Firstly I posted this chart and these comments yesterday regarding the SPX500:
First off... the hourly histograms bracketed by the mavs on the macd and the following bracketed bar is higher... this suggests price is gonna go up some more.
Also note the quite higher low on the MACD mavs when the "double bottom" occurred before open on spx500 last night...
This is suggesting to me that we are going to revisit levels around the previous highs...
This is the result of the US Day Session (last night for us)…
Some points of note:
I have mentioned “triangle Trades” for about two years now… not the usual ones as denoted by trendlines, but ones that consist of a localised triangle bottom. As we can see formed between the 18th and 19th, and the vbasic rule for this is that if price goes above the peak of the triangle then usually the entire previous decline is tretraced.
This happened quite nicely over the last day and a half of US trading and I like it! LOL. Note that I have placed a red arrow on the left of the chart and put in red dotted cross hairs which give a target higher than current price…
However, on the hourly stochastic we have a ower peak forming, with a higher price peak and on the MACD in the last couple of days we have both negative divergence on Moving Averages and histograms now, so some caution towards upside is warranted and I am actually contending that we will see a drop in the US indices of ten points or so over the next 24 hours… don’t bet yer house on it, this is just a bit of contention, coupled with the fact that US option expiry occurs tomorrow and it would not surprise me to find that they have a similar price action to what we experienced yesterday during our cash market session.
Okay Coolies… On to Our beleoved XJO
Point one… Volts premium XJO/XAO to futures/spi.
Now I am not going to go into the longer term stuff ‘cos I have the concentration of a gnat and one day is enough.
Observations of this methodology are that it can be used to ones advantage if one has the proverbial “balls of steel”… in that, don’t even bother figuring out what the cash versus futures premium is… just obsereve what price does on the futures after cash auction close going in to futures close.
If there is a reasonable discount (5 points or more as a rough guide) between the price of the futures after the cash auction has completed, and the price of the futures on day session close, then one can reasonably assume that price will return to the cash auction close level, sometime during the overnight session.
Like wise if there is a premium.
Now this can be a pain to play unless you use wide stops, but the success rate is pretty good… Big Ole Thanks to Volt for showing the way on that one.
Okay chart of the Hourly igXJO SPI equiv.
This is right where we are at market closed waiting for futures open at 09:50 AEST this morning.
Firstly, the pattern on priceis another potential triangle trade but is risky to play to the upside until price gets above the blue dotted horizontal line, if indeed it does to make this pattern.
Personally I am a bit suss that it will.
Now nothing is ever certain, and this is conjecture area and many bears have been bitten in the bum over the last month or two…
However, if you take a look at the arrow on the MACD, pointing to a histogram bar bracketed by the MACD moving averages, the following bar is greater, and this suggests to me that price could still well retest the level shown by the thin horizontal line on price.
I am also suggesting that the thick blue lines on Price are actually marking out a larger three wave or more structure, with price roughly halfway down on the third wave now…. Potential if this is true is shown by the thick blue segments, the left hand side being a copy of the height of possible wave one down, which gives a potential down side target of 4280 IG roughly 4250 spi equivalent.
Let’s have a quick squiz at the daily:
Though not so obvious, there is a thin orange moving average on that price is sitting on now, and this is having difficulty providing support. Initially it did quite well, but the first bounce off it did not manage to go anywhere, and truth be known at this stage I would not be surprised if we tested the 21MA shown on this timespan which is around the IG level of 4300… about4270 spi equivalent.. this is pretty close to the portential downside marked by the wave conjecture on the hourly above...
Of great note is the marked divergence on stochastic and MACD which I beleive is starting to be rectified.
Now as usual, I can never be certain… and these are just my thoughts…. The opening moves often reveals all.
(20min delay)