Tuesday, July 19, 2011

Dollar Index (DX) Ascending Triangle 7/19

To the left is a daily chart of the Dollar Index (DX). I decided to do a second post to Dolemite's because we get different continuation charts based on the software we use, so sometimes different viewpoints can be seen. After reaching our lows @72.86, we seem to have been forming a strong ascending triangle. Each rally has rejected the lowest fib retracement (shown in purple) of the prior down move and every move down has made a higher low, creating a strong trend line (shown in yellow). Usually these resistance / support areas attract the price and it looks like we might see the dollar get down to the 74.9 area over the next couple days, but in the end I feel this type of formation breaks towards the upside and we will see a dollar rally that can actually break the 38% retracement level around 76.25 and hold it.

Crude Oil (CL) Target Reached 7/19

Hourly chart of Crude Oil (CL) to the left. In a post yesterday we pointed out we had reached the bottom of a channel and the lower fib retracement from the previous downmove. We also looked to target the upper end of the channel around 98-99 from this buy and this morning we have already reached this area. While ultimately I think the breakout of this channel might be to the upside, I personally will lighten my position here and then wait for any bearish candlestick formation or divergence to form to pull the rest of this position off. If the signal forms inside the channel / retracement area then I might look to reverse my position too.

EDIT: An hour after this post crude formed a nice shooting star off the top trendline and I have exited my position. I might look to go short soon as well.

SnP Mini Future Daily Chart 6:45AM 7/19

(chart 1 - snp daily chart zoomed)
(chart 2 - snp daily chart)

OK, here is the SNP 500 september future.
Price is bracketed between significant support and resistance.

We have support at 1295 (62% fib retrace of jun-jul rally and high of june chop/stall zone).
We have resistance at 1315-1309 (32% retrace of july selloff and prior shallow (32%) retrace of jun-jul rally) (also bottom of MML trading range at 1308.50)

I think we will get a close over/under this resistance/support in the next few days.
If it closes above resistance / below support, I think a 30 point move is feasible. (1345 or 1265)
I think we get a close over 1308 today and then go higher from here and test 1345

In the next few weeks, we may have a downside test of the longterm orange bullish channel (see chart 2 for scope of this channel). This has held for 2.5 years. If it breaks this, then the neckline of the head and shoulders sandwich is so fond of (search recent snp posts if curious) (also on my chart in white) comes into play.