I’ve been hearing a lot this week, and particularly with the break up yesterday, that we have moved beyond an area where TA can help forecast the markets. I have to say the evidence for that right here looks pretty thin. I said in my post last Friday that SPX might well retest the highs unless the 50 hour MA held as resistance. In my post yesterday morning I noted that SPX had broken back over the 50 hour MA and showed a rising wedge from the 1925 low, giving my reasons why I thought that wedge might well break up with a target in the 1960-5 area rather than break down. Yesterday that wedge broke up with a target in the 1965 area, and that joins the 1965 target that I gave almost a year ago in my weekend post on on 30th June 2013 after the break up from a much larger rising wedge. So far at least we have not demonstrably moved out of predictable territory. (more…)
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 and Bonds
No equity charts today as I covered that pretty thoroughly in my post yesterday. You can see that here if you missed it. Today I’m going to have a look at USD and bonds.
For the last few months I’ve had mixed feelings about USD, as there were, and still are, strong bull and bear scenarios. Last year I gave key support on USD at 78.6 and USD came close to testing that in May. However the marginal new low made in May didn’t challenge 78.6, and I’m increasingly leaning bullish. The daily RSI 5 is signalling a decent retracement here, but as long as the May low at 78.93 holds this retracement should be a buy, and I’d expect the next move up to test main double bottom resistance in the 81.5 area. USD daily chart: (more…)
Weekly Upper Band Punches
At the close on Friday there was a clear punch over the weekly upper bollinger band. These are rare, and even rarer when the weekly RSI 14 is over 70, and this is only the tenth such punch in the last twenty years. I’ve had a look at the previous nine to see what they can tell us about what to expect next.
My first observation would be that only three of those were at a short term high, though another five topped out within 2% of the punch level, before making a retracement that went at least back below the punch level and ranged in size from 3% to 21%. The exception was in June 1997 which went into an eight day upper band ride that ran up 80 points before retracing 70 points. This is a fairly bearish history, with one strong exception. (more…)
Technical Problems
I said yesterday morning that I’d be impressed by a push up that broke the falling channel on RUT, and it broke up hard yesterday. I was duly impressed. The double bottom target is in the 1190 area and this updated version of a chart I posted last week shows the possible option that RUT is forming the right shoulder of an H&S with an ideal high in the 1182 area. The 1190 area is the obvious next target on RUT. RUT 60min chart:
Push Up or Shut Up
I’m a reversals specialist, and on a multi-timeframe basis I chart trendline, pattern and RSI reversal setups that work well. I’m good at what I do. However on an intraday basis the first question of the day is always whether it might be a trend day. On a trend day all reversal setups become worthless, bearish patterns deliver tiny declines if they deliver at all, every counter-trend reversal setup, however good on other days, stops working, and there will generally be no setups in the direction of the trend because the retracements are too small to form them. That is the power of a strong trend.
On larger timescales these trends can last months or even years, and while in the grip of these strong impulse waves my smaller reversal setups and intraday reversal setups work just fine, as they are too small relative to the trend to be strongly affected. However I then get the same problem with my daily, 60min and 15min charts as I get with my intraday charts on trend days. Time after time very nice reversal setups will setup and the trend steamroller will squash them flat. A strong impulse wave up will roll straight over anything in its path until it ends, and must be respected. (more…)
