The Rally Is Flagging

The rally that the bulls failed to manage yesterday has been delivered today, with SPX sustaining some trade above the daily lower band, though albeit not by a lot. So far the rally has retraced 50% of Tuesday's decline while forming a very nice rising channel. So far this is a classic bear flag setup that on a break of channel support should at minimum deliver a retest of yesterday's low. SPX 5min chart:

On the hourly chart the RSI 5 buy signal made target and on the RSI 14 natural resistance at the 50 level has been reached. This is the natural fail area but  in the event that SPX goes a bit higher the next level up would be at the 50 hour MA, currently in the 2367 area. SPX 60min chart:

On the daily chart a possible retest of the daily middle band at 2370 would be a decent match with a 50 hour MA test. I'm expecting a fail close to today's highs but that would be the next level of resistance if this very bearish setup is slow to deliver. SPX daily chart:

The ES 60min buy signal has reached the possible near miss target, as has the NQ signal, and the TF buy signal made the full target. Flag channel support on ES is in the 2342 area, and on a break below the next leg down would likely be have started. That leg should at least retest yesterday's low but may go considerably lower.  ES Jun 60min chart:

Stan and I are doing a free educational webinar at theartofchart.net an hour after the close today, and that will be the third webinar in the 'Technical Patterns You Can Profit From' series. If you would like to see more of the methods that Stan and I have developed to help forecast market direction over many markets then you can sign up for that on this page here.