A tease or a squeeze ? Something to keep an eye on - Current retracement may be part of Inverse Cup & Handle Pattern..

The retracement higher this morning on the S+P Futures seems to be gathering steam. - However, it is a possibility that this pullback higher is part of a bearish continuation pattern. - I have highlighted this in the charts below. - The pattern I am talking about is an 'Inverted Cup + Handle' pattern. In standard Technical Analysis these are powerful continuation patterns. -- however they come with a 'Strong Government Health Warning' : Anticipating patterns early in their formation can be highly risky: - Firstly, it may be an incorrect analysis, secondly even if the analysis is correct, there is no guarantee the pattern will be successful. - Most analysts advise against taking the trade prior to pattern completion.

- The charts below show the pattern on the AUDUSD Spot and the SP June Future. - Below that is an example of a successful 'Inverted Cup + Handle' pattern on the weekly Bund Future a few years ago. --- FWIW AUDUSD is pushing the upper boundaries of the maximum Hammer retracement. -- If however the AUDUSD can make a 'sustained break' over 8330/40 (with 8370/80 the absolute limit on a spike), and likewise the S+P can break and hold over 1070/75 (absolute spike limit 1080/85) the notion of an 'Inverted Cup + Handle' pattern may be dead in the water.With regard to the above analysis, I have used the AUDUSD because it has synched extremely well with the move in US stocks since late April. In fact it has been a good indicator of when a move in the S+P June 10 is likely to succeed or fail. I have posted two charts below, highlighting how the AUDUSD has diverged as key turns from the S+P future. The synchronisation has occurred as both the AUDUSD and Stocks are 'Risk-on trades', however I am not sure why the AUDUSD has been leading the S+P500 at key turns, I can only assume perhaps it displays less emotion and more rationality. - Note - at some point the AUDUSD/S+P500 synchronisation/divergence is likely to end, however if the current 'Risk-off' episode continues, then this pattern is may remain for some time.