SPX didn’t quite reach the .786 target I had picked out for it yesterday because the emini got to its first. ES then bounce exactly to the .707 at the top of the channel we had been tracking and reversed, putting in a perfectly placed right shoulder for a H&S Pattern that, if it completes (1673ish), targets 1647.
Good time to be short — especially if 1673 falls.
The other drama is with the USDJPY, which completed the little H&S we looked at yesterday morning and is threatening to lose support at 98.26 (hint: it will.)
This would be a very bearish development as 98.26 is the pair’s best shot at maintaining the Crab Pattern (white) that would break it out of the falling white channel. It’s already broken below key yellow and purple channel lines but is approaching potential support at the purple midline at 97.63.
If the purple midline falls, it’s all the way back to the yellow midline — probably at the .786 (95.45) where the white midline and yellow midline intersect around Aug 25. Of course, that would complete another H&S Pattern, wouldn’t it?
I have to get on the road shortly, but it’s appearing more and more likely that we’ll likely reach our downside target after all. SPX completed a H&S yesterday (in red, below), but bounced hard and didn’t come close to closing below the neckline, which is required for confirmation.
I suspect it will do the same thing again today.
I think it’s likely we’ll reach not only the .786 at 1677.61, but probably 1674.91 too. I’d take profits on my short position at either one if the market is firming up, but anyone taking a long position should be careful around that 1671.84 support.
And, if 1680 holds, I’d have stops on the short position around 1683 — the purple channel line.
I’ll check back in later if I get the chance — probably around 2-3PM. GLTA.