The longer term trendlines from October and November are looking a little thin here, as I've mentioned before, but in the shorter term there is no shortage whatever of decent trendlines, and looking at those this morning I think everyone is likely to get a surprise, as there seems to be a powerful consensus that we are going to see new highs today, and my charts are suggesting a move down instead. You be the judge, but I'll show you what I'm looking at.
Short term the move up since last week's low on ES has formed a very nice looking rising wedge cum channel, which I posted yesterday. I suggested yesterday morning that this looked likely to retest the high in the 1342 area before hitting the support trendline and I was very pleased to see that play out exactly as I predicted, albeit in slow motion. The next upside target is in the 1353.50 area at the moment, but I have marked in the potential double-top that is now in play if rising support breaks here:
I noted yesterday that both EURUSD and GBPUSD had topped out short term and had broken their respective rising channels. Yesterday there was a strong bounce on both, and that bounce topped out at perfect kiss goodbye retests on their respective broken rising channels. That looks bearish, though since then they have both traded sideways, in what might be a prelude to breaking up instead. here's how that looks on EURUSD:
This is particularly interesting as ES appears to be in the final subwave of this move up from the December low, so this might actually be a significant interim top. Short term the double-top neckline is at 1330.25 ES and the double-top target on a break below 1330 is in the 1318 ES area. It's worth noting that I have six week rising channel support now in the 1314 area and that trendline would be the likely target.
What do we have to suggest that we might be making a significant top here? Well I capped two charts yesterday that look interesting in this respect. The first is the Vix chart, where the support trendline of the huge falling wedge from October was hit again on Friday. I mentioned yesterday morning that ES and Vix often moved up together after a support hit and that's what we saw yesterday. I capped the chart however as there are two other points worth making about the chart.
The first point is that the falling wedge is running out of road, and even a fairly modest bounce will break the wedge. The second point is that when the last Vix Sell (equities) signal triggered two weeks ago, I mentioned that I had seen these trigger in the past just before before a last move up, and that something similar had happened last April. Have a look at the chart below, as that makes an interesting comparison with today:
The rest of the week might get very interesting :-)
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