Friday, June 7, 2013

SPX Daily Chart Upward-Sloping Channel

The SPX tested the 50-day MA at 1605.35 yesterday and bounced.  This move mimics the prior tests (red circles) that all led to recovery rallies. The weaker yen carried the markets higher this year. Over the last week, however, the yen has strengthened causing the dollar/yen to drop through 100, 99, 98, and 97 now printing 96.35. The ECB decision was uneventful but the lack of Draghi cheerleading causes the euro to leap higher well over 1.32. This lowers the dollar and added to the drop in the dollar/yen. Today is a huge day for markets since price will decide if it wants to stay up inside the safety of the rising channel, or, collapse.

The purple dots show how far price has deviated from the 200-day MA and as time moves on price will revert back to the 200-day MA for a test. The indicators are mixed. RSI provided positive divergence over the last two days to bounce price but the MACD line and histogram remain negative, wanting to see lower lows in price, and stochastics and money flow are uninspiring. Stoch's are oversold, however, and agreeable to a bounce.  Key S/R is 1593, 1597-1600, 1614, 1618, 1625-1629, 1634 and 1649-1650. The range between 1597 and 1629 is key since the winner, bull or bear, will be determined by price moving below 1597, or above 1629. This information is for educational and entertainment purposes only.  Do not invest based on anything you read or view here.  Consult your financial advisor before making any investment decision.

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