Here are 2 SPX charts, the first in the daily timeframe and the second in the 60 minute timeframe.
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On the daily chart the market broke down below 1040 today after the hanging man candle yesterday, and now that level is a real barrier. You can also see the red support lines coming up from the March lows and late July & August meeting at 1007. Above this we have the 50 ema at 1017 in the area of the gap from 1016 to 1018.
On the 60 minute chart we see a descending channel with todays action contained in that channel closing at 1029. The lower channel boundary is at 1024 and that is where the futures are pointing. Since 1040 is a master level, I expect a backtest there tomorrow or Monday. So, the market could gap or fall down tomorrow to 1024 and then rebound to 1040 before sliding some more. A possible scenario forming, is to retrace to between 1017 and 1007, which is an area of significant resistance and then rally about 60 points. That would put the range to 1067-1077. This would produce a double top, as the market high is 1080. Double tops are bearish. Usually the right top is a little higher, so the 1080 level could be exceeded a little bit. Another possibility is that 1016 and 1007 is taken out, and we have a steeper down channel.
First, I am expecting a bounce to 1040 tomorrow or Monday.
Here is a chart for the dollar as shown by UUP in the weekly timeframe:
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I have to admit the US dollar looks bearish for the medium term. We see a bullish falling wedge (red lines, it looks like this will take a few more months to really converge so a breakout of the wedge can occur) and then a downward sloping trading channel within, with stairstep bearish descending triangles. We also see one of the master levels (horizontal grey lines) taken out. The MACD is below the signal line and the RSI is very weak below 50, coming in at 32. There is a bullish cross of the MACD in the daily timeframe, with RSI above 50 at 57, but I expect this to be short-term.
