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.

US Dollar Opens Death’s Door (by Springheel Jack)

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Equities gapped up and ran yesterday for the second trend day of the week. We'd normally expect to see a retracement for a day or two after a trend day unless the move is extremely powerful, but ES held the gains overnight so far, and I'm wondering whether we'll see that retracement today. I have a line in the sand on ES, as it has risen to declining resistance from the recent high, and it has held so far. Any move over 1334 would be a clear break up. The likely target of a retracement today if we do see one is the 1320 area:

NQ was much stronger than ES yesterday, and blew through declining resistance before breaking the last high in the 2370 area. Overnight it retested the 2370 level and like ES the overnight action is looking a lot like a bull flag. If we see a retracement I'd be looking at the 2340 area as the most likely target:

The copper IHS is still looking good, though I've been playing around with the neckline a bit as it's hard to pin down exactly. The retracement yesterday has confirmed a supportive rising channel and I'm expecting to see more upside. Immediate resistance is at 454 and the next rising channel target is in the 467 – 72 area depending on when it is reached. Channel support is at 449.5 and key support is at 445. A breach of 445 support with any confidence would badly damage the bull scenario:

For any of you following the longer term Yen short setup, I was saying that USDJPY (inverted Yen) had most likely bottomed the other day. It went a little lower subsequently but has now broken declining resistance at 82.5 (since I did the chart) which confirms the short term low. I have longer term declining resistance at 83.8, the main target is in the 86 area, and if the full Yen meltdown scenario plays out to target, the potential move is to 124. An alternative play on Yen for anyone wishing to avoid USD is to short JPY using another currency pair, long EURJPY for instance:

EURUSD made my upside target yesterday, and is now testing this extremely important level. The level is so important because USD is now testing rising support from the 2008 low. A break above will open up a lot more upside on EURUSD with more declining resistance at 1.43 to 1.432, but my main target would be a declining channel upper trendline in the 1.517 area, if it is hit in June or July. I've marked the rationale for this target on the chart:

The last chart today is the DX weekly chart to look at the US Dollar. I'm not optimistic about USD here, as the last bounce up looks like a dead cat bounce, and with the US effectively printing 70% of the huge deficit over the last two years the downward pressure is obviously strong. If it breaks down here then there is some support at the previous lows at 74.25 and 70.9, but USD will essentially be stepping into the unknown and it could go much lower. USD is still looking good next to the Yen, but that's a race between two currencies competing to have the worst fundamentals of any rich world currency. That Yen looks even worse is no compliment to USD. If USD falls hard here, there is also the clear risk that trading partners will move into using more stable currencies as a reserve currency, and that could turn this retreat into a rout on both USD and on US Treasuries. Anyone wanting to see the effect of a currency losing reserve currency status should take a look at GBPUSD between 1945 and 1980 to see what that looks like. Not a pretty picture:

I'm leaning towards seeing some retracement on equities today unless ES breaks up through declining resistance, but the underlying picture here will look bullish to me unless SPX breaks the main support trendline on SPX since July. That trendline is in the 1305 SPX area today.

Chart on Junior Gold Miners ETF (Mike Paulenoff)

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The hourly chart of the Market Vectors Junior Gold Miners (GDXJ) has two powerful aspects to it.   One is that the base-like accumulation pattern that developed between early Jan and late Feb has propelled prices above its key breakout plateau at 38.50.  This triggers potential upside targets at 42.50 and then 44.40.

The other is that the series of higher-lows and higher-highs off of the Jan 27 low at 32.51 suggests strongly that the most recent "higher-low" at 36.73 from Feb 24 initiated a new, powerful upleg.  The magnitude of this should approximate the length of the upleg from 32.51 to 39.96.

Should that be the case, then the current upleg has a "swing" target of 7.45 points, or to 44.00/20, which aligns with the upper target measured from the breakout from the base pattern. At this juncture, only a decline that breaks 38.00-37.80 will compromise the timing of the anticipated surge, while a break of the Feb 24 low at 36.73 will invalidate the bullish scenario altogether.

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Originally published on MPTrader.com.

Chart on Silver, Gold & EUR/USD (by Mike Paulenoff)

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Silver in the pre-market today climbed to new bull market highs at $34.52, while gold prices popped above a key 11-week resistance line off of its Dec 7 high at $1,431.70. 

This bodes well for higher prices that propel gold — and the SPDR Gold Share (GLD) — to new highs in the upcoming hours/days.  Meanwhile, silver and the iShares Silver Trust ETF (SLV) point towards upside continuation towards a confrontation with the upper trendline of its multi-month up-slanted price channel, now at $35.30 in spot silver. Only a decline that breaks $32.40/30 will begin to compromise the near term bullish scenario.

Also shown on the chart is the euro/dollar, which, although perched right off of its recent high at 1.3860, acts tired technically.  However, it otherwise remains the beneficiary of a relatively weak U.S. dollar and strong German fundamentals, and  barring a break of 1.3710, the uptrend should remain intact and head for 1.4000 next. 

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Originally published on MPTrader.com.

Wall of Worry (by Springheel Jack)

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It's rare that the path for any market looks entirely clear, and that's as it should be, as if more upside were guaranteed it would already be priced in and historic. It is a concern that last week's decline looked like a single wave down, and is entirely possible that there is more downside coming as many expect. Fortunately there is a decent looking line in the sand drawn on ES in the 1320-1 area, as an IHS has formed there with a target at 1347. If 1321 is broken with conviction today then the path will look clear to new highs, with Mondays being historically strongly bullish and the first of the month (tomorrow) also historically strongly bullish:

The picture is slightly less clear on NQ, with a resistance zone in the 2335 to 2365 area, with the key levels in the 2335, 2350 and 2365 area. A break with confidence of Friday's 2350 high will look bullish, and a break with confidence of 2368 will open up a retest of the 2400 area:

Copper broke up on Friday and the next obvious target is strong resistance and the potential IHS neckline in the 451 area. There's significant negative divergence on the 60min RSI however and I'm wondering about a retest of broken resistance:

Silver broke up from resistance at the close on Friday and may be forming an IHS with the target at 35.7. There's some negative divergence on RSI suggesting there might be another test of broken resistance and I'll be watching the current short term support trendline:

Oil has a lot of geo-political risk at the moment and increasing unrest in the middle east may well push it up further. It has made the broadening formation target from last week and negative divergence on the chart looks weak short term:

A lot of people, including myself, are looking with great interest at the longer term short setup on Yen, and I've been suggesting for over a week that Yen might have another last push up to deliver a good entry level. USDJPY (inverted Yen) has now reached my highest probability target and reversed there so this looks like an attractive entry for those scaling in to a longer term short Yen position. If I have room I'll post the longer term chart tomorrow to show the full setup

I'm leaning strongly bullish on a break with confidence of the IHS neckline on ES today. Until that happens I'm seeing this as the highest probability reversal area if we are to see another wave down on equities so longs should be cautious until we see that break up.

Oil’s Explosive Move – Chart by Mike Paulenoff

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Crude oil's upside pivot reversal off of last week's low at $83.85 has morphed into a powerful spike that has climbed above the prior high of $92.84 to a new, post-Dec 2008 high at $99.94 today.

The explosive upmove has blown through key resistance at $90.15 — the 50% resistance plateau of the huge $114.87/bbl bear market from July 2007 to Dec 2008. It has hurdled key multi-week resistance at $92.30/90 into what looks like a vicious new upleg that could be heading for a confrontation with the upper channel resistance line, now up near $110.50 to $113.00.

At this juncture, only a major downside reversal that breaks and sustains beneath $92.00 will begin to compromise the developing vertical surge in oil prices.

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Originally published on MPTrader.com.