The ES Channel

The channel I posted on twitter last Thursday is still going strong. I gave the target area as 1538-40 yesterday morning and the low was 1539. As with the previous six reversals within this channel the reversal was signaled with 15min RSI divergence so we are back on a buy signal today:

Channel resistance is now at 1562. ES has been crawling up the 50 hour moving average overnight and will obviously need to break back over it with some conviction to make it to channel resistance:

One thing worth noting here is that there is now a very nice looking double-top setup on SPX. These are best when the two tops are very close together as these are. The target would be 1512 on a conviction break below 1538, though there is obviously rising channel support in the 1528 area now:

On the SPX daily chart SPX is riding up above the middle bollinger band, now at 1542. That is also significant support:

The megaphone type pattern I've been marking up but not talking about much in recent days on CL is a broadening top. I don't much care for these patterns as they are both bad at making target (19 out of 23 according to Bulkowski), and also very misleadingly named, as these are actually direction neutral. For what it's worth this pattern has now broken up with a target back at the Jan/Feb highs. Strong resistance not far above though at 96:

EURUSD tested 1.288 yesterday as I expected and broke below it to a marginal new low. What now? There is still a chance of a strong bounce from here but I think that ship has most likely now sailed. All things considered looking at the EURUSD and DX charts I'm leaning short here on EURUSD, which isn't going to be helped in the coming months by the Cyprus deal, even if everyone involved is claiming that the losses there by depositors and senior bank bondholders set no precedent. That's funny, but much less funny for anyone with large cash or bond holdings in marginal EU countries, and I'm expecting a steady stream of capital from these countries in coming months. Some of that will stay in the EU. Much won't:

I'm definitely wondering about a double-top here on ES and SPX, and we'll see whether ES can reach channel resistance today. If it does, watch the 15min RSI for signs of reversal.