Saturday, April 30, 2011

S&P500 Inverse Head & Shoulders: Target 1430

That's a pretty neat-looking Inverse Head & Shoulders (IHS) Pattern on the hourly! Although a IHS pattern is seen more often at bottoms of downtrends, they do occasionally turn up uninvited. A target of 1430 can be calculated based on the chart. Severly overbought on short-term charts, there is a danger of a pull-back, and hence chasing price here would be unwise!

Itching to get LONG?

If you are not long already, wait for a successful back-test of the neck-line, or at least a pull back to wind down the RSIs. That will enable employment of appropriate stop-loss points in the event of a failure.

Significant TOP around 1430

Last update, we talked about dangerous levels of BULLISH sentiment, as a contrarian indicator. Take a look at the weekly chart above. I believe we are approaching a significant top around 1430. There are three reasons to support this proposition:

1. Inverse Head & Shoulders Target level as shown above
2. Serious congestion zone from 2007-2008, just before the wave 3.
3. A Fibonacci 1.38 extention level is reached at this level

All the best!

Thursday, April 28, 2011

Shanghai Composite: Retreating towards 2850

Shanghai Composite hit the upper trendline of a broad triangle pattern (refer to previous post), and promptly turned down. Selling has picked up pace somewhat,but has support around 2850 - a level also supported by the rising trendline, as shown on chart. In the event of a bounce, resistance lies around 2950. We will review this picture in case of a break towards 2650.