Slope of Hope Blog Posts

Slope initially began as a blog, so this is where most of the website’s content resides. Here we have tens of thousands of posts dating back over a decade. These are listed in reverse chronological order. Click on any category icon below to see posts tagged with that particular subject, or click on a word in the category cloud on the right side of the screen for more specific choices.

SPX Support Trendline Confirmed (by Springheel Jack)

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I posted a very speculative rising channel on the SPX 60min chart yesterday suggesting that we might see a hit to confirm the lower trendline in the morning, and we saw that hit, albeit not until the afternoon, so the channel is now confirmed:

100910 SPX 60min Rising Channel

The lower trendline was also hit on an ES speculative rising wedge from the last major low, so support is firmly established for both ES and SPX now, which is very good news as I think SPX may well peak and then break downwards today, and a break of those support levels will be confirmation that a short term swing high is in:

100910_ES_60min_Rising_Wedge

I'm still hopeful that we could see a major interim top here, and we could see that if we rise strongly in the morning today. My 30 year treasuries target for a rising channel lower trendline hit has only risen slightly and I'll not post an update of the chart I posted yesterday, other than to add that half the distance to that trendline yesterday morning has now been closed, and that a hit of the lower trendline would be in the 130'26 area today. An interesting spec long there would put a stop at 130'11 and as both previous waves up were over 10, the risk/reward for that spec long would potentially be 1:20.

The rising channel may break of course and if we are to see a major bull breakout here on equities then that would happen. However it is just a fact of life that bull breakouts always seem more likely at the top of a range and bear breakouts at the bottom of the range. Until we see an actual break of the range though, the best risk/reward trades come from buying low and selling high at likely reversal points within it.

Apart from long treasuries the pattern I am watching most closely today is on AUDUSD, where the rising wedge that I posted last week has evolved into a much larger rising wedge. Rising wedges do have a strong tendency to evolve into channels or other patterns, though a transformation into a larger rising wedge is thankfully rare. The upper trendline of that rising wedge could well be hit in the 93.15 area on an upswing today and that would get AUDUSD into the right area for a major reversal on the big broadening formation I posted yesterday as the major high in January was at  93.24:

100910_AUDUSD_60min_Rising_Wedge

There are some other interesting potential reversal patterns building here. One is on copper where we may have an H&S pattern forming at the top of what would be the right shoulder on a much larger pattern. This is one to watch and if the bear case has any real legs over the next few months then we should now see a retracement on copper into the 317 – 320 area to finish the head:

100910_Copper_Daily_Possible_HS_Patterns

I'm seeing the same on oil, though a little more advanced with the right shoulder forming on an H&S pattern that would indicate to 58. I'm thinking that we could see a rise to 77.5 this morning to retest the broken channel lower trendline and make the top for the right shoulder and if so oil would look a very attractive short there:

100910_Oil_Daily_Gartley_and_Poss_HS_Pattern

I posted a possible declining channel on EURUSD yesterday and suggested that we might see a hit of the upper trendline on that channel. Arguably we have seen that hit overnight, though there is a little play in the upper trendline and we could see a more confident hit in the 1.2745 area this morning. If we see EURUSD turn down again then I'd expect a move down to support on that channel in the 1.255 area, but I'd really have my eye on a hit of the main declining support trendline from the August high in the 1.21 to 1.225 area:

100910_EURUSD_60min_Declining_Channel

I'm expecting a reversal today and if that is just a short term reversal then I'd be expecting it to last three or four days with an ES target in the 1070 – 1075 area. If we see a bounce in the morning high enough to hit my targets on AUDUSD and long treasuries though, then we could instead be seeing a major interim top and then the retracement would last longer, at least test 1040 again and perhaps then break out downwards.

There is obviously a chance that long treasuries and AUDUSD may reach my reversal targets and just keep on going. If we are going to see the major equities break up that many bulls are talking about then that will happen. That's a real maybe here though and until we see some real signs of a break up from the current equities trading range we're better off regarding that as just a possibility to bear in mind.

NOTE: Special thanks to our mystery dislikes troll who gave me a remarkable and impressive 126 dislikes in a two hour period after I suggested that he was a sad, lonely, dimwitted, unemployed pathetic loser with microscopic wedding tackle. I'd like to apologise if he took that personally as I meant that in the very best sense of all of those observations, and to repeat that with the impressive work ethic required to manage 30+ IDs just for handing out dislikes like that, I can see a bright future for him in the waste management or street beautification industries, where they are very tolerant of hardworking employees even when they have major social and learning difficulties. Take a chance mate, what have you got to lose? 🙂

SPX Resistance Tests (by Springheel Jack)

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I said I was low on conviction yesterday morning and SPX failed to close flat or down. That is irritating because it means that the broadening ascending wedge indicating to 1077 ES has failed to reach target, and I currently have no short term channels or patterns on ES / SPX giving a strong indication for the next move.

That was a significant reversal though. I'm watching to see whether we have another move up today and if we do then I'll be expecting a sharp reversal down next week. I don't have a target yet for that reversal but I see this morning that would fit with Pug and Alphahorn's predictions yesterday that we would see a move  up towards the 1110 – 1115 SPX area this week before a retracement next week into the 1064 – 1073 SPX area. They've both been right on the mark in the last couple of weeks so that is worth taking very seriously, though Pug is seeing a possibility today that we have already peaked in the short term.

If we do see that move up today there are a couple of points worth noting on the SPX charts. I posted a chart of the SPX 1040-1105 range the other day, and I included on that the declining resistance trendline from the April high, which is where this upswing has faltered since the trendline was hit on Friday. Here's the updated version where you can see that the trendline was hit both on Friday and yesterday, and held both times. If we see a significant close up today then this very significant resistance trendline will be broken, and there is a significant risk that we will overshoot towards the key resistance level above in the 1130 SPX area:

100909 SPX Daily Range 1040 - 1105

There is some limited chart support  for an overshoot if we see a move up today. I've not been getting a lot out of the SPX 60min chart so far on this latest move up from 1040 but the action since Friday does have the look of a high and tight bull flag that would indicate to the 1130 – 1135 SPX area. I also have rising resistance on a very tentative and very steep rising channel from the recent low, though I'll won't be taking the channel seriously unless we get a hit and bounce at the currently very speculative lower channel trendline early today. It is a thought-provoking chart though:

100909 SPX 60min Flag and Possible Channel

I have a number of interim top indicators that I'm looking at and none of them are indicating that the next major top is here. and a hit of the next likely interim top level won't happen this week unless we do see a very sharp move up. I won't post the updated versions of my SPX:Vix and EEM charts today, but one of the others that I am watching most closely is the 30 year treasuries chart.

As you can see from the chart, we have a strong rising channel, though not a well confirmed one on the upper trendline yet, and we are currently seeing a retracement towards the lower trendline of that channel. In that retracement we now have a perfect declining channel and we could possibly see the lower trendline of the main rising channel hit in the 130'24 area if we saw a big move down from 133'04 at the time of writing. That's a big move but we've seen several huge daily candles on this recently, with several larger than 2 and one over 3, so it isn't inconceivable:

100909_T30Yr_60min_Channels

There is a big year-old pattern on AUDUSD that I have posted before, and from the 24 hour forex charts the next upside target is at 93.85. If there isn't a bullish breakout from there then the next downside target would be in the 75 area on this pattern, which sounds very ambitious, but back in April I recommended shorting AUDUSD on the basis of this pattern for a 1000+ pip drop, and we got it. At the least a short from the top of this pattern is a very low risk / high reward short and if we do see a reversal at the top of the pattern, that would be a very bearish indicator for the general market and commodities just as it was at the last reversal in April:

100909 AUDUSD Weekly RADBF

I've been looking very hard at the EURUSD chart for an indication whether it is in an intermediate term downtrend or whether we've just been seeing a correction within an intermediate term uptrend. That's hard to say unless we get a conviction break of the key support and resistance levels on it, which I would see at 1.248 for support and 1.30 for resistance. In the short term though I've found a compelling declining channel from the recent high that suggests more short term upside if resistance at 1.273 can be broken:

100909_EURUSD_60min_Declining_Channel

I see that ES has moved above 1104 as I've been writing, and so is above yesterday's range. If that can be sustained until the open then a gap out of the previous day's range has a high probability to run further in the direction of the gap. If so the odds would then favor a continued move up with a gap fill, if we see one, late in the trading session. We could then see the strong upward move that I have been speculating about and if we do hit the key interim top targets today or tomorrow I will be posting that here as we hit them.