ES Interim Low Probably In – Good Bounce Plays (by Springheel Jack)

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I was expecting that we would make a low on ES early this week, and I
think we made it overnight at 1003 as a significant declining resistance
trendline was broken after that low:

100706 ES 60min Declining Channel Break

I'm not absolutely certain that the interim low is in, and looking at
EURUSD particularly I had expected to see a bit more downside first, but
looking at quite a few charts this morning I think that most likely
that won't now happen.

I've marked in my expectations for a bounce target on the ES daily chart
and, though I haven't marked it in on this chart, the low point on SPX
was almost exactly at the 38.2% fib retracement of the move up since
March 2009, which was interesting. On the ES daily chart there was a
touch of the RSI 30 oversold level, with some positive divergence on
MACD, and the lower trendline of the (sloppy) declining channel was hit
on Friday:

100706_ES_Daily_Declining_Channel

For promising bounce plays I'd highlight oil and copper, both on the
September futures. Oil on the 60min chart has broken up through a
significant declining resistance trendline and has a good chance of
making it back up to $78 IMO to hit the upper trendline of what appears
to be a broadening descending wedge:

100706_Oil_Sept_60min_BD_Wedge

The copper broken rising wedge that I posted the other day appears to
have been a diagonal slice of a previously unrevealed rising channel.
Both rising and falling wedges frequently develop into channels which is
always something to bear in mind when trading them. Copper also appears
to have formed a small IHS indicating to the $307 area, though my
target is the top of the rising channel in the $315 area:

100706_Copper_Sept_Rising_Channel_and_IHS

I'm expecting a bounce here rather than a longer term bottom, though if
strong declining resistance on ES/SPX and EURUSD is broken that could
still go the other way. At the moment however the SMA 50 & 200 death
cross is being made on the  SPX daily chart, and also the EMA 13 &
34 cross on the weekly chart, both very bearish indicators for the rest
of the summer.

It would be nice to get a hindenburg omen as well of course, but one of
the preconditions for that is that the NYSE ten week simple moving
average must be rising, and that looks unlikely in the near future
without a major bull break up, which would then make it hard to get the
number of new yearly lows required to trigger an omen. Wikipedia have
an excellent page on this indicator for anyone interested in how it
triggers.

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