Daily Archives: July 29, 2010

Hitting Turbulence (by Springheel Jack)

By -

After the fast bleed up of the last few days I'm expecting to see a
return to serious volatility during the next few days. I'm not sure of
the direction, but looking at USD particularly I'm expecting that we may
see some significant moves down, though longer term I'm still leaning
firmly bullish on equities.

On the GBPUSD daily chart we can see that the top of the strong rising
channel has almost been reached. I am expecting to see a return to the
bottom of the channel once it is hit and I'm expecting to see a parallel
move in EURUSD at the same time:

100729_GBPUSD_Daily_Rising_Channel

On the EURUSD daily chart we have nearly reached the next obvious
resistance level, which is the last significant declining resistance
trendline in the 1.315 area:

100729_EURUSD_Daily_Declining_Resistance

We've seen some recovery on ES overnight, but the broadening descending
wedge I drew on the 60 min chart is unbroken and I am expecting it to
hold for at least one more swing down. The target of the broken rising
wedge is the important support level at 1084.5 ES:

100729_ES_60min_Wedges

On the ES daily chart that 1084.5 target is the level of the lower trendline of a much larger rising wedge, if it is hit today.
If that rising wedge should break downwards next week then I would
expect it to develop, as they often do, into a rising channel and the
target, if hit at the end of next week, would be the lower trendline of
that potential rising channel in the 1050 ES area, so we could see a
retest of the mid-July lows:

 

100729 ES Daily Rising Wedge or Channel

I'm out all day today but I'm leaving some orders on. It should be an interesting day. :-)