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I last wrote about China’s Shanghai Index (SSEC) on March 25, at which time I identified 3150 as major resistance. Price had closed at 3043.03 that day.
Since then, price briefly broke above 3150 to hit a high of 3288.45 on April 8, and, after retesting that level several times over the next few days, it finally broke and closed below on April 25. In Sunday’s overnight trading it closed today (Monday) at 2906.46.
It has been a while since we’re introduced any new technical studies to SlopeCharts, but we’re going to be beefing up this portion of the product. The newest entry, available to you right now, is the Average Directional Index (ADX).
The most important thing to understand about ADX that makes it different than most indicators is that, in spite of the word “directional” in its name, it actually should not be heeded for guidance about direction. The indicator is all about trend strength. In other words, the ADX could be moving higher and higher while prices are moving lower and lower, and all the ADX is telling you is that the trend is strong and getting stronger. The fact ADX is going “up’ doesn’t mean prices are doing the same.
Since my post a week ago SPX has retested the all time high as expected and made a marginal higher high, the rising wedge from the December low has broken down, the second daily RSI 5 sell signal since the December low has fixed, the first having played out into the March low, SPX has broken important short term trend support at the 50 hour MA for the first time since March, and backtested that as resistance, and also broken the weekly pivot at 2925.
In my premarket video this morning I was looking at key support and resistance to define what we were likely to see on SPX this week. Resistance I put at the new weekly pivot at 2907.7. ES was opening the week below this and if that held as resistance, then this swing high might be behind us. That has not held as resistance, ES is back above it, at 2910 at the time of writing, and WP is currently holding as support. This opens a very possible retest of the 2019 high and likely at least marginal higher high above that.
SPX has spent the week inching through the topping process, with some progress particularly yesterday and today. Yet another higher high may be needed, as I was suggesting in my premarket video this morning. That is below with an update on ES and the usual 21 other futures charts.
This really is one of the most nicely formed trendline highs on SPX/ES here that I’ve seen in a while and, so far at least, trendline resistance is holding like a champ. As long as that remains the case we should either be starting the first swing down now or, if the weekly pivot on ES at 2879.50 can’t be broken and converted to resistance on this test, we would likely need one more high retest to complete a slightly larger double top than the one that has already formed and broken down on both SPX and ES.
The short term setup here is a double top that might be a Janus bull flag. That’s a pattern of mine and I haven’t yet found time to write a definition page with examples but the short version is that a double top has formed and broken down slightly. At this stage SPX either heads to the double top target, or rejects back into a full high retest. One of those two scenarios should be next. I talked about the setup here and support levels in my premarket video this morning.