In yesterday’s post This is a Test, we wondered how the “markets” would handle USDJPY’s departure from the Pennant Pattern it’s been in since Aug 25.
After declining to last week’s 118.16 target, USDJPY behaved pretty much as expected:
And, note that the 118.26 tag does, in fact, reaffirm the white channel bottom while suggesting that the rapidly rising purple channel might finally be ditched…Whatever big resistance SPX runs into today, USDJPY can overcome it with a rapid spike back to the purple channel bottom.
USDJPY did, in fact, spike back into the purple channel that has kept in on the rise since last December. The result was a 1.5% gain in SPX, though it had some help from central bankers, horrid economic news, today’s OPEX.
For all the excitement, ES ended up at a key overhead resistance — though SPX still has a few points to go.
continued for members…Note that ES landed at the purple .618 retracement of the drop from its all-time highs.
I would normally say this is a sure fire reversal point, except:
- SPX is still 8 points south of its .618 at 2032.48
- the SMA100 is just north of that at 2041.82
- today is OPEX.
With all three factors working in its favor, odds are SPX will be drawn to the top of the falling channel it’s been in since July 20. I would not rule out an SMA100 tag, but would be cautious around the .618 and ES’s SMA100 tag at 2033.18.
Arguing against a push up to all those magnets is VIX, which just reached the .886 retracement of its rise to 53.29 on August 24.
And, NKD has retraced .886 of its drop to the white .500 Fib and channel midline on Wednesday. It is retreating from the white channel .786 line and faces overhead resistance from an approaching SMA50 (purple.)
As mentioned previously, I will be out of the office again today. I won’t be able to chart or post for the remainder of the day, but will leave you with a chart that appeared in Zerohedge this morning. I think it’s very appropriate, given that today is not only OPEX, but the culmination of a virtually uninterrupted 160-pt rise since Sep 29.
In other words, no matter how bullish things might look today, Monday is likely to bring some retrenchment.
Good luck to all.