Charts I’m Watching: Jun 24, 2013

I hope everyone had a great weekend.  Friday morning [see: Channel Tilting] we looked at the big picture, a breakdown through some key support levels — most notably the purple channel that guided SPX from 1343 to 1687 between Nov 2012 and May 2013.

This continues to be the elephant in the room from a chart pattern standpoint.

DX, EURUSD and SPX came very close to the target levels posted Friday morning.  I was looking for 83.075 for DX.  This morning, it reached 83.05 — just shy of the white .618 and purple .75 line.

After breaking channel support, EURUSD almost reached its .618 at 1.3032.

And, SPX acted pretty much as expected:

I suspect it’ll reverse around 1598 and head down to 1580, then possibly to 1568 and finally 1553.  Don’t know if it’ll all happen today, but those are the key levels I’d be watching for.

It rallied on the opening to reach 1599, then fell to 1578 before bouncing to close at 1592.

This morning, we’re getting the next leg down.  SPX just arrived at our 1568 target, the .786 of the 1536 to 1687 rally.  It should at least pause here, and could get a nice Fib bounce (1577ish?)  The real target is 1553, though.

I’ll play the bounce here at 1568.32, but with tight stops in the (quite possible) event that the bounce turns out to be nothing much.

UPDATE:  9:55 AM

Just got stopped out on the interim long position, reverting to full short here.

BTW, if 1568 sounds familiar, it’s because we talked about it on Jun 17 as the initial target in the downside scenario [see: This Time Really is Different – members section.]

The downside case is just a matter of degree.  At 1598, SPX recently retraced just shy of .618 of its rise from 1536 (Apr 18 low) to 1687.

It also came within 4 points of the trend line connecting the 2000 top of 1552 and the 2007 top of 1576 — which is more of a bullish argument, really (looks like a backtest of an important TL.)

In any case, a drop to the .618 indicates the potential for either a Gartley, Bat or Crab Pattern — which would complete at 1568, 1553 or 1442 respectively.

Now that we’ve reached our initial target and are closing in on our second, we’ll update and review this scenario.

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