Seriously Whippy

By -

A surprisingly bearish day on Friday and I’ve been reading a lot of bearish commentary over the weekend. I’m not convinced, even though the close on Friday was certainly weak. The main points I took away from Friday’s close were as follow:

– The high to low during the day was almost exactly a 38.2% fib retrace of the move up from 1992
– The close was one point below the daily middle band
– The close was on the 50 day MA
– The close was three points above the 50 hour MA
– The close was fifteen points above the 5 day MA

None of these look inherently bearish and while the bears may follow through and do some real technical damage today, I don’t think they managed to do much damage on Friday. SPX daily chart:

150112 SPX Daily Rising Wedge

If the bears can take out the big support cluster for the close on Friday, they can do some significant technical damage by closing today well below the daily middle band (now at 2046) but the main target below has to be the open breakaway gap at 2025.90. As long as that gap remains open that was a very bullish break that strongly suggests a retest of the highs. Until that gap is filled I will be working on the assumption that at SPX should get to at least the 2070-80 area before the next significant decline begins. SPX 60min chart:

150112 SPX 60min Support Levels

I’m still looking for a possible low area on EURUSD to be a base for a strong bounce and I have a possible trendline candidate in the 117 area that is supported by similar trendlines on GBPUSD and AUDUSD. EURUSD has been a real falling knife however and with the Greek election on 25th January the geopolitical winds may be rough. EURUSD daily chart:

150112 EURUSD Daily Falling Megaphone

ES rallied up to 2048 overnight, having put in a higher low and then a higher high to do so. That gives the bulls an edge going into today. The daily stats are neutral until Wednesday. If we see a break over Friday afternoon’s high at 2053.38 I’ll be looking for at least a retest of the Friday morning high at 2064.42.