Slope of Hope Blog Posts

Slope initially began as a blog, so this is where most of the website’s content resides. Here we have tens of thousands of posts dating back over a decade. These are listed in reverse chronological order. Click on any category icon below to see posts tagged with that particular subject, or click on a word in the category cloud on the right side of the screen for more specific choices.

Dr Copper is Unwell (by Springheel Jack)

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I've been watching for a break of the big H&S neckline on copper and we got that yesterday with confidence. The pattern target is 383 and copper is now in sell the bounces mode:

Is 383 the real target for this move though? I'd say most likely not, as a look at the bigger picture on the daily chart shows that this H&S neckline break is also a break of a broadening ascending wedge indicating to the 270 area, after a failure at two longer term resistance trendlines. The main rising support trendline from December 2008 is now in the 350 area and that is the main target in my view. If 350 is broken then the next target would be 270 and that may also be the neckline on a very large H&S. The target for that would be 75, and I'd be extremely doubtful about that playing out. Targets are therefore 383, then 350, then 270, with support at 350 likely to hold in my view:

Is it possible that we've just seen a major top on copper? I've looked at AUDUSD to see whether there's any support for that on the AUD chart, and there is, as AUD is testing the upper trendline of a 14 year rising channel. A break through to 1.03 would look very bullish but the daily RSI isn't encouraging and there is a strong argument for a major top on AUDUSD here with targets in the 0.92, 0.8 and 0.68 areas depending on which support trendline holds:

So where does this leave equities? Well I'm definitely leaning strongly now towards a breakdown soon, but we won't necessarily see that today. ES made an interesting low overnight, as it bottomed at the original support trendline I had for the symmetrical triangle. I'm now inclined to see that low as the main hit at triangle support so the low at 1303.75 is now the line in the sand today for a break down from the triangle:

There is some reason to think that ES may bounce from support here, with the obvious target at triangle resistance in the 1328-9 area. A poorish quality falling wedge has formed since the highs yesterday and positive divergence on the 15min RSI is supporting a bounce. Resistance at 1310 has been tested twice since I capped this chart and a little IHS has formed. A break up through 1310 should open up 1320 as a target and if that is broken then I'd expect main triangle resistance at 1328/9 to be tested:

I've seen the forming sloping H&S on NQ posted several times in the last few days. I haven't been posting it myself because I don't much like it, as the neckline is a bit too mushy for my taste. Nonetheless it is a possible pattern and NQ has fallen to test the neckline overnight. If the neckline breaks with confidence I'd be looking for a move to 2250, where I have an alternative neckline for a larger H&S pattern.  The sloping H&S target is 2160:

As I've been finishing up I see ES has broken up through 1310 so I'm expecting any gap down to be filled today and my targets on ES are 1317 for the little IHS, 1320 as the falling wedge target and 1328/9 for main triangle resistance. Most likely this is just a bounce before a break down however and I'm expecting the ES symmetrical triangle to break down soon with a pattern target 51 points below the break level. Triangle resistance may well not be tested before that break down.

Key Break Coming Soon (by Springheel Jack)

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Mixed signals everywhere this morning, which fits the last couple of weeks really. On ES the upper trendline of the symmetrical triangle is at 1330 dead and a break of that level with confidence will give a pattern target of 1381, which is almost exactly at the 78.6% fib retracement of the bear market and a popular target for the end of the wave up since July last year. An IHS has formed that may get ES through triangle resistance:

However I'll be surprised if ES breaks triangle resistance as the overall setup here still has me leaning bearish. NQ has been underperforming ES in this recent move up which is bearish, copper looks bearish, and Vix has been holding up which looks bearish. On the Vix a break below 19 is required to make the immediate bull case look more convincing, followed soon afterwards by a close of the open gap zone above 17.3:

The big HS pattern on copper looks ominous for the equity bulls. We've seen the bounce from the neckline that I was expecting yesterday morning, but the overall setup looks bearish:

Short term there is a strong case for both bulls and bears on the copper chart. An IHS has formed, the neckline has broken and the neckline has been retested which looks promising for the bulls with an immediate target at broken support in the 445 area. On the bear side a rising wedge (70% bearish) has formed with a target at the main HS neckline just over 425. That could go either way, though a move back to 445 wouldn't necessarily suggest a break up on equities or invalidate the main HS pattern on copper. Here's the setup on the HG 15min chart:

The transports index is looking stronger than most this week and I've been having a careful look at that this morning. Overall the chart for $TRAN is weaker than most and support from August has definitely been broken. A broadening top has formed, which is a neutral pattern despite the name, and the obvious next broadening top target is at a marginal new high, though first resistance has to be at broken rising channel support in the 5200 area:

Overall I'm leaning bearish on the overall setup, though the real test for ES is at 1330. A break above would be extremely bullish with a target at 1381, and a failure there would target triangle support at 1306-7. A failure at triangle support would be extremely bearish, though I'd wait for the break of 1300 for confirmation. A break downwards from the triangle would open up targets in the 1225 – 1260 area.

Chart on FCX, SLW, SLV & GLD (Paulenoff)

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My near-term work indicates that this morning's spike low in Freeport-McMoRan Copper & Gold (NYSE: FCX) at 48.61 followed by a sharp upside reversal above 50.00 (so far) has the right look of the end of the corrective process off of its Jan 12 high at 61.34.

If that proves to be the case, then FCX is about to enter a new upleg within its dominant uptrend off of the July 2010 low at 28.36.

Let's keep an eye out for a positive close today above 50.14. While FCX is attempting to put in a corrective near two-month low, the iShares Silver Trust (SLV), Silver Wheaton (SLW) and the SPDR Gold Shares (GLD) all are taking a breather in the aftermath of their near-vertical upmoves, which so far has not negatively impacted their otherwise very much intact and dominant uptrends.

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Originally published on MPTrader.com.

Symmetrical Triangle on ES (by Springheel Jack)

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The picture has turned distinctly more bearish in the last day. Copper broke support at 445 and fell to support at 425, and made a fourth touch on a gently rising trendline there. A fourth touch on a trendline is often because that trendline is a neckline of course, and this could well be the neckline for an HS pattern. If so it would indicate to 383 on a neckline break. Positive divergence on RSI made a decent looking low on the 60min yesterday though, so I'd expect a bounce first:

EURUSD broke channel resistance, but hasn't held above it. A daily close above is needed to confirm that USD has broken support and to open up targets much higher for EUR:

SPX tested main rising support again yesterday and pinocchioed slightly through it at the low. This trendline has been visited a bit too often now and I'm increasingly concerned that support won't hold:

ES has now formed a nice symmetrical triangle on declining volume, though the touch yesterday was a little high and ES might return to touch 1301 today to make a better low. The next upside target is 1330-2 and the pattern top to bottom measures 51 points, which gives the target up or down from a breakout from the pattern. These patterns break up 54% of the time and the percentage meeting the price target is 66% on an upward breakout but only 48% on a downward breakout. Here's the link to the pattern stats at Bulkowski's Pattern Site:

Treasuries have been rallying in recent days and could be forming either of two patterns at the moment. The first pattern is an IHS with the neckline slightly over 122, but the right shoulder is looking too deep and treasuries haven't yet made the obvious downside target, which is strong support in the 115 area. The second pattern is a right angled and descending broadening formation, with the next downside target in the 115 area before either a break down from the pattern or return to 122 area resistance. These are a neutral pattern and can break out either way, though I'm looking for a break downwards to confirm the end of the 26 year declining channel on 30 year treasuries:

The likelihood of a downward breakout is considerably higher now, but the symmetrical triangle on ES gives shape to the current trading range. I'm wondering about an early move to triangle support at 1301 on ES, If that is broken with confidence then the pattern target is 1250. If if holds then the next upside target is 1330-2. As with yesterday, I'm watching copper closely for direction and a break with confidence of 425 support there would most likely also be followed by a break down on equities.

Cautiously Bullish (by Springheel Jack)

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Last week was very volatile, with trouble in the Middle East that is still unresolved, and everyone was waiting to see whether equities would make new lows, but they didn't, and as long as they don't the trend is still upward. Equities were moving roughly inversely to oil last week, but were stronger than a pure inverse correlation would require. Here's SPY vs USO on the 15min chart:

A new low wouldn't be required to show reach weakness on SPX however, and a break of trendline support would get us there. That support is in the 1308 area today

ES hasn't been making higher highs, but has been making higher lows. A triangle could be forming but the lower trendline has only had two touches:

Since the low NQ has been making higher highs and higher lows, and is now up almost 100 from the 2280 low. Given that the high was at 2403, that puts NQ within striking distance of new highs:

The overall picture remains somewhat ambiguous though. Copper looks weak, and has been hanging around in ther 245 to 255 area too long. The rising channel was broken on Friday and the IHS looks overcooked. A break below 245 on copper would look bearish for both copper and equities:

Silver made my 35.7 IHS target and gold has also made new highs. I have a possible rising wedge on gold with a target in the 482-5 area:

Overall the outlook looks cautiously bullish though the geopolitical risk still looks high. I'm watching copper particularly for a signal that equities might break down.