Three Blind Mice

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Just a short post today as it is a holiday here in the UK today. SPX broke up over 1660 on Friday, so the bottoming pattern is a double-bottom with a technical target in the 1680 area. The real target however is declining (channel) resistance from the high, at 1680 at the moment but declining of course. The SPX daily middle bollinger band is also currently at 1680. SPX 60min chart:

130826 SPX 60min Declining Channel and Double Bottom

Assuming that target is reached, which I think is likely, there are three main options from there. Firstly SPX may break up, in which case we would most likely see a test of the highs, and then either a conviction break over that to resume the bull trend or a double-top there to target the 1560 lows. Secondly a reversal at declining channel resistance to a marginal lower low that respects rising support from 1343, so probably no lower than 1625. Thirdly a reversal at channel resistance that tests the 1560 lows. The daily chart below favors the third option, on the basis that SPX is still in a topping process from the broadening ascending wedge from the 1343 low. That isn’t necessarily the way this will go, but it is a technically perfectly valid scenario. SPX daily chart:

130826 SPX Daily BA Wedge and Scenarios

On other markets the broadening ascending wedge on CL broke up and after topping out on negative RSI divergence some of that move has been given back. It isn’t obvious where the next move will go so I’m currently neutral on direction here. CL 60min chart:

130826 CL 60min Trendlines

On ZB the double-bottom has broken up with a target at 133, though I’m looking for a move to test declining channel resistance over 134. As I was saying last week, this rally is strongly tied to the rally on SPX and will most likely end with that. Recent action looks like a bull flag consolidating for the next move up. ZB 60min chart.

130826 ZB 60min Declining Channel

GBPUSD has tested 1.553 area support, but the decline so far has lacked conviction. The 1.553 test was on positive RSI divergence so we may see a larger bounce before the next decline. Ideally GBPUSD would test rising wedge support in the 1.54 area. GBPUSD 60min chart:

130826 GBPUSD 60min Rising Wedge

GLD broke over short term resistance on Friday and the next obvious target is slightly over 137.5 at short term rising channel resistance. I’ve also marked in currently theoretical but very possible larger rising channel resistance in the same area so that could be an interesting short entry area. GLD 60min chart:

130826 GLD 60min Trendlines

Looking at the overnight charts on ES I’m seeing some positive RSI divergence at the low on the 15min chart. I was wondering about a test of broken resistance and the ES 50 hour MA in the 1657 area but we may not see that. Assuming those support areas don’t break with conviction today I’m leaning long.