Charts I’m Watching: Feb 2, 2015

As we’ve been discussing for nearly two weeks, a triangle in USDJPY has been driving the volatile sideways action in SPX.  Yesterday, while half the world was absorbed in football, the triangle finally broke down — just long enough to tag a meaningful retracement.

2015-02-02-USDJPY 15 0600By the time the game was over, USDJPY was safely back in the triangle, where it currently resides in the narrowing territory between the purple channel top and the triangle bottom.

It’s a lot easier to manipulate futures prices over a low-volume weekend, and this one was no exception. Has USDJPY’s plunge taken place right about now, SPX would be testing the SMA200 down at 1974.  But, that’s not the way the script reads…

S&P futures fell 9-points with the initial plunge, but have since risen more than 13 off the bottom. They’re currently showing a gain of 7 points – meaning yet another test of the white channel top and/or purple channel midline.

2015-02-02-SPX 15 0600If the rally can be sustained beyond that, the SMA100 is currently around 2010. But, bulls might wish to keep an eye on the fading rally in oil.  CL briefly tested 50 — almost at the .886, and has since hinted at a retracement.

2015-02-02-CL 60 0615

UPDATE:  10:11 AM

SPX just reached our next downside target at 1980.  A reminder, this is a TL that connects the Jan 6, 14 and 16 lows that we detailed in the 3:55 update (members’ section) on Friday afternoon.

2015-02-02-SPX 15 0710Note that this move below 1988 completes a traditional H&S Pattern that would target 1912 if it were to hold.  Needless to say, not many H&S Patterns have held in the past couple of years.  They’ve effectively been banned by central bankers and algo-centric HFTs.

More importantly, though, it officially kills off the IH&S that TPTB were trying to sell us.  From here, the SMA200 becomes a much more reachable target — though we wouldn’t be surprised to see a decent bounce at this TL.

Next moves coming up.  continued for members


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