Cobra was saying at the weekend that the Dow is the leading index from a technical perspective at the moment. That may well be right. If so then the low on Friday at rising support from the October low looks particularly important, and it's obvious from the chart what will need to happen next if we are to see any more retracement this week. On a break below trendline and level support in the 13000 area the obvious next target is in the 12750 area. Without that break the main upward trend remains unbroken, and the next obvious upside target is in the 13400 area:
reference page at Bulkowski's excellent and free website. You can see from the three declining channel retracements so far that two of the three hit the technical bull flag target before the next retracement, which matches Bulkowski's stats well. If we do see more weakness today what is also worth noting is that I would expect to see a hit of current declining channel / bull flag resistance in the 1400 area before the next swing down, that the next downside target would be in the 1380-5 area, and that rising support from the late November low is in the 1375 area, which matches the support level at 1370 ES that I've been mentioning:
That well looks dry in Japan though, and their prospects for financing further debt are reducing to selling their extremely doubtful debt abroad at an interest rate marginally above zero (hollow laugh), or continuing to just print more money to finance their deficits. It will be interesting to see how long that can last, but meanwhile further Yen weakness (USDJPY strength) looks very likely after a retracement here:
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