Some interesting price action to take a look at today, following the NFP in the US. In particular, the overnight strengthening of the Yen this morning could be rather meaningful in terms of trends. The following is some basic technical analysis of selected financial markets. Click all images to enlarge them
S&P 500 Futures
The following is a 12 month view of the daily ES futures:
As you can see, it’s been in a clear uptrend over the last year or so, although the veracity of the moves higher have waned since May. For our purposes, I’ll focus on the latest leg up, below:
The above is an hourly chart. The trendline from the 1640 low had been respected until the circled action, following the September unemployment report. While it’s too early to classify that action as a rejection (one would need to see a break below 1735), I’m not exactly enthusiastic about going long. In my opinion it wouldn’t hurt to put out a small long with an extremely tight stop, but the price action, combined with the broken trendline have me looking for more downside, at least in the immediate short term. Possible targets include the 1710 area, which is notable given that represents the Debt Ceiling Agreement level. Other targets include 1700, then 1680-1690. Longer term, 1640 failing to hold would usher in much more downside, and indicate a far larger correction.
10 Year Treasury Futures
Longer term chart, over 10 years:
The red trendline has held up ever since 2007. I do believe that it was a significant event when it broke down during the rout in the bond market earlier this year. The rally since the low in September is approaching the yellow horizontal line at 128, which proved to be resistance in 2008 and 2010, then support in 2011 and early 2012. Having broken down below this price level, in addition to the longer term trendline, adds to the potential concerns over the 10 year. The way the market acts at the 128-130 level will be indicative. Failing at this level will go a long way to confirming that at the very least, a massive correction is on the cards. Blowing right through that area once again would render the spring 2013 turmoil another minor blip.
The above is a chart over the last 12 months or so. Quite clearly the biggest issue facing this pair is the resolution of the trianglbe pattern. The last red candle, which is still playing out, threatens to be the candle that does the trick, but one would have to see a break below 96 to be more sure.