Daily Form April 1, 2010

Inter-market Technical Analysis using algorithmic pattern detection

THURSDAY APRIL 1, 2010       07:15 ET

The stalling of momentum to which I referred in yesterday’s commentary saw US equities lose ground and look vulnerable again to more corrective action. The S&P 500 is now, in my estimation, poised to test 1165 quite robustly today and should that break the next area of support is around 1150.
The Russell 2000 also looks vulnerable - in view of the highlighted candlestick pattern - to a pullback to the 650 level which sees the intersection of three technical indicators - the Ichimoku Kijun Sen value, the lower Bollinger band (based on a 20 day period with a 2.25 value for the standard deviation) and also the 50 day EMA.
I wish all readers a happy Easter holiday and I shall return next Wednesday - April 7th.

As expected EUR/USD made progress up to almost exactly yesterday’s target mentioned here of $1.3540.
Within the 240 minute chart the currency pair is now immersed in the cloud formation and this presents good scalping opportunities for short term traders but it does not lend itself, until the rate moves out of the cloud to any intermediate forecasts of direction.

USD/JPY has moved up almost exactly to the base of the cloud formation and it would not be surprising to see consolidation near to current levels before the next decisive move aimed at piercing through the top of the cloud formation.
As discussed yesterday the odds are now favoring a considerably weaker yen in the longer term.

The daily chart for GLD, within which a fibonacci grid has been superimposed on to the Ichimoku cloud pattern reveals an interesting technical pattern.
Despite red candlesticks the price of gold has moved above back above the 62% retracement level from the swing high and has also moved above the cloud pattern. The blue line on the chart at 110.50 is not only the 50 retracement level but also the top of the cloud. I would expect this to be challenged in the near term but I also see it as a potential rejection level. The short term technical pattern is not particularly encouraging given the fact that I remain a long term bull for the metal.