That was a wild day yesterday, and the daily candle looked impressively bearish, but in truth the shorter term pattern setup still looks bullish here, though if yesterday’s lows are broken then that may change quickly. Until then though there is a falling channel from the high, and within that is a falling wedge from 2055 that broke up yesterday morning and retested broken resistance at the close. We may well see this bounce strongly at this retest and then trigger a double top target in the 2060 area with a break over yesterday’s high.
If we see a break below that falling wedge support this morning however, then the lower targets in the 1950s that I was looking at yesterday will open up. SPX 60min chart:
The short term setup on RUT is very similar indeed, right down to the perfect retest at the close yesterday. The same comments apply on the wedge here though I’d add that the low on RUT yesterday was a perfect 38.2% fib retracement of the move up from October, which favors the bulls, and that there is an open H&S target at the 50% fib retrace, which favors the bears. Price action today will have to tell us which way this is going to go. I’m favoring the bull side on the basis of the historical stats I explained yesterday, but this is a powerful move, and the bears side may well push this lower today. RUT 60min chart:
We also have FOMC today of course, and 4 of the last 5 FOMC days have closed green. I’m expecting the Fed to make doveish noises with an eye on the market today, but it’s hard to say what the impact might be. I’m still leaning bullish until we see those wedge support trendlines taken out. After that I would be leaning bearish looking for support in the 1950s. This market action has been wild so trade safe, and watch out for the angry badgers:
