Saturday, November 6, 2010

Weekly Forecast - Nov. 7th

What a great week to be a bull!

Markets flew higher to break above April highs and regain its 2008 levels.  So now where does that leave us?

Let's hit the charts:

$SPX (hourly)
 Here is the $SPX hourly chart again.  The market was trading in a beautiful channel, broke above resistance, and reached the top of the channel.  Friday I figured we would get a pull back as profit taking would start, but we actually saw the market push just a bit higher.  This doesn't give a clear sign that we won't still get a pull back in the next week.  Opening new long positions here would not give an ideal risk/reward strategy.

Clearly the bulls are in control and will remain that way until something major happen.  We would have to assume that any dips will be bought up, so entering long positions will be best on any dips.

Here is the /ES just to show how much we've zoomed past the April highs

EUR/USD currency pair is still holding that upward trendline.  Trading on Friday was trapped between resistance and support.  We could see the upward trendline push the euro through the resistance.

We saw a perfect cup and handle formation and break in the british pound.  However it was quickly met with a fibonacci retracement line (in red) at 1.62725.  This will give some resistance before pressing on higher. 

USD/JPY is still trading at the bottom of its channel.  It has been locked onto the bottom for awhile and now finally seems to be putting in a bottom.  Fortunately even move up with be quickly met with the upper trendline.

  Here is the bullish dollar index UUP.  We saw a bunch of indecision in the dollar at the start of the week and the finally got a break below support.  We did see it catch support on a fibonacci retracement level at 21.94 and Friday it bounced up and smacked its new resistance line.

We have a very exciting week coming up with very interesting price action going on.  I would still look for a dip in this upcoming week.  We are not talking about a major correction but a slight pull back across the boards.  Now is the time to tighten up stop-losses and wait for a better buying opportunity.

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