Fascinating interplay between the yen, the euro and the dollar today. Biggest problem for bulls continues to be the broken rising white channel.
Look for any more downside to be relegated as much as possible to the after-hours to offset the likely overnight decline in CL, which is ramping like crazy to try and stop SPX’s plunge. There’s a nice backtest available at the close where the red midline crosses the white channel bottom at 119.80.
They had to run CL up through two channel tops — one of them from Jun 2014! Same thing happened on Mar 5, and they had to ramp USDJPY back above the .618 at 120.11 to cover CL’s retreat.
SPX tagged our downside target [see: Mar 20 Update] of 2089 early this morning. A meager bounce saw it slide through support at the SMA50 to within a point of our final target of the day: 2066-2068.
The EURUSD is lending a hand as best it can, but badly needs a breather.
Breaking the TL from Mar 12 definitely did some damage. What does it do to our forecast?
continued for members…Assuming we get a solid bounce here at the white .618, the falling purple channel’s .786 could be left intact. We never got a tag of anything lower than the midline, so it’s touch and go as to whether we will.
If it doesn’t hold, then the SMA100 (currently just north of the white .786 at 2055.78) could easily be pressed back into service — for the third time — to halt SPX’s retreat. There’s a great fan line at the white .886 at 2048.26. But, the best back breaker out there would be our old friend: the red .618 at 2033.
It would keep the rally alive with great channel support. And, because it would represent a slightly lower low, it would screw over a lot of bears.
The most irritating target would be the TL off the Oct 15 low — currently around 2060.3. It also stopped the Feb 2 and Mar 13 declines, and would be a stick in the eye to everyone who considered Bullard’s October 16 stick save dirty pool.
My favorite target would be the one we discussed back in early February after SPX bounced prematurely: coming back to tag the SMA200 when it crosses the .786 at 2010.58. FWIW, it should be there tomorrow.
At this rate, SPX could get to 2033 by tomorrow. If reached, it should provide good support; but, a bounce there would also set up a Gartley Pattern. While we’re talking about it, I should point out that the SMA200 is fairly flat right now. It should be in the vicinity of 2010.58 for several days. So, a tag next Monday that represented a slight overshoot of the SMA200 would be just as legit as one tomorrow. And, FWIW, one that occurred around Apr 8 would also tag the next fan line from Oct 15.
UPDATE: 4:00 PM
So, yeah, it was the “most irritating” close — right on the TL from Oct 15. I’ve highlighted in below as the yellow, dashed line. Thank goodness the “market” isn’t rigged (sarc!)
I still like 2033/2010. But, after what happened the last two times SPX closed on this line, staying short here would take some cojones gigantescas.
And, while I’m suggesting really, really stupid stuff, don’t forget that a .786 reversal of any size would set up that early May 1943 target at the red 1.272/white .618. Just saying…