The bear flag megaphone on SPX hadn’t broken down at the close last night but is very likely to at the open this morning. Overnight ES has already tested and slightly exceeded the August low at 1804.25. The downtrend has resumed. SPX 60min chart:
The main target for this leg down is rising support from the March 2009 low, shown on the weekly chart below and in the 1750-60 area. This is a possible 2016 low area and a major inflection point. Bulls want to test it and reverse back up there to new all time highs. Bears want to find support before a hit (leaving unfinished business and strongly suggesting a break on the next test) or to break down through it. SPX weekly chart:
On the ES chart the next obvious target is a hit of falling megaphone support in the 1785 area. I’m wondering about a possible retest of broken flag support in the 1835-40 area before the move to that support trendline. ES Mar 60min chart:
Expecting a bearish day today and looking for an AM high that fails.
A couple of announcements. Stan and I did a free to all Chart Chat on Sunday 7th Feb and if you want to see the recording for that you can find it here. We are also doing a free to all webinar on trading triangles after the close tonight, and you can find the link to sign up for that on the same page.
