by David G. Hawkins

Here we are, on the eve of the U. S.’s self inflicted financial crisis of failing to raise the debt ceiling, likely to cause at least a credit downgrade and its accompanying negative sequela.  I don’t know what’s going to happen, except to say it’s unlikely to be good.  All I can do now is review how the charts are behaving through to the present, and set up S/R levels to watch as the craziness unfolds next week.

Long Term – Monthly bars chart

The first chart here is the long term monthly bars chart, updated through to the end of July.  You’ll notice that I have removed the latest TopFinder, TF4, that showed on previous posts.  This TF is now 88% done, but the behavior of the chart now is showing that the uptrend that that TF was following has clearly ended, the peak being at the May price bar.  Notice that the new R1 launched from that May bar is now holding price down, while the S2 of the latest trend is being broken.  ”Holding resistance while breaking support” is the definition of a downtrend in Midas theory.  So, I have to conclude that a new downtrend on this long term timeframe started at the beginning of June, and that TF4 failed, something that sometimes happens.

Intermediate Term – Weekly bars chart

The second chart here is the intermediate term weekly bars chart, on which I have carried over the level of the new monthly R1 curve.  What we see here is continuing consolidation with increased volatility.  Temporarily at least, price is confined between the new S1 and the new R1, but with volatility increasing, I doubt that that confinement will hold long, especially with next week’s crisis looming.  Volume has been increasing, and this latest week had the largest volume since the middle of 2010.

Short Term, Daily bars chart

On the third chart here, daily bars, I’ve copied over the levels of the new monthly and weekly R1 curves, which shows clearly how well price has been honoring these levels on the up moves.  On the downside, we see that price has been turning at previously defined S levels.  As volatility increases next week, I expect that we’ll see more turning points emerge, most likely at these curve levels already established here.  Unfortunately, I don’t know in advance at which ones price will turn!  Fasten your seat belts, we’re in for a rough ride ahead!

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