More Downside I Think (by Springheel Jack)

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Short term direction is very tough to call this morning, as the low on ES yesterday was a very nice looking double-bottom on strongly positive 60min RSI divergence. ES tested the pattern neckline overnight but hasn't closed an hour over it. If it does then the pattern target is 1422. Short term ES has been trying to hold the 50 hour MA, currently in the 1408 area. Rising wedges have clearly broken down on the ES and SPX charts and I'm expecting more downside, but that doesn't rule out a strong bounce or even a marginal new short term high before getting that:


On the SPX 15min chart a similar rising wedge has broken down and I have added a possible channel support trendline that intersects with strong 1390 area support on Friday. Just a possibility but something to bear in mind:

On the SPX daily chart the close was slightly under the broken rising support trendline from the 2011 low and the 100 DMA. The obvious support levels are the middle bollinger band and the 200 DMA, at 1392 and 1385 SPX respectively:

While the possible IHS on the NDX chart is still in play I'll be posting the NDX chart every day. I'm ignoring the superficially similar setup on SPX because the neckline starts too early in the decline from the 2012 high, but that's not a problem on NDX. The obvious right shoulder low target is around 2636 and ideally the right shoulder would take another two or three days to bottom out for decent symmetry:

EURUSD almost reached the 1.314 area overnight to test the October high, and has reversed strongly from there so far. Hard to say what happens there but as long as the rising channel on EURUSD holds I'll be leaning bullish there overall. Rising channel support is now in the 1.3015 area:

The last chart for today is the Vix, where Vix opened and closed over the daily middle bollinger band yesterday. It may fail at the 200 DMA at 17.54, but if it can get over that I have a possible symmetrical triangle target at 18.8 that I'm watching:

Direction looks uncertain today unless we see ES break with confidence over 1412 or under 1408. If ES breaks downwards I have some support in the 1400 area and main support in the 1386-8 area. If ES breaks upwards the double-bottom target is 1422 and we could well see a test of the current high at 1424. 

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