Charts I’m Watching: May 29, 2013

Lots of red out there this morning.  SPX just retraced .886 retrace of yesterday’s spike higher – a good place for a bounce.  We should get a bounce here, but keep an eye on the primary target: the purple channel midline, currently around 1642.19.

UPDATE:  10:00 AM

SPX just bounced up through the falling purple midline at 1650.  I’ll play the bounce here, with tight trailing stops.

This could be a bounce to further establish the falling red channel’s upper bound at 1658-1659, but you never know.  It could just as easily be a simple backtest of the falling purple channel midline — hence the tight stop.

There’s a tiny potential IH&S setting up that targets 1660 — the confluence of the .500/.382 retracements and a quick gap fill.  But, there’s also a small rising wedge here…

UPDATE:  10:23 AM

Stopped out on that little move, so back to full short.

Next stop should be the big purple channel midline.  It looks like 1641.85 on the 60-min chart, which is so close to the pink .886 at 1641.14 that I’ll use that as my target.

The big question, of course, is “then what?”  I did a lot of charting last night, and found some interesting patterns in the currencies [see: Update on USDJPY] that might shed some light.

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