Crossing the Line (by Springheel Jack)

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I'm in two minds about market direction this morning. As I expected, ES
has returned to the lower trendline of the large rising wedge formed
since the low, and once there it can obviously bounce back up towards
the top trendline, or break the wedge and start resolving down much

I therefore have two scenarios for ES, which become the same scenario
next week, as we form what I am expecting to be the right shoulder of a
bottoming IHS. Here's the first scenario where the lower trendline of
the rising wedge breaks today, and ES falls to my next target in the
1050 – 1060 area:

100730 ES 60min IHS Scenario 1

On my second scenario, ES bounces back towards the top trendline of the
rising wedge, and turns back either at the recent high, or the June
high, both of which are possible necklines for the IHS that I think is
forming. It then turns back down towards the 1050 – 1060 ES area to make
the right shoulder of that IHS

Resistance at 1104.5 ES could hold however, giving only a partial rise. I'm looking for an upswing target of 1.575 on GBPUSD and (less confidently) 1.314 on EURUSD, If they are hit before or as we hit 1104.5, then the chances are that we will go no higher.


For today's direction, the key is the strong support area at 1084.5 ES.
If it breaks and we close an hour below it, then we are going with
scenario 1 IMO. If it holds then we are going with scenario 2. I'm
leaning towards scenario 2 slightly because EURUSD and GBPUSD have not
yet made my upside targets for them, but it could easily go the other

I've mentioned before that I think we have bottomed for the summer, and
the reason I think so is because of breaks down in USD and long
treasuries, among other reasons, but the target of the large rising
wedge is obviously for a full retracement of the rise since the low,
though I'm not expecting to see that hit.

Instead I am assuming that the rising wedge will evolve into a rising
channel, as they often do and from that I get my target of 1050 – 1060
ES, though the target would be 1045 ES if it was hit today. If that
theoretical trendline breaks, and if the mid-July low is broken, then we
will most likely see a return to and possibly beyond the lows, despite
the many indicators suggesting that won't happen.

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