Short Term High Looks Close

ES reached the 1688-90 target area I gave yesterday morning and reversed there. That could have been the short term high that I'm looking for, but if so then I would have expected the 50 hour MA to be tested overnight and break. As it is it was tested overnight and held, and ES has bounced back to 1680 at the time of writing. If that continues to be the case today then we may well make a new high not too far above and I am running two scenarios for that. The more bearish scenario has ES making a high in the 1693-6 area today and then dropping back below 1691 (weekly upper bollinger band SPX) by the close. This should signal a 30+ points retracement, and possibly as much as 50 points. The second scenario is that we make a high near yesterday's high for a short term double-top. This is less ambitious and would just target a move to rising support, currently in the 1666 area but rising about 6 points per day. ES 60min chart:

Which scenario do I favor? The more bearish option from the SPX and other equity index charts, and partly that is based on a very interesting trendline development yesterday on SPX, SPXEW and TRAN when these indices, which had all been missing strong resistance trendlines, all established strong rising wedge resistance trendlines at the high yesterday. This is a strong signal that a significant reversal is close, and that the high yesterday may have been the short term high. If so then confirmation will come with the break below SPX rising wedge support in the 1670-5 area. SPX 60min:

I have mentioned several times that I am not expecting this to be more than a short term reversal, and that is because we have not reached the obvious target area for the current move up. I posted one scenario for that last weekend and I have since identified an alternate to that scenario. Both are shown on the chart below and the higher target area is the 1770-1800 area (the chart I showed last weekend). The lower target is in the 1730-50 area and that scenario is a rising channel from the October 2011 bear market low. The higher target is more technically elegant but both are decent options from here. The target is most likely one or the other, though there may of course be a third option that I don't currently have the data points to identify. SPX daily chart:

On other markets the possible bull pennant I was looking at yesterday morning turned out to be ..... a bull pennant. :-) CL broke up hard and as I also mentioned yesterday morning, I have an open target in the 110.50 area. I can't see anything short term suggesting reversal and a small rising channel has formed from the break up. CL 60min chart:

GBPUSD is still grinding slowly upwards and I have drawn in a potential rising wedge resistance trendline that is just a possibility. A break of the rising support trendline would most likely mean that the rally has ended, as and when that happens. GBPUSD 60min chart:

Bonds declined sharply yesterday and that wasn't unexpected. The declining channel has broken up and TLT is now retesting the break. There is already a valid possible W bottom in place but it's possible TLT could retest the lows to establish a better one. If so that would be a strong buy area. TLT 60min chart:

A short term high looks close and may have been made yesterday. If we see a clear break and hourly close well below the ES 50 hour MA (currently at 1677.25) early today then that high should be in. If so then I have marked possible H&S necklines on the ES and SPX charts. If we see early strength then I'll be looking for a high either close to yesterday's high or higher under 1696. The close shouldn't be significantly higher than 1691 as we shouldn't see a close above the weekly upper bollinger band. Let the OPEX shenanigans begin and everyone have a great weekend. :-)