SP500 holds in there. AUDCAD fx update.

The SP500 managed to just hold on within key support. On Friday I stated that the Bullish View was on life support, well it just about clung on posting a hammer candle on Friday. The SP500 front futures contract 2-hourly chart (see below) shows the SP500 has managed to hold on to some key trendline levels, and also displays some other further supportive factors. These are as follows:-

- A declining support line from the lows of the past couple of weeks (This line when extended backwards can be seen to have acted as support and resistance over the past 4 months).
- Secondly, note how the low on Friday touched the base of an Andrews Pitchfork.
- Thirdly, the low has managed to just hold above the low of the week of the breakout, from the May - July declining wedge.
- Furthermore, the low on Friday occurred at just over the 50% Fib retracement for the entire July - August rally.
- Also Momentum is supportive, the 2 hourly chart shows clear bullish divergence on both the RSI and MACD.

Though I am not at this stage advocating a bullish resumption, on a pure risk reward basis, the SP500 may be worth a buy around here, with fairly tight stops.

(Click on chart to enlarge)

Friday's call on the AUDCAD FX cross, will go down as one of my less successful calls. Looking back at it, I actually find myself guilty of the mistake of reaching a conclusion of the shorter-term picture, whilst not referring to the bigger picture. This chart below shows the weekly AUDCAD FX cross. This actually shows a far more bullish picture, with the move in the past year appearing to be a Broadening/Flag pattern, with the move over the last couple of weeks appearing to be a re-test of the breakout. I did refer to this area as potential support which had to be overcome, however in light of the pattern I have identified, this support would appear to be even stronger. Resistance remains the area just below 9500, which has capped all attempts to move higher since late Jan 2010, a sustained move above here would be extremely bullish with potential to 100 at a minimum.

(Click on chart to enlarge)