Pattern Profits: Pattern Watch

Sunday, March 21, 2010

Pattern Watch

After Friday's dip, I believe there's a good chance the S&P tests 1150 early in the week. If that level fails to hold, we could see prices at 1130 in a hurry. As you'll see in the chart below, the shortest term moving average is now acting as resistance and only the 10 dma stands to act as support before a test of 1150...

For the DOW, prior highs were able to provide support late in Friday's session. The rising 10 dma still stands nearly 100 points away, but I don't see much support until 10,500 if we should get a breakdown early in the week...

Interestingly, the Nasdaq was the first index to test the 10 dma despite being the relative strength leader for the majority of the recent climb. That support line provided a bounce late in the session Friday, but nearly any weakness from here should see that 10 dma begin to roll over and give us the long awaited short signal we've been watching for...

The Euro was forming a rounded bottom pattern that now looks to have completely failed...

Dollar strength against the Euro would likely be a strong headwind for equities and make it a difficult continued climb from here.

Despite my continued bearish bias, I did find several breakout candidates for this week, as well as a couple of head and shoulder patterns to watch for breakdowns. First up is this ascending triangle on AMED. It attempted to breakout on Friday, but reversed back into the consolidation near the close. I already own a little piece of this one...