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Thursday, 6 July 2017

Inflection at 2400

SPX rejected from the backtest of the daily middle band yesterday and came close to a retest of last week's low at the intraday low today. There is a compelling case for seeing that full retest tomorrow as well as a retracement low retest on NQ and that the next important inflection point is there. I'll be looking at why that is below. SPX daily chart:
NDX is on the fifth day of a daily lower band ride and has backtested the broken H&S neckline. If NDX can deliver a sustained new low I'll be looking for the H&S target in the 5360 area. NDX daily chart:
The ES and NQ futures charts below were done before the RTH open for Daily Video Service subscribers at theartofchart.net, except for ES which was updated at about 11am. If you are interested in trying our services a 30 day free trial is available here.

So, the inflection point ..........

On ES I have a falling channel in purple trendlines, and the channel support trendline is now in the 2398/9 area, just above the 50% retracement of the rising wedge from the May low. If that trendline is tested and holds, then there would be a decent looking setup to head back to channel resistance, and with the low close to the 50% retrace target there would be an excellent case that the channel is a bull flag channel setting up a retest of the all time high, in a likely second high of a double top.

The bear option from the inflection point is that if that channel support trendline doesn't hold as support, then that same trendline also works as the neckline on a decently formed downsloping H&S, and on a sustained break below the H&S target would be in the 2355 area, though the obvious target by then would be a full retracement back into the May low at 2341. ES Sep 60min chart:
The bear option for NQ is already laid out on the NDX chart, but the bull option here is well worth a look. The short term falling wedge broke up slightly yesterday and there is therefore a good case that the retest of the current retracement low on NQ would be making the second low on a double bottom. That wedge is part of another falling channel that would not be a likely bull flag in this instance. A retest of the lows and rejection back up would set up a possible return to channel resistance, slightly over 5800. NQ Sep 60min chart:
TF looks as though a triangle is forming here. That leans weakly bullish and there is still potentially unfinished business at a dull retest of the all time high. TF Sep 60min chart:
I'm leaning strongly towards seeing ES and NQ retest their retracement lows tomorrow and make at least marginal new retracement lows. At that point price will need to make a decision. On a rejection back up there is still a good case to see full all time high retests on ES and TF, and potentially on NQ as well, though that is more of a stretch. On a sustained break below the current retracement lows, we should see a move to the next target areas below.

Stan and I did our monthly free public Chart Chat at theartofchart.net on Sunday and if you missed that you can see the recording posted on our July Free Webinars page. I would also note that this week's edition of The Weekly Call is posted and that the model portfolio there is up 170% in the seven months to June 23rd, obviously well on course to make our target minimum 200% return over the first year. As and when that target is reached we're thinking of making the strategy there a bit less conservative. That's a free weekly service and if you trade futures I'd suggest adding it to your reading list.

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