Friday was a very good day for the bulls and a number of key support and resistance levels fell that suggest that we've a lot more upside coming. After the slight break back down through the SPX IHS neckline on Thursday it was weakened, but not greatly so, and the neckline was recaptured with a lot of confidence on Friday. On the 60min chart we've now established a support trendline to go with the already established resistance trendline. Together they look like a rising wedge, but there aren't enough crosses between the trendlines to make it one really:
Copper has broken upwards from the rising wedge and well established resistance trendline and the rising wedge target is 397, which fits with the two alternate resistance trendlines that I've marked on the chart. This break could possibly still be a wedge overthrow, but I wouldn't put any money on that:
USD has now broken down from both the H&S neckline and the support level that I marked in on Friday's chart. The next obvious targets for EURUSD and GBPUSD from their charts are in the 1.375 and 1.595 areas respectively so I'm not really seeing much reason for a bounce here:
Oil broke declining resistance and the H&S that was forming now looks unlikely to finish forming the right shoulder. Oil's probably the weakest long here with the high stocks position looking likely to be a drag on any move up:
Financials are often a good indicator for equities and I've been looking at the XLF chart over the weekend. That also looks encouraging for bulls, with a falling wedge that has broken up and retested, and a smaller rectangle bottom that has formed at the bottom of the falling wedge. Rectangle bottoms, despite the name, break down 55% of the time, but this one looks likely to break up under the circumstances. On an upward break this has an 85% chance of reaching the target at 16.8. The falling wedge target is 17.05:
All in all the technical picture overall looks very bullish now and the best strategy here looks likely to be buying on weakness. We may see some weakness this week and I'm seeing a big move today in one direction or the other. If that move is down then it is likely to set the direction for much of the week. If that move is up then I'm seeing strong resistance in the 1161 – 1165 area today.
