Saturday November 13, 2010 - 05:34:11 GMT
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E-Mini S&P Forms Weekly Reversal Top; Move Downside Indicated.
The shedding of risky assets
put downside pressure on the December E-mini S&P 500 this week, leading to
the formation of a closing price reversal top. This pattern often leads to the
start of a 2 to 3 week break of about 50% of the last rally. A move through 1191.50 is needed to confirm
the reversal top; otherwise it could go into sideways mode.
Technically, a move through
1191.50 should lead to an acceleration to the downside. The current Gann
angle/retracement zone set-up looks pretty ugly for the bulls. The first downside target is an uptrending
Gann angle at 1150.75. This is followed by a Gann Angle/.50% support cluster at
1128.75 to 1128.50. This is this weekâ€™s primary target should sellers get
aggressive. Under this price is a Gann angle at 1106.75.
This week the December
Japanese Yen confirmed last weekâ€™s closing price reversal top with a
follow-through break to the downside. The primary catalyst behind the Yenâ€™s
weakness was the interest rate differential. Treasury Bond yields rose this
past week while Japanese rates held steady. The increased spread helped draw
investors into the Dollar. Compounding this incident was a hard sell-off in
equities and the shedding of risky assets.
Technically, the weekly main
trend remains up, but the confirmation of the closing price reversal top is a
sign of lower markets to follow. Often
this pattern leads to the start of a 2 to 3 week break equal to 50% of the last
major range. Based on the range of 1.0557 to 1.2466, the potential downside
target is 1.1512 to 1.1286.
Next week, an uptrending
Gann angle comes in at 1.1957. A failure to hold this angle could trigger a
sharp decline into the next Gann angle at 1.1257. Combined with the retracement zone, watch for
a support cluster at 1.1286 to 1.1257.
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