My old mentor used to say to me that Tuesdays are reversal days. I feel that today could be a very interesting session indeed given the setups I am looking at globally.
The US markets retested the lows they made on Friday as I suggested here on the weekend. Base patterns take time to form. There was no follow through to the downside and the lower end of the open gap at 1286 proved to be the low for the day. Volume was light and breadth closed at 2:1 decliners. This is indicative of indecision and not a new move lower at this stage. Interestingly, this pattern on the 5min chart appears to be quite like the initial low back on the 25th February. Please see the 5min charts below. Markets retest a low, cannot break down, and then a new trend up can begin. Key support levels are 1286 and this must hold otherwise we are looking at a deeper retrace to 1280/76. Resistance levels are 1300 and 1310. Note that the June Eminis did not make a new low.
S&P 500 Cash 5mins:
25/2/11 S&P 500 Cash 5mins :
S&P 500 60mins:
The Nasdaq 100 made a squeaker new low and looks to be building a great basing pattern. There are strong bullish divergences now in place and lots of down gaps that act as natural targets.
Nasdaq 100 5mins:
AUD bottomed right on the 61.8 fib retrace level from Friday's high to low and I think this remains a great risk/reward setup for long entries. We saw a momentum high on Friday thus we must focus on buying the first pullback-here it is. Stops must be below 1.005/1.004 Spot
AUD 60mins:
In sum, I believe this is all part of a corrective move down and we are seeing a short term basing process. The Daily trend remains intact. We need to see 1300 break first to get long and then add above 1310. Tonight is a FOMC meeting and I am sure there will be a lot of volatility.
Thanks
Austin
