SPX bounced back into the ES rising channel yesterday and is back just below resistance. We may well be making a triple top. The action in recent days has a disturbing look of an IHS being made though, and that is something to watch this week, though the left shoulder has too much sideways trading for a good H&S pattern:
We should correct here. We have hit the top of the current internal SPX channel within the main rising channel and I'm still expecting to see a correction this week to the 1120 level as the obvious target:
USD has broken up from the declining channel of recent weeks and looks set to rise further. That should at least slow rises in equities while it is ongoing on past performance:
EURUSD bounced from strong support yesterday for what looks like a technical retracement only, and a break down through it would be confirmation that a major new wave down has started:
Oil has broken down from a rising wedge and has established a gently declining channel:
Gold has also broken down from a rising wedge and has also established a gently declining channel:
My feeling is still strongly that equities will correct this week, but I'm starting to lose confidence. We will need EURUSD to break support in the next day or so to back up my view, and a break with confidence through resistance at 1165 on ES would undermine the case for a correction badly.
One thing that I will be watching very carefully this week in terms of a longer term signal is the longstanding rectangle on XLF. It traded above the rectangle intra-week last week but closed back within it. A weekly close above or below it would be a strong signal for equities in the weeks afterwards. If we fail to correct this week then a close above it would signal that we will rise strongly in the weeks afterwards:
