Ramp & Camp Monday

I hope you all had an enjoyable and relaxing Thanksgiving. Those long holiday weekends are always a stark reminder that I am in dire need of a vacation – after about the third or fourth day I am just starting to mentally relax! I am definitely looking forward to our Christmas break and another opportunity to recharge those old batteries. It’s been a tumultuous year – not a bad one for us I can proudly say – but definitely an exhausting one. But heck – let’s be honest for a moment – once all this drama has played itself out, maybe a few years from now – aren’t we all going to bored as hell trading ‘normal’ tape again? That’s right – always be careful what you wish for!

As expected the Sunday night AUD/JPY was a clear reflection of what awaited equity traders in the morning. Nice stair step pattern up and we never even as much as touched any of the hourly NLSLs. What I find fascinating and at the same time rewarding from a technical perspective is that the AUD/JPY reached all the way up to our first NLBL and reversed from there. The hourly is now in a battle with several NLSLs slightly above the 77 mark. Which is also where we have the upper 100-hour BB line. If that support cluster gives way expect the AUD/JPY (and probably equities) to follow lower.

I have one juicy FX setup and more equity specific musing below for the subs. Please step into my lair:
[amprotect=nonmember] More charts and cynical commentary below for anyone donning a secret decoder ring. If you are interested in becoming a Gold member then don’t waste time and sign up here. And if you are a Zero or Geronimo subscriber it includes access to all Gold posts, so you actually get double the bang for your buck.
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NZD/USD – the hourly is also battling the 0.7539 NLSL right now. What I like about the daily panel is that it’s a lot closer to that 0.7575 NLBL, which also coincides with two NLBLs on the hourly right now. Arguably there is a heck of a lot of resistance looming above. Which may mean that this bounce is going to fail. I think the right way to trade this beast is to wait for a push higher and then to remain short until a stop above all that resistance (e.g. 0.7611 – never use an even number) has been breached.

The reason why I’m not too excited about a long trade here are all those daily NLBL looming above – way too much commotion for my taste. Of course what I like and what we’ll get are usually to separate pairs of shoes.

Since I took this snapshot the hourly panel on the spoos has bounced at the 1189 NLBL – again, nice how those repeatedly work for gauging support/resistance levels. As you can see that 1199 NLBL on the daily panel has thus far been too much to handle – perhaps there will be another attempt near the end of the session. It won’t be easy for the longs however – there’s a ton of resistance looming above. We’ve got three consecutive NLBLs and there’s the 100-day SMA followed by the 25-day SMA (coinciding with that last NLBL). That ought at minimum be good for quite a bit of gyrations, so be on your toes and don’t get lured into over trading.

Fascinating configurations on the weekly chart – as highlighted last week, we dropped right to that 1158.15 NLSL and reversed from there. Looming above now is the 100-week SMA – it’ll be a tough nut to crack to say the least. The right panel has us back above the 25-month SMA but we are also right at the 100-month SMA. Having to recapture those old support (now resistance) levels will take quite a bit of doing – perhaps it can be done in low volume Christmas tape.

UPDATE 2:05pm EDT: I decided to tack on my SPX P&F chart as it offers us additional clues. Obviously today’s reversal was rather vehement but you often get those during a down trend. The real test here from a P&F perspective will be a three-fold: First we need to make it to 1210 in order to trigger a ‘low pole reversal warning’. Second we would need to push above that SMA at around 1215. And third we would need to retest that SMA and hold it. Assuming those three events happen then the longs may have a chance to actually enjoy their seasonal Santa Rally.

Bottom Line:

As expected we got ourselves a bounce after seven consecutive lower closes – the setup I presented on Friday fortunately worked like a charm. But whether or not the bulls can stage a last offensive and lead in that Santa Rally remains questionable. Bear in mind that we are smack middle in what is traditionally a very bullish season of the year. To have lost so much territory in late November represents considerable technical damage in itself. Think about it – if the bulls cannot pull their cart out of the mud right now and here, then what’s going to happen once we push into the second week of January? Nothing involving green candles I would imagine.