The USDJPY pulled back from the brink, EURUSD is trying to make the best of the dollar’s momentary vulnerability, and stocks are wondering whether (if bad news is once again good) this morning’s data is “bad enough.”
We’re watching to see whether or not SPX’s drop at the end of yesterday’s session completes the wave higher. A push back into the rising channel would be reason enough to play along on the upside. The Inverted Head & Shoulders Pattern completes just above at 1654.54 and targets 1667.
UPDATE: 9:46 AM
I might be early — the IHS target is still 8 points away. And the gap SPX was trying to fill is technically still open up at 1659.76. Our primary target yesterday was the .618 Fib at 1661.16 and the smaller scale (gray) .886 is at 1660.22.
I’ll use fairly loose stops — say 1662ish, as we also have a confluence of Fib levels at 1660-1661.
The larger traditional H&S Pattern we were following yesterday would have equal left and right shoulders at the purple channel .75 line — currently about 1662. But, 1659 is close enough. The neckline is back down at about 1642.
As we head back down, I’ll be watching for a bounce at the IH&S neckline at 1655 – also the midline of the revised rising white channel.
UPDATE: 11:00 AM
Got the bounce at the neckline/white channel midline as expected, flirting with higher.
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