SPX broke out of the falling white channel yesterday… …largely on the back of USDJPY, which rallied sharply…

…to offset CL, which tumbled to our target — in the after-hours, of course.  When it comes to manipulating prices higher, it’s important to backfill at night, when the e-mini volume is light enough to prop it up cheaply.

Now that the cash markets are open, let the spoofing begin!

continued for members…

Note that the yellow target marks the TL from the 1998, 2001 and 2009 lows that stopped CL’s initial decline.  So, it should stabilize, if not rally, from this point.

If prices bounce between here and the red .886 at 45.61, it’ll allow SPX to backtest rather than slip back below the SMA50 at 2059.  As we discussed yesterday, this would open up the next upside target at 2083-2086.

2083 is the SMA10, and 2086 is about where the white channel midline currently resides — along with the rising purple channel bottom.

CL may or may not be ready to bounce.  But, USDJPY has done an excellent job of offsetting it so far — going so far as to construct the rising gray channel within the rising purple channel within the rising white channel.

A backtest of the .618 is still in order.  If it’s to come today, we should see the falling red channel below hold (for starters) which — along with SPX’s SMA50 — is easy enough to track.

Should they both retreat in sympathy to CL, then 2033 is still in the picture.  The bears’ other little ray of hope is VIX, which is clinging by its fingernails to a rising channel that, so far, hasn’t managed to undo yesterday’s technical damage of falling below the purple channel line.   The key will be to pop back above.

In sum, the bulls are trying to use USDJPY to keep it together long enough for CL to reach 45.61 and bounce there, where it can take over the heavy lifting.  There is plenty of selling pressure, so it’ll be touch and go.

The keys for bears: USDJPY dropping through the purple channel midline, CL not bouncing by 45.61. VIX popping back above the purple channel line, and DX retreating to backtest — well, anything really.

UPDATE:  10:11 AM

UMichigan consumer sentiment just unleashed a haymaker on the bulls.Will it be enough to punch back through support at the falling gray channel that’s being backtested?

USDJPY is backing off the red channel top, but certainly hasn’t capitulated.  This is the one to watch.

UPDATE:  10:30 AM

CL just reached 45.61.  Put up or shut up time for bulls.

EURUSD needs to reverse as well. USDJPY seemingly disinterested…content to let things slide?  It’s certainly looking that way.

If it loses the purple channel midline and CL loses 45.61, I think 2033 has a very good shot.

UPDATE:  10:55 AM

Oops…

…and, even oopsier…

Not saying it will happen, but if SPX’s SMA100 at 2044.08 doesn’t hold, a 79-pt H&S Pattern awaits completion at 2040ish.

But, since the .618 and purple channel midline are just below at 2033, TPTB will have some help in preventing it.  The downside scenario for the day shifts slightly to either a close at the SMA100, or a drop through it to 2033 and bounce back to the SMA100.

The troublemaker scenarios are: (1)  a close at 2033 — with a completed H&S Pattern that can then be erased over the weekend; or, (2) a bounce off the SMA100 that shifts bears out of shorts, but which is followed by a plunge to 2033 set up by weekend action.

We’ll see how things go after the euro close coming up.  SPX just made a reversal at .786 of its rally from 2039, which sets up a Butterfly Pattern at the 1.272 of 2032.42. DX suggests a potential bottom at 9pm Sunday.

So, we’ll add an alternate 120.11 target at that earlier time just for grins.

UPDATE:  11:30 AM

Euro close and things aren’t looking any more positive for SPX as it approaches support at the SMA100.USDJPY is still hanging around the purple midline, so this still feels quite orderly — very unpanicky.

The chart suggests a late-in-the-session plunge, meaning SPX could close at its lows. Either way, I think TPTB are walking SPX down to 2033 in order to establish firmer support for a rally.  We’ll see.