Daily Form August 2, 2010

Inter-market Technical Analysis using algorithmic pattern detection

MONDAY AUGUST 2, 2010       07:54 ET

The S&P 500 futures have made good progress since Friday’s close and have been energized by a buoyant mood amongst traders in European equities as well as a 1.8% gain on the Hang Seng index in Asian trading.

The current level for the S&P mini, as captured on the 30 minute chart, reveals a stalling pattern at 1112.
As previously discussed the 1130 target seems likely to be tested in coming sessions but with the possibility of more defensive positioning ahead of the NFP data, the risk/reward on the long side for US equities this week does not seem attractive enough for position traders as opposed to intraday traders.

EUR/USD is range bound and has still failed to make any progress above the $1.31 level and there is evidence of a series of declining recent highs. If the euro can provide sharp upward surprise move, which is not too unlikely given thin volumes in FX at present then $1.3140 becomes the target.
On the other hand a break below $1.30 would set $1.2880 in play.

The stand out performer amongst the major currencies during the last few sessions has been sterling which is now contemplating a push up to the long term pivotal level of $1.60.

There is quite a lot of resistance to overcome at $1.58 but thin volumes could see a sharp rise towards $1.60 at which point the risk/reward ratio would favor the short side of GBPUSD and most crosses involving GBP as the base currency.

Once again the FTSE is back to the 5366 level suggesting that this level is both an attractor and a hurdle.

If this level can be breached the next target is the 50% retracement on the chart below at 5436.


The patterns identified below should be considered as indicative of eventual price direction in forthcoming trading sessions.
None of these setups should be seen as specifically opportune for the current trading session.
For a more comprehensive listing of price formations detected by our pattern recognition algorithms please visit TradeWithForm

ACWI  iShares MSCI ACWI Index  

ACWI, the exchange traded fund which tracks the MSCI All Country World index, may be set to challenge the level indicated by the arrow on the chart. This level has significance as the level at which the bounce following the abrupt sell-off in May ran out of steam.

XSD  SPDR Semiconductor ETF  

XSD, which tracks the semiconductor sector, has one of the least positive technical patterns amongst the major ETF's

IWM  iShares Tr Russell 2000 Indx  

IWM is the exchange traded proxy for the Russell 2000 and the top of the cloud pattern, equating to around 680 on the actual index would be a feasible target while the overall appetite for risk remains intact.