The bulls had a very good week last week, helped by Draghi’s announcement on Thursday that we should expect more european QE, and then the BoC lowering interest rates and the deposit requirements for banks. However, on a big news event like this, and regardless of what happens afterwards, there is very often a retracement of the initial spike to revisit and retest ‘the scene of the crime’, and one thing very much coming through from the charts I was looking at over the weekend was that we may well see see that retest in the first half of this week on SPX, NDX and of course USD.
The charts are from my weekend subscriber updates at theartofchart.net today, which will often be the case on Mondays and Thursday, but particularly so this week as the clocks changed in the UK over the weekend, so I’m losing an hour every morning this week until the clocks are back in sync next Monday.
I’m watching the weekly chart with great interest this week as SPX is now testing broken primary rising channel support from late 2012. At the same time the declining resistance trendline on the weekly RSI 14 from June 2014 is also being tested. No break would fix until the close on Friday but a break up on that RSI trendline particularly would strongly suggest a retest of the all time high. On the other hand if bears can deliver a weekly candle this week that closed back under the middle band having retraced most or all of last week’s candle, then that would negate last week’s breakout candle. SPX weekly chart:
My brewing daily RSI5_NYMO sell signal was run over by the Draghi bull train on Thursday and Friday, but there is a double top setup still on the RSI 5 that would normally deliver a move to the 30 level (on the RSI 14) if that RSI double top breaks down on a daily closing basis. SPX daily chart:
If we are going to see a retracement from here today, which is the obvious option, but predicting the direction on trend days can be tricky, then I’ve sketched in the three next obvious options after a test of rising wedge support, currently in the 2040 area and rising at about 12 handles per day. SPX 15min chart:
The futures charts look interesting and I’ve left the bonus premarket subscriber charts that I posted at theartofchart.net open to all today. I’ve posted ES, NQ, TF, DX, GC and CL charts there this morning. All of those had strong moves the last three days of last week, and all have setups suggesting that they may well start this week by retracing those. You can see those charts here.
