A strong bounce in the US markets overnight has taken us right into recent resistance. The market has transitioned from a clear downtrend, to volatile sideways base building, and now we are on the cusp of a genuine breakout. Breadth has improved and fear peaked right on the low. I am sure there are many traders who are fully aware of this 1295/1300 resistance zone in the S&P 500 and there will be a lot of buy stops above this level. Bottom line, I think this level gets breached and we will continue to see an advance up to at least 1320. Then we see. This market continues to follow the 2007 scenario I have been talking about: http://swingtradersedge.blogspot.com/2011_06_16_archive.html.
S&P 500 Daily:
A strong base pattern has been built and we are now testing overhead resistance. Look for breakout trades and switch to guns.
Nasdaq 100 Daily:
This market is always a lead indicator. Price has already broken out of the recent base pattern. A new trend up has begun
I showed this chart the other day and I thought now would be a perfect time to update. In almost all the significant low points in this bull market, the S&P 500 has built a solid base prior to a strong breakout. I believe we are at a very similar junction.
S&P 500 Daily 2010- Present
To Asia today. My thoughts have not changed since my recent posts:
http://swingtradersedge.blogspot.com/2011/06/why-i-still-like-asia.html
AND http://swingtradersedge.blogspot.com/2011_06_20_archive.html.
I believe we have seen peak bearishness and a number of failed technical patterns which all imply to me that this rally has more to go. Australia has been a laggard in the region no doubt. However, we are looking at yet another strong gap up today and if this should hold in the first 30mins above 4500, I feel that finally our time has come to transition out of this downtrend. It is all about developing a low risk idea and pursuing it until proven wrong.
Thanks
Austin
p.s. Currencies are always an important lead indicator to me. I don't see too much panic in these 2 patterns. Looking for breakout trades also here
AUDUSD Daily:
EURUSD Daily:
