Charts I’m Watching: Jan 27, 2015

Yesterday’s forecast worked out nicely.  Recall that this was the same scenario first laid out last Friday.

As such, I see no reason to adjust Friday morning’s chart/forecast: a test of the SMA20/50 — and a potential IH&S right shoulder if those don’t hold.

After SPX reached our initial downside target, we called for a bounce that was only slightly more exuberant than anticipated.  Watching USDJPY, we noted:

It’s now threatening a breakout for the fifth time since early January.  I suspect this one will also run out of juice, leaving SPX to backtest the rising white channel at around 2053 before heading further south.

2015-01-27 SPX 15 0600SPX bounced off the SMA20 at 2040 up to 2055, then hung around while USDJPY teased us with the idea of a breakout — a breakout that failed yet again last night.

2015-01-27 USDJPY 60 0600Our closing note to members was that SPX should be shorted overnight at 2053 by those with the stomach and the ability to watch/hedge such positions — a stance that’s looking fairly prescient with the e-mini’s off nearly 30 points just prior to the opening bell.

SPX is at our target of 2053.  I’d short here with tight stops — but would strongly recommend cash overnight for those who can’t hedge or watch their position like a hawk overnight.

SPX looks likely to nail our next downside target in its opening move.  We’ll update the charts shortly.

continued for members


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