Thursday, 18 February 2016

EURO STOXX 50 rallies clear of 2.5 month old down trend channel

So far I see no reason to doubt that the correction from the 2015 peak is finished, and a rally to above that level has begun, as the Elliott Wave labels suggest. That said, the 3000 level is strong potential resistance, and the bullish case must continue to prove itself, with a move through that level in coming weeks. Let's see.

ASX 200 rallies from test of up trend line drawn from 2009 and 2011 lows

Monthly chart shows the ASX 200 rallying from support at the up trend line drawn from the lows of 2009 and 2011. I still consider the move from the 2009 low to be an upwards correction, that will at some point be fully retraced by a plunge to below the 2009 low. But in the short term, especially while the market remains above that trend line, I will respect its ability to rally. Charts include all sessions trade.

Daily chart next. A bit scrappy but the down trend channel remains a useful edge. Currently the market is arguably range bound, testing toward the upper end of the range.

S&P 500 rallies from weekly chart trend line supports toward daily chart resistance

Weekly chart shows the S&P all sessions has rallied from dual trend line support.

Next chart zooms in on the weekly for clarity. Note last week's long tail, and the size of the market rallies which followed other long tails. If history repeats or even just echoes, the current rally should have further to go.

Daily chart shows that the market is approaching potential resistance. Briefly putting my trading hat on now.... I find it useful to map out expected action on a trade, and if the trade doesn't follow my script I aggressively tighten my stops. My script for remaining short term bullish the S&P demands continued strong rally. If the market does not push quickly through the illustrated daily chart resistances, I will aggressively tighten my stops and be prepared to turn bearish. I think another test of the weekly chart trend lines would likely result in a downside break.... right now I don't expect that, but it's best to be prepared for every possibility.

Nifty rallies from trend channel support up through initial trend line resistance

Daily chart shows that the Nifty has rallied from major trend channel support, up through the lower line of the shorter term blue trend channel. Other nearby trend line resistances remain, but they should be quickly beaten if (as I think) the Nifty's correction from the 2015 has bottomed. Let's see.