Possible W Bottom Forming

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A short post today as I’m not feeling well.

SPX has been consolidating in a triangle for the last couple of days. I’m not wild about triangles as they have a strong tendency to make false breaks, making them hard to trade unless there has already been a false break. SPX 5min chart:

140106 SPX 5min Triangle

On the ES chart this is clearly a possible W bottom forming, and on a break above the last high at 1833 ES, then the W bottom target would be the 1845.5 area. Encouragingly for the bulls today ES recovered over the very important 50 hour MA a couple of hours ago for the first time since this retracement started, and if we see a further boost over 1833 this morning then the low for this retracement is most likely in. ES 60min chart:

140106 ES 60min Poss W Bottom Forming

On other markets EURUSD has broken down from a small double-top targeting the 134.8 area. However the more interesting thing about this chart is the much larger double top that would target the 127.2 area on a clear break below 133.18. This would have important implications for USD and I’m watching this closely. EURUSD 60min chart:

140106 EURUSD 60min Double-Tops

AAPL broke down from the small rising megaphone support it was testing on Thursday and is about to trigger a double-top target at 503 on a clear break below 538.80. There is decent rising support in the 525-30 area however and that could hold. AAPL 60min chart:

140106 AAPL 60min Rising Wedge and Poss DT

We’ll see what happens this morning, but the pattern setup is suggesting that SPX may well retest the current highs shortly. If so this was most likely not the retracement that I was looking for, and I’d be watching for a very possible larger double-top at the retest of the highs to take SPX to my main retracement targets. Time will tell as always.