Value of Perfect Information

A quick review of last week’s guidance

Last week I said:  “The euro/usd pair continued to consolidate in a range all of last week and has yet to break out to one side or another – looking for a close below 1.48 or above 1.5 for further clues.”

The currency pair closed above 1.50 for only 1 day and sold off hard for the next two days.  This makes me cautious about expecting higher prices although so long as it stays above the 50ema, now at 1.485, I would expect higher prices for this pair.  A close below 1.482 would confirm at least a short-term top has been put in place.

Regarding the SPX I said:  “For the next week it appears likely that a head and shoulders pattern could be forming – see Fig. 1 for a chart I generated and posted on the subscriber’s site on Friday of last week.  So long as ES stays above 1083.5 Sunday-Monday, I’m looking for upside targets of 1098.5 and then possibly 1102.5 to 1105 with a max target of 1108 before I expect the ES to make another drop below 1083.5, possibly towards the end of the week if not sometime the week after – that downside target is tentatively in the 1050-1066-1072 range and ill be able to generate something more precise if/when the ES confirms my current analysis.”

The ES took out my max projected retracement of 1108 and made it just 3 points higher to 1111, consolidated sideways, and took a swan dive to 1067 before recovering to the 1090s in Friday’s session.  All in all, this was very close to what I had projected, and even my downside targets of 1050-1066-1072 ended up being capturing the low at 1067, just 1 point off my mid-target at 1066.

This week I’m thinking that if the ES can make it above 1098 and then 1100 (Monday-Tuesday), it’s very likely to make a new high for the year.  I would think upside targets in the range of 1020-1030-1035 could be in the cards by the EOW.  Conversely, if ES takes out 1088 then roughly 1082.5 at the beginning of the week, I would expect it to travel below last weeks low of 1067, first target would be 1060-1061 and then the low 50s if that level doesn’t hold.

A few charts are attached with commentary:

Fig. 1 – SPX VPCI system chart with long term VWAPS

Fig. 2 – DOW (INDU) VPCI system chart with long term VWAPS and LT ellipse

Good luck trading.

Categories: Charts , Commentary , Exclusive , Markets