Big picture of what I think might happen short term – looking at the 4 hour chart. EMA’s would suggest that we could break through the 5700 resistance. I have had 5850 on my radar for a while, (as well as summer lows) and we have a resistance line there now. That’s the top of the 50 day based on the latest channel as you can see on the Bianca chart below. I wouldn’t be surprised to see us test that level soon. Once we do though then I think the bears are going to charge for August – possibly September. For Monday I am thinking a drop to test the 10ema on the 4hr around 5650 then another try to breach the resistance at 5695, then if we do, up to 5725, drop back (maybe to 5695, previous resistance becoming support), then 5830/5850. From there we will need to asses – will that be the top or will it try a bit higher first? We can decide that nearer the time.
Asia Overnight from Bloomberg
Asian stocks and European equity futures rose as Premier Wen Jiabao said China’s government will do more to support economic growth. Oil declined and the euro weakened ahead of inflation and confidence reports in Europe.
The MSCI Asia Pacific (MXAPJ) excluding Japan Index added 0.4 percent as of 2:02 p.m. in Hong Kong. Japanese markets are closed today for a public holiday. Euro Stoxx 50 futures gained 0.2 percent, while those for the Standard & Poor’s 500 Index declined 0.2 percent. Corn futures jumped to a 10-month high and soybeans rose to the highest since 2008 on concern a U.S. drought will damage crops. The euro fell 0.1 percent to $1.2238 and weakened 0.2 percent against the Japanese yen.
Pretty much as per last night’s email – I have plotted the blue arrows on the30 minute chart below. I am expecting a test of 5650, possibly 5635 (green support line (so stops below that just in case it breaks the 200ema). I will probably go half stake long at 5650 then add at 5635, with a stop around 5618 (below the previous resistance/support) for a decent run up. So wide stop, but larger target of 50+. This week we have Ben Bernanke speaking tomorrow and he usually gets the bears going, so I expect we will see some declines tomorrow. If the bulls can really motor today it would be good to see 5720+. I have drawn the arrows up to that 5695 area – from there it will either start to fall if the bulls cannot breach that area, or, more likely, it will break.