Charts I’m Watching: Nov 26, 2012

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Here’s where we left off Friday.  I’m not thrilled with the idea of adjusting channel lines to fit with an overshoot of a target.  Looks a bit hinky on the 60-min chart…

…even if it fits fine on the daily.

But, here’s the chart that really convinced me to stay short (from 1404, 10:30 EST in members’ section) over the weekend, even though SPX slightly exceeded my original stop of 1407.  Remember, this is a short-term trade only.  Our core position remains long.

The RSI ran into the upper bound of a well-formed channel (yellow) at the end of the day.  So, it’s either break-out or break-down time – regardless of what price was saying.

And, in the 60-min time frame…

Meanwhile, the dollar was breaking out of a week-old 60-min RSI channel and appears to be setting up for a back-test of the broken channel and recently broken moving averages (10-day = 80.88, 20 = 80.78, 200 = 80.9).

UPDATE:  11:30 AM

SPX broke down through the important 1400 price level, and is likely on its way to completing a proper B-wave for this corrective wave on its way higher.  Friday, I updated the primary forecast to reflect a significant sell-off into the middle of the week, followed by a strong recovery.

This scenario is in play if we reach the low 1380s in the next day or two — something that seemed unlikely on Friday, but would seem less so if we traded down through the SMA 200.

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