Riding the Lower Band

The first thing to say this morning is that short term the bears own the SPX chart until demonstrated otherwise. There are no strong reversal signals here yet and SPX is riding the lower band down, with a very telling hit of the SPX daily lower band from below as resistance at the high on Friday. The lower band is now at 1938 and that may hold again as resistance today. If a bounce clears that resistance, and broken rising wedge support in the same area, then next strong resistance is at the 50 DMA in the 1953 area. SPX daily chart:

That said, a retest of Friday's low, and ideally a slightly lower low to hit the full double top target at 1914 would look cautiously bullish and should establish the 60min positive RSI divergence that is currently absent. Strong support is just below the 1914 double top target at the weekly middle band at 1912 and the 100 DMA at 1911. I'd expect at least a decent bounce from a test of of this area. SPX weekly chart:

NDX has reached the lower target that I gave last Monday at rising megaphone support from the April low. If we see more (but limited) weakness on SPX today I'll be looking for bullish positive divergence on NDX versus SPX. A break below megaphone support would promise further weakness on NDX soon, but might well find support not far below at the possible H&S neckline at 3837. NDX 60min chart:

I posted this chart on 9th June showing the nice looking double bottom forming on USD. That is now fully formed and testing double bottom resistance in the 81.6 area. Whether USD can break over this level with conviction should define the next few months on USD. USD daily chart:

I'm still reading back in after my vacation but I'm cautious about the long side this morning for three main reasons. The first is that SPX is clearly on a daily lower band ride, and on a break of 1911/2 support could very much extend lower. The second reason is that I don't yet have a decline pattern or bottoming pattern here yet, though I'll be working hard on that today and a retest of the lows could give me that bottoming pattern. The third is the lack of positive RSI divergence. That isn't a requirement but it helps. Again a test of Friday's low could deliver that. I'll be doing a wider ranging post tomorrow discussing the bigger picture options after the support breaks last week.