Testing Testing - 1 - 2 - 3... Mid-week analysis - 27 Sept 2011

The ES weekly chart is still holding on to a sell signal despite the recent bounce. The daily chart shows a break of the bear flag and a current retest of the support-turned-resistance level. The current situation does not confirm a bullish trend and the breaking of the bear flag still holds for now as the daily indicators are not confirming an uptrend. Looking into the 30min ES chart, it looks like the retracement up is about to be decisive today. The breach of the 200MA and potential cross of the EMAs should give some upside, but the bear flag resistance is met and indicators tell of a worn bull rally at this point. Watch out for a failure of the 200MA and EMAs as well as confirmation by the indicators.

The DX futures weekly chart appears to have hit the 200MA and is stalling. The daily DX chart shoes a steep rally over the past few weeks that is a little overdone and a short term pullback retracement can be expected. This USD (DX futures) rally is not over but needs a breather to continue higher. The 30 mins DX charts suggest a little more downside testing and re-testing the 200MA before a likely resumption of the rally.

The /6E futures weekly chart shows a steep decline and is about time for a pullback technical retracement. Noted that the MACD crossed over into the bearish area last week. The daily chart suggests that there would be some upside today but needs to end below 1.3454 for the downtrend to continue committedly. While being in an extreme depressed area, it looks like support at 1.35 is holding – for now. The 30 mins chart currently show a breach of the 200MA, and potential crossover of the EMAs. This suggests some short term upside.

Based on the EUR/USD movements, short term movements appear to be biased to the down for USD/DX, and up for EUR(/6E and ES. While the weekly charts are still bearish, a retracement is currently in place and the extent of this retracement is unknown, so watching the 30mins chart and news releases would be prudent.

A slightly less rosy picture appears with CL futures (Crude) as the weekly charts display a second break of the 200MA and a weekly sell signal was triggered. The daily chart suggest that it needs to close below 80.36 on Thursday to keep the downtrend in force. IF it does so, but does not close < 79.65, there is likely to be a spike down past 77 by mid-next week. Looking into the 30 min chart, a rising wedge is formed with the EMAs potentially crossing, but price is met with resistance of the 200MA at 82.20. Indicators suggest a mature mini-rally.

The Gold futures (GC) show very interesting charts. The weekly GC chart activated a Sell signal last week, and this week’s follow through (if it is a real trend) appears to be a candlestick with a long tail. While 1487 is a critical support, the gold futures bounced of 1537 first. The daily chart nicely ended a setup with a long tailed candle, which usually indicates a significant buying area. This came about after bouncing off the 200MA area. While the MACDs are indicating more downside, a breather may be in place for the short term. Given the 30 mins chart, Gold’s recovery is not spectacular, and it looks rather mature as well.

Living up to its reputation as “Superman on drugs”, Silver (SI) futures weekly chart demonstrates how high and low Silver can achieve in a short time. It is recovering from a fall too fast as it did a rally too fast. Both weekly and daily chart indicators look really bad, confirming a downtrend. The recovery of Silver yesterday looks aged, very much like Gold. However, the daily candle is a reliable indication of very short term upside in silver.

Copper was in the news last Friday for being in bear territory, and as a ominous sign of a recession. The weekly chart is testing the 200MA with indicators being bearish. The daily chart has dived fast and is in extreme depression, with the EMAs and 200DMA marking a deathcross and ice-hole failure 2 weeks ago. The 30 mins chart looks good for some upside in copper. While a bounce is due, there is more downside.

Overall, it appears that a bounce is upon us and it may be stopped at the bear flag resistance. Watch for news breaks that would confirm these expected trends and their associated reversals.

Be safe!

The MadScientist
27 Sep 2011

Note: Any material posted here is of my sole opinion, and my opinion may differ or change. This is NOT a solicitation nor advice proceed with anything else as a consequence of reading these materials. The materials presented here are intended for educational purposes only.


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