A Pivotal Day

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Today is the last day of both the week and the month, and is a very significant day technically for direction here. Bears want a close well below the weekly middle bollinger band at 1643, and ideally also a clear break below rising support from 1343, now in the 1625 area. A clear break below the weekly middle bollinger band will open up the 50 week MA and the weekly lower bollinger band as targets, and those are currently at 1540 and 1564 respectively. With the June low and the possible major double-top trigger level there at 1560 and the 200 DMA currently at 1561, a test of the June lows is a very attractive target if bears can deliver the goods today. SPX weekly chart:

130830 SPX Weekly Trendlines BBs MAs

Apart from the stop sweep in the morning with the intra-hour pinocchio through the ES 50 hour MA yesterday went much as I expected, with a rally into my 1644-50 target zone. Having formed a rising wedge to get there, ES then topped at 1644.75 and retraced back to 1634.25. I posted the chart below on twitter overnight to make the case for a break back up to retest the afternoon high. ES 5min chart from last night:

130829-C ES 60min BD Wedge

That broadening wedge broke up as I expected and made a marginal new high at 1645. As we come into today that means that we have a possible perfect double-top targeting 1623.50 on a break below 1634.25. This is the setup for today if the bears can deliver it. That target should also be an exact test of the rising support trendline from 1343 SPX. I won’t show the ES 60min chart today but the marginal new high overnight has established negative RSI divergence on that, and support at the 50 hour MA is now at 1636. ES 5min chart:

130830 ES 5min Double-Top Forming

On the SPX 60min chart the rally yesterday has stopped well short of key resistance levels at the breakaway gap and declining resistance. The move from the low so far has formed a perfect bear flag. Encouraging for bears as long as that breaks down. SPX 60min chart:

130830 SPX 60min Declining Channel

I’ve been watching the declining channel on Dow for any bullish break up there. The high yesterday was a test of declining channel resistance which is holding so far. INDU 60min chart:

130830 INDU 60min Declining Channel

The possible H&S forming on COMPQ is still looking good. The high yesterday was a test of the open breakaway and island gap there and that’s holding so far. If an H&S is forming then that should be the right shoulder high. COMPQ 60min chart:

130830 COMPQ 60min Possible HS Forming

On other markets CL has been retracing hard on the UK vote against intervention in Syria yesterday, but I won’t show that chart today. GBPUSD looks as though it is bottoming out short term, and we may see a test of 1.544 today to touch rising wedge support and establish a possible double-bottom with a target back in the 1.57 area on a break over 1.555. I won’t show that chart today though either (space constraints)

On bonds ZB (moved to December contract) has established a rising channel after a bull flag retracement. A clear double-tap reversal trendline also formed from the retracement high to low. That bull flag has now broken up and this is a strongly bullish setup as long as the rising channel holds. Rising channel resistance is now in the 133’04 area. ZB 60min chart:

130830 ZB 60min Rising Channel

GLD didn’t quite make it to my theoretical rising channel resistance trendline and may be forming a rising wedge instead. Short term rising channel support was being tested at the close yesterday and if we see a breakaway gap below that at the open today the next obvious target would be rising (wedge) support, currently in the 129 to 129.5 area. GLD 60min chart:

130830 GLD 60min Possible Rising Wedge

This is going to be an important day from a technical perspective and may well establish the direction for the next few weeks. Bears want a new low at 1623.5 ES and ideally a break below that to close very well below the SPX weekly middle bollinger band at 1643 SPX. Bulls want a clear break over resistance at the highs yesterday (and overnight), a break above the Dow declining channel and a close near or above the weekly middle bollinger band at 1643 SPX. I’m leaning strongly towards the bear side at the time of writing and am rooting for the bears today unless we see a clear resistance break. Everyone have a great holiday weekend 🙂