ES is still within the rising channel of the last five weeks. Support today is at 1260 and resistance is at 1281:
So far, so boring, but elsewhere things are starting to get very interesting. I've been watching to see whether silver would break the support trendline from 18, and after a couple of days of testing it hard it has now broken through. For my money silver has made a major interim top and a serious correction has now begun. I've tried to show this in the context of the longer term chart and we might in theory see a correction down to 12 now. That seems (cough) extremely unlikely and I'm looking for a correction into the 20 – 22 area:
EURUSD made a marginal new low overnight and is clearly now in a new wave down. We'll see how far that goes. There are a lot of analysts expecting to find major support in the 1.27 – 1.29 area, and that could be right if we've just been watching an ABC correction from the November high. We'll see, and I'll be watching other USD currency pairs with clearer pattern setups for directional clues as EURUSD is currently a mess, though the current wave down may form a helpful pattern as it progresses.
One of those to watch is definitely GBPUSD, where there is a clear falling wedge within a very possible rising channel. I'm expecting a move down below 1.53 to hit the falling wedge support trendline and the notional rising channel lower trendline and at that point we'll see which way GBPUSD breaks. Falling wedges are obviously bullish patterns, but they break downwards about 30% of the time:
AUDUSD is another to watch, and that is currently correcting towards trendline support in the 98.5 area. If that support breaks then I'd expect a much deeper correction with a target in the 90 area:
Oil's looking interesting at the moment, and appears to be correcting towards channel support within a falling wedge. That looks decently tradeable and it will be interesting to see whether that wedge too breaks up or down:
One question that is asked a lot is whether what we have seen since March 2009 is a real bull market. I'm going to work up a post on this subject this weekend or next weekend, but for my money the answer can only be no. The reason for that is that no real bull market requires huge amounts of ongoing government intervention to support it. There may be a genuine bull market under here somewhere, but until government intervention finishes there's really no way of knowing, and QE2 may of course be followed by QE3. That raises a number of related issues and I'll try to address some of those in that post.
