Charts I'm Watching: May 30, 2013

The USDJPY pulled back from the brink, EURUSD is trying to make the best of the dollar’s momentary vulnerability, and stocks are wondering whether (if bad news is once again good) this morning’s data is “bad enough.”

We’re watching to see whether or not SPX’s drop at the end of yesterday’s session completes the wave higher. A push back into the rising channel would be reason enough to play along on the upside. The Inverted Head & Shoulders Pattern completes just above at 1654.54 and targets 1667.

I’d be more optimistic about that scenario if the EURUSD could break out of the falling white channel…

…or the USDJPY could climb back into the rising wedge.

UPDATE: 9:46 AM

SPX just poked up into the rising channel and appears likely to complete the IH&S targeting 1667. Going long here at 1654.

UPDATE: 9:55 AM

SPX just completed a little Gartley Pattern at 1659 with 5 identifiable waves higher. I’ll try going short here and see if we can get something going on the downside.

I might be early — the IHS target is still 8 points away. And the gap SPX was trying to fill is technically still open up at 1659.76. Our primary target yesterday was the .618 Fib at 1661.16 and the smaller scale (gray) .886 is at 1660.22.

I’ll use fairly loose stops — say 1662ish, as we also have a confluence of Fib levels at 1660-1661.

The larger traditional H&S Pattern we were following yesterday would have equal left and right shoulders at the purple channel .75 line — currently about 1662. But, 1659 is close enough. The neckline is back down at about 1642.

As we head back down, I’ll be watching for a bounce at the IH&S neckline at 1655 – also the midline of the revised rising white channel.

UPDATE: 11:00 AM

Got the bounce at the neckline/white channel midline as expected, flirting with higher.

The RSI picture suggests that a push to 1661 or 1667 is a good possibility, so I’ll probably take an interim long position with any strength through 1661.