If you just crawled out from under your rock, Europe is in trouble which means the U.S is considered safe. Who would've thought. What this has done has caused a rally in the dollar as people moved from Euro's or Dollar Bills y'all. The rally could potentially continue as well based on the chart. The Dollar index or /DX has formed a Bull Flag- a bullish chart pattern. Let's take a look at it
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Silver is not looking good here long-term, sure we can get a few bounces upwards but an event occurred two days ago that put the nail in this precious metal coffin for at least a few months and possible a 15% decline- that event is the "Murder Cross". The murder cross is similar to the "Death Cross" of the 50 ma crossing below the 200 ma but the "Murder Cross" is the 70 ema crossing the 200 ema. This cross eliminates many of the false signals that the "Death Cross" can give. Here is a link to a post explaining it more.
Financial stocks have been rising over the last few days causing XLF to rise as well. The current price action has formed a Broadening Top Pattern.
The Broadening Top Pattern represents a rare reversal pattern and typically represents a top and being bearish. It is the opposite of the Symmetrical Triangle pattern that was previously formed in the market. It starts after a strong move upwards. The Pattern is then formed by a a stock or index making new high and a new swing lows, forming upward and downward sloping trendlines which represents the swing high and lows.
An interesting pattern has formed on GOOG's weekly. Since 2010 GOOG has failed to get above 631 testing it around 6 times-each time failing and each time declining back to the 200 ema. The resistance is more around 626-630 but 631 is the high and a break above that level would signify a break of the entire resistance giving a better chance of a sustain breakout. This has created a large ascending triangle pattern with the top of the triangle at $631 and the bottom trending from $431 up to $500. Because of its size a break out would be big over a $200 point move with a price target of $831 this would be an all-time high.
SPY closed up a big 7% this week after the last two weeks SPY was down on selling pressure. SPY's bounced this week closed the gap left from the Thanksgiving week drop and made further headway breaking above the 118 and 121 resistance. These areas should now act as support especially the 118 level since as the weeks progress this horizontal support level will also be at the uptrend line.
SPY finally meet resistance at its short-term downtrend that has started since the decline in October. Each time SPY has hit trendline it has been rejected, the downtrend is also at the 126.76 resistance level. The 125-127 area should be strong resistance and if the bulls want to break through it, they might need to hit it a few times.
Overall this week was very bullish with a 8% gain in the market, killing many bears with it. The last few weeks when SPY reached these levels it was turned back. Friday, we saw this rejection at these levels on the daily chart as the market hit the 126.50 area and was sent back down. It appears the market isn't ready to test these levels yet.
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