The Difficult Road to Recovery

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They say the first step in recovery is recognizing that there’s a problem.  So far, TPTB have taken the right steps to avert a total meltdown.  Will it work?

The support USDJPY reached yesterday remains unbroken.  2016-02-12 USDJPY dailly 0615 And, CL is doing its part, having bounced at our .886 target and already breaking out of its falling white channel.  Its next serious over head resistance should show up around 28.25-28.35.2016-02-12 CL 60 0625But, more remains to be done – especially for USDJPY.  A recovery from the yen carry trade bust will depend on it breaking out of the falling channel it’s been in since Jan 29.2016-02-12 USDJPY 60 0615SPX tested the Jan 20 lows and is bouncing nicely.  But, a robust recovery won’t happen until CL and USDJPY have proven themselves to be on the mend — as in, more than a technical bounce.

2016-02-12 SPX 60 0625And, of course, much larger problems remain.  They still haven’t begun to address the fact that the long-term channel from the 2009 lows has been broken, and remains broken.  Furthermore, the large H&S Pattern from April 2014’s lows has been triggered, and remains triggered.

2016-02-12 SPX daily 0800These problems will take more than a 25-50 point bounce to correct.

UPDATE:  9:35 AM

Because I’m supposed to be on vacation today and am likely to be busted any second for working, I’ll leave you all with one potential road map to today’s action.

Assuming USDJPY breaks out of its falling channel (it’s a minor thing to ask, Haruhiko) then SPX should test the falling white channel midline at 1859-1863 (depending on when.)  If that’s broken, we can expect it to try for the the red neckline at 1872ish.2016-02-12 SPX 60 0633If, on the other hand, USDJPY can’t break out of the falling red channel, then we’re likely to see yesterday’s downside target reached.2016-02-12 USDJPY 60 0638We spend a lot of time identifying important intraday targets that can help generate nice trading profits.  But, this is a good time to take a step back and look at the big picture.  What if the USDJPY isn’t supported here?  Suppose CL has much further to go?

In the interest of addressing those questions (and, scaring the crap out of bulls), I’ve updated the Current Forecast.  CLICK HERE.

UPDATE:  11:31 AM

Everyone’s sleeping late, so I’ll sneak one more post in here.  SPX just reached our initial target of 1859.  I’d either take profits here at 1858.61 on this morning’s long position or at least tighten up stops — as USDJPY and CL have both reached potential overhead resistance.

If they break out, great.  Go long, have fun.  The neckline at 1872 comes into play.2016-02-12 SPX 5 0831But, if they don’t, this could be as good as it gets.  CL has reached the falling red channel midline.  2016-02-12 CL 60 0831And, USDJPY suggests a breakout of the falling red channel, but could get stuck at the purple channel line and fall back. 2016-02-12 USDJPY 60 0831Even ES is flashing warning signals here with the test of this falling, yellow TL.2016-02-12 ES 60 0831



The Difficult Road to Recovery — 3 Comments