UUP (PowerShares DB USD Index) In A Wedge

UUP has been consolidating in a wedge pattern (from 23 May high/04 May 2011). With the potential bullish RSI divergence forming from the 04 May to 17 August 2011 lows on the daily chart, there is scope for bulls to re-open the recent 2-week range resistance at 21.16 (Resistance 1). A break above would extend gains towards 21.41 (Resistance 2), near 61.8% retracement of 21.74(12 July)/20.87 (17 Aug), then 21.61 (Resistance 3) near the wedge upper bounds. However, a break below 20.90 near the wedge support would initiate the next down leg towards the Fibonacci projections at 20.66 (equality target x 21.41/20.87 from 21.16) (Support 1) then 20.47 (1.382x 21.41/20.87 from 21.16) (Support 2) ahead of 20.35 (1.618x 21.41/20.87 from 21.16) (Support 3).

Trading Indication (Short term - Intraday):

Buy at 21.00 and lower;
Target at 21.41 and higher; Stop Loss at 20.88/85 (<0.71%)
Long-term: Possibly sell higher

10-year Treasury Note Yield (BUSY10)

10-year T-Note yield has descended within a 17-year bear channel since November 1994. The yield posted a fresh low at 1.974% (18 August 2011) below the 2.034% prior reaction low (18 December 2008) before consolidation took hold. Near term, a break above 2.360% (Resistance 1) would extend the consolidative strength towards 2.438% (Resistance 2), near 38.2% retracement of 3.223% (01 July 2011)/1.974%, then 2.589% (Resistance 3) near 50% retracement. However, as the monthly trend studies remain bearish, there is scope for the current corrective bounce to form a swing high under the significant resistance zone at 2.756% (near 61.8% retracement)/2.814% (Resistance 4)/(Resistance 5) ahead of a reversal to the downside. A break below 2.113% (Support 1) would resume bears to reopen 1.974% (Support 2). Only a sustained breakdown there would initiate the next down-leg towards the Fibonacci projection at 1.734% (0.618x 5.333%/2.034% from 3.770%) (Support 4) which guards the next Fibonacci target at 1.250% (0.764x 5.333%/2.034% from 3.770%) (Support 5).

Trading Indication:
Short-term (Intraday): Possibly buy lower
Long-term: Possibly sell higher

August 26, 2011 SPX

SPX continues to base within a triangle since 09 Aug (52-week) low at 1101.54. Near term, a break above 1190.68 (Resistance 1) would extend the consolidative strength towards 1208.47 (Resistance 2) then 1218.11 (Resistance 3). However, as the weekly trend studies remain bearish, there is scope for the current corrective bounce to form a swing high under the significant resistance zone at 1227.08/1249.09 (Resistance 4)/(Resistance 5) ahead of a return to the downside. A break below 1135.91 (Support 1) would resume bears to target 1121.09 (Support 2) then 1101.54 (Support 3-Target 1) near 38.2% retracement of the 666.79 (06 Mar 2009 low)/1370.58 (02 May 2011 YTD high). Only a sustained breakdown below 1101.54 would expose 1056.88 (Support 4-Target 2) which guards 1010.91 (Support 5) near 50% retracement.

Trading Indication:
Short-term (Intraday): Possibly buy lower
Long-term: Possibly sell higher