Play for Wednesday, May 20th

The market mostly offered scalp opportunities yesterday, although there was a good shorting chance at midday as we travelled from the 4510 to the 4440s.

On Monday, the rally began in the 4300s and as noted reached above 4500 yesterday. There are both bullish and bearish arguments on the table.

Bullish arguments:

• Momentum is quite mixed, but still positive on 4 and 8 hour intraday charts.
• The 50% to 61.8% retrace of the recent rally is between the 4380s and the 4410s.
• 4400 could turn into support.

Bearish arguments:

• Momentum on the daily chart is mixed (not a great argument actually).
• We might be detailing a double top, see the chart below. Emphasis is on the word "might".
• Longer term intraday charts (4 hours and 8 hours) as well as the daily chart (below) are beginning to show relevant divergence on this potential double top. This has to be confirmed with a sell signal.
  

So momentum is mixed and we are well within the ascending channel. I have a small short on still on from yesterday: I am going to keep it for now, but will be looking for buy signals within or above the 4380s and 4410s.

We have the minutes of the Bank of England and of the Fed coming out today, which might move the currency markets and consequently the indices.