If there’s one thing that SPX has been really good at over the last year or so, it is pausing at highs, and one of the best ways to really kill time at highs is to form triangles. The obvious read on SPX here is that a triangle formed from the all time high nine weeks ago, and that broke up at the start of last week into another smaller triangle that is forming from last week’s high.
The obvious read on this current smaller triangle is that it is bullish into the ATH retest that we have come close to a couple of times but not seen as yet. Given though that this triangle has formed on the break of the larger triangle, there is a decent bear scenario here where SPX breaks down from this triangle in a backtest into the larger triangle, before a triangle thrust up that at least delivers that ATH retest. If the bear scenario is going to play out then the first signs would be breaks of rising channel support and the 50 hour MA, currently at 2386 and 2384 respectively, and the target should be at least a backtest of broken triangle resistance, currently in the 2360 area.
SPX 60min chart:
The pattern setup on ES is a bull flag channel that has broken up with a minimum target at a retest of the start of the channel at 2394.75. The low this morning was a backtest of that channel and to deliver the short term bearish scenario ES needs to break down through that and the weekly pivot at 2380.5 and convert WP to resistance. ES Jun 60min chart:
The 60min sell signal fixed on NQ but rising wedge support was tested and held at the low this morning and unless that changes the obvious next target within the wedge is wedge resistance at 5655. I’d note that the last three 60min sell signals on NQ all failed to make target and that this is the fourth decent quality pattern on NQ for this move up from 5350, with each of the previous three breaking the pattern support trendline and evolving into the next pattern without much retracement. This has been a very persistent uptrend. NQ Jun 60min chart:
On TF the strong support trendline that confirmed at the low yesterday morning broke at the low this morning so the downside on TF is potentially open. TF Jun 60min chart:
Stan and I are doing two free public webinars at theartofchart.net this week. The first is an hour after the close on Thursday and that one is ‘Managing Risk – Part 1 Managing Entries and Exits. The other is our monthly public Chart Chat at 4pm EDT on Sunday. If you are interested in attending either or both then the link to register are on our May Free Webinars page.