Break out

DOW:  finally a break??

Yesterday's rally may have broken the wedge to the upside.

Now it needs follow through, a failure here would probably mean trading back into the wedge and testing the lows again.  Volatility still persists.

Gut feel:  still didn't seem to be enough pessimism for a bottom - we'll see.
Rallies like yesterday's can be self fulfilling as short covering increases.
The market was DUE a bounce - so expected.

At moment many markets are near resistance.
Good area to try a short - with a tight stop. for a short term trade

If it does follow through on volume, but the dips.
Initial targets:  25300, 25800  - on the upside.

FTSE breaking out !

FTSE daily

Breaking above declining resistance
next key level if we stay up 6100
a break above there can open up test of highs at 6800 ..see weekly chart below

FTSE weekly

expect some pause at around 6100 level
may even be a SHORT level..but BEWARE a push through 6100 especially if strong.

Short term overbought, Long term still UP

The charts below are pretty self explanatory.
Short term DAX has gapped up, and has a tendency to fill the gaps.  So a fall to around 7300 may be on the cards, HOWEVER if the market stays above here, and works off the overbought condition, then it may launch higher, attacking resistance at 7450/7500.  

Range 7266 -7470 for a few days.

BUY the dips! 
The Weekly and Monthly charts show the declining resistance.

IF we get a sustained break out, DAX could see as high as the ALL TIME HIGHS @ 8100 (10 % higher from current levels)

DAX 2 hr chart

 DAX daily

DAX weekly

DAX monthly

Summer ended..

Click prices for links to prior posts

Copper now at 371 
DAX 7350
FTSE 5800
Gold 1740
Silver 33.6


Where now?
DAX weekly

DAX approaching strong overhead and downtrend resistance.  Could be we get a brief push above, before a correction sets in.  However unless the trend changes that will be all it is .. a correction.

FTSE weekly

Also approaching resistance

Needs to break and hold above 5810, for test of 5870/5890

Formidable resistance around 5900.

IF the market can break higher obvious target is 6000

DAX/FTSE spread chart

When there is an uptrend can see that DAX outperforms FTSE.

Reasons? 

1, FTSE is quite heavily weighted with defensive stocks

2, DAX has only 30 stocks compared to FTSE 100, and many are cyclical risk on stocks.

However sometimes the spread widens too much.  For a relatively risk free trade sell DAX buy FTSE at these levels, possibly 200points, before uptrend resumes

When a prolonged market down turn occurs the tables are turned with the FTSE outperforming the DAX, in which case a spread trade can be held for longer

Cable update low risk short level..

Cable daily

 Now at top of the "megaphone" pattern, and also horizontal resistance.  Good low risk short level.  

EURO support test and PASS!

The €/$ tested support at 1.30 yesterday and passed with "flying" colours...now it has to overcome the next test to the upside at around the 1.32 level...and then the declining trend line at 1.3370 for a real push higher towards 1.37/1.40

A failure here could see another push down, below 1.30 next stop 1.26

Cable

Cable looks like it is breaking out at 1.60, with some heavy resistance still at 1.6140; however if "everybody" is looking at the breakout we may see a "false" break up.

Strategy seems to be wait and see, a fall back through 1.60 could be a short; Many shorts probably will have covered and new longs initiated on the break above 1.60  = BULL TRAP?

Anyway the next major resistance is at 1.6140 so not far away; Another level one could short at

Looking at the chart we can see going back that between 1,60 and 1.6140 there is heavy congestion.

Also on the bigger picture, we could still be in the process of forming a large HEAD and SHOULDERS formation, significantly above 1,6165 would invalidate this pattern.

We can also see that recent price action seems to be forming a MEGAPHONE or BROADENING WEDGE, usually a BEARISH pattern. 

FTSE a look at the trend UP..different time frames

4 hour FTSE chart


We can see that since end of November the trend is UP..
and we are at a minor resistance near 5915 hence the market consolidating.  We may get a push down to the trend line 5775, before pushing through.

The FTSE DAILY chart shows resistance more clearly

The push above should target 6100 minimum.

FTSE WEEKLY chart

Above 6100 we target the highs of the FTSE at 6830 !!

Having a quick look at the US market, specifically the S&P 500 index weekly

We can see we are approaching 1372 ..OBVIOUS RESISTANCE.

Scenario for the markets is:

S&P breaks 1370 level briefly and then falls back as investors perceive as a double top.
A quick correction short and sharp and then when the market doesn't fall as much as people expect , a longer rally through 1370 and as high as 1425/1450 as more "public" are lured onto the BUY side.

Obviously European markets will respond in a similar manner