking swing high candidate on NDX/NQ. NQ Mar 60min chart:
TF has broken short term declining support in what may be a bullish underthrow of falling wedge support. No positive divergence on RSI and strong resistance at the weekly pivot at 1365.50, which is a long way north of price at this stage. I remain doubtful about TF managing a new ATH at this high. TF Mar 60min chart:
My lean is to see that Jack In The Box reversal into a full all time high retest today or tomorrow on SPX/ES. If ES can convert the weekly pivot to resistance however, then I'll be looking for 2271/2 and starting to wonder whether the swing high might already be in at the marginal lower high on Monday.

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