Obviously I was right to think that the setup looked weak yesterday and the short term support trendlines for ES and NQ were broken at the close. For those of you following me on twitter I posted the short term patterns yesterday afternoon with an observation that we were likely to see a break down from them. For any of you wanting to see intraday updates from me my twitter handle is shjack666.
I've had a late start this morning so I'll keep it short today and just focus on ES, NQ and copper (HG). On ES the short term triangle / falling wedge broke down and a very nice looking declining channel has formed. As long as that channel lasts, playing this retracement will be very straightforward, so I'm hoping that it lasts until this retracement reaches my main targets today or tomorrow:
In terms of the main target for this retracement, I'm thinking that the larger rising wedge that also broke down yesterday, and retested overnight, may turn into a rising channel. If so then the target today would be in the 1286-90 area:
In terms of this just being a retracement, both the pattern setup and the target are clearer on NQ. On the 15min chart NQ broke down from the short term gentle declining channel yesterday and has formed a small falling wedge. Again, as long as that lasts the upside and downside trendlines are easy to play:
In terms of the bigger picture on NQ, the obvious retracement target is the 2270-5 area for the lower trendline of the rising channel as I mentioned yesterday. If that lower trendline is broken I'm going to start wondering about a lower low, as there is a larger declining channel in play until declining resistance from the recent top is broken:
EURUSD has held support, but copper broke support yesterday and I've been considering downside targets there. No single target springs to the eye, but there is a potential neckline at 427, strong support at 425, and if 425 is broken, then there is a declining channel pointing to a test of 400. Short term copper is trying to bottom looking at the 60min RSI, and we might see a bounce to reset that before it falls further:
I'm expecting more downside and will be expecting more downside until ES and NQ negate the current setup by breaking up through declining resistance from the recent top, or my targets are hit. Longs should be cautious today and if my downside targets are exceeded, then there is a strong possibility that we will see lower lows on equities.