ES finally broke below the ES 60min 50 hour MA yesterday afternoon and that has held as resistance overnight. On the ES 60min chart I have a double top target in the 1589 area but it may be that well see a strong bounce without making that target as the current overnight low is the possible H&S neckline in the 1593 area. If this continues to form we would see a decent rally today and the downside target on a break downwards would be the 1566 area. If we reached that level we would then see whether we would get the second low of a double-bottom confirming the current low, or break downwards towards the ideal retracement low target around the 1510 area (and the SPX 200 DMA). ES 60min chart:
If we do see that neckline bounce today then there is a direct equivalent on the SPX 60min chart, which I posted on twitter after the close last night. Worth noting on this chart as well is how the new declining channel was tested and held at the high yesterday. SPX 60min chart:
On the SPX daily chart we saw another close yesterday just under the daily middle bollinger band. If we see a clear break over it then the first resistance is at the 50 DMA in the 1624 area (held as resistance yesterday), and on a break over there the next resistance is at the daily upper bollinger band in the 1657 area. On a break down the daily lower bollinger band is now in the 1575 area. SPX daily chart:
CL broke over 100 yesterday and is now in an area I’ve been watching for a while. However I’m mainly posting the CL chart today to show two examples of a new TA trendline (as far as I am aware) that I’m working on. In an uptrend this trendline starts as support and ends as resistance and is characterized by the touches at the top and bottom of the trendline. I see quite a few of these and am researching their performance statistics, though I currently have them categorized as strong reversal signals. You may recall me muttering once or twice about patterns retesting well below the break and the pattern, and those brutal retests were generally while forming one of these trendlines, which I am calling Double Tap Reversal (DTR) Trendlines. Any other examples that you guys may see would be very welcome to add to the performance charts. CL 60min chart:
Some of you may recall that I mentioned a few weeks ago that a move on CL might turn out to be a very bearish development. Here’s the reason on the WTIC chart, where you can see a slightly rough triangle has been forming since 2010/1. This is a pattern of some interest as the targets would respectively be rising support on oil since 1999 in the 45 area, or a test of the 2008 highs just under 150. Watching this setup with some interest. WTIC weekly chart:
USD is being pulled in two directions at the moment, and that has very much been the case overnight. On the bear side (for USD) the falling wedge on GBPUSD that I have been posting this week broke up overnight, and the obvious target is the 61.8% fib retracement in the 1.5789 area. GBPUSD 60min chart:
On the bull side for USD LTDMW (long term dead man walking) currency EURUSD has dropped back below 1.30 overnight on news that the Portuguese government trying to enforce the 2011 bailout deal is falling apart amid the increasing unpopularity of the measures required to comply with EU bailout conditions. I suspect that small crises like this will be a regular thing until EUR and JPY begin the final lap of their race to throw themselves into the dustbin of history. I’m still backing JPY to win that race by a printing press at the moment. Meantime the uncertainty on EURUSD is exemplified by the repeated crosses of the 200 DMA within the current broadening ascending wedge. EURUSD daily chart:
While I’ve been writing ES has recovered back over 1600, so my H&S scenario on ES and SPX is looking interesting.
There’s only a half day of trading today and tomorrow the markets are closed for the 4th of July celebrations. I would like to leave you with a couple of historical snippets on these celebrations, which are to celebrate the USA winning independence from the UK. 237 years on that’s still looking like a good decision, though I’ll admit that whenever I think that UK politicians are so stupid and worthless that the UK must be doomed, I look at Congress and the Senate to cheer myself up that in relative terms at least, UK politicians may not be so bad.
The first historical snippet is that the 4th of July signing of the Declaration of Independence was originally scheduled for the 2nd of July, but had to be delayed due to an inability to agree the details in time. Fortunately such legislative delays in Congress are unknown nowadays. The second is that I’m proud to say that not only did numerous members of my family proudly fight for the runners up in the War of Independence, but that my family also has a strong personal connection to the USA national anthem. The words of The Star Spangled Banner were taken from the poem ‘Defense of Fort McHenry’, written by Francis Scott Key while he was a prisoner on my great great grandfather Admiral Alexander Cochrane’s flagship, having watched that defense from there. 🙂
Everyone have a great holiday and my next post will be on Friday morning.