Hello and welcome to CantosCharts. My name is Eoghan Leahy and I'm a Technical Analyst and Trader with Fat Prophets here in the UK.

The market call at the moment is quite difficult. There are a number of scenarios for both the bullish and bearish case which we're going to have a look at and try and see if we can anticipate which direction the market might take in the coming weeks.

So jumping straight into the bullish case here we can see we have a downtrend. The long-term downtrend has been broken. We've seen a retest and we have a new uptrend now since March 2009. The initial uptrend has been broken, but in the potential bullish case we could be looking at a new upward channel. We've seen a pullback that has found support at the 38.2 per cent Fibonacci retracement. If this support holds, there is a very strong case for an extended move higher up past the April high.

Looking a little more closely now on the daily chart we can see an inverted head and shoulders pattern here. The recent move has broken this downtrend and retested it. We've seen a break back above the 50 day moving average and what we really want to see for the bullish case is a break through the 200 day and neck line resistance. If this occurs, it opens up a target with takes us right back to the previous high and potentially beyond.

Now let's take a look at the bearish case. We're still looking at the S&P futures here but we can see now the March rally has potentially broken an uptrend and may be forming a head and shoulders pattern which will be quite bearish.

If this trend line does prove to be resistance and we break the neck line around the 1,020, 1,015 area, it could open up downside targets back down towards the 900 region.

Again, looking more closely we can see the long-term uptrend has been broken. We now have a break back below the 50 and 200 day moving averages and a bearish, what's known as a death cross of the 50 day crossing below the 200 day.

After that, this rally formed what's known as a rising wedge pattern which gave us a downside target which has been reached. Essentially, you're looking for kind of the width of the wedge pattern and projecting that down from the breakout points. So perhaps this pullback is exhausted, we're now testing the resistance and we're also testing the 200 day. If we fail at this level and start to push lower, we now have a lower low, lower high and could be looking at a downtrend, so things are quite finely balanced at present.

People say sell in May, but the real issue here would have been to trade in May. Since May we've seen a trading range that has had a few breakouts above 1,125, a few tests below 1,040 and each time that has drawn in people trying to play the breakout trade and trying to play one of the two scenarios we've looked at before.

But what's really been happening is the traders on low volume have been earning their money within this range - shorting at the top, buying at the lows. So what we really want to see is a breakout on higher volume with the 2 per cent close above or below either band of this support and resistance zone.

So trying to get a tip off as to which direction the market might break, we like to use point and figure charts. They take the volatility out of the market and give good projections. We can see here we have a target at 910, a target at 1,320 which coincides with the two scenarios we're looking at but doesn't give us a conclusive signal as to which direction the market might break.

Again, if we put all these indicators together, the key issue to have a look at here is volume. Since June we've seen volume really taper off in this downtrend. Now, as the Labour Day weekend ends and volume comes back into the market in September we would expect to see a spike in volume. The real key is whether companies will break through the 200 day and above this resistance to open up our long-term upside targets or whether perhaps we see another retest of this 1,045 low which would suggest a move lower and open up that head and shoulders pattern that we looked at previously.

Thank you very much. I've been Eoghan Leahy from Fat Prophets here with CantosCharts and over the next two days we're going to have a look at both copper and the 10-year treasury and see if these markets could give us a lead as to how equities may perform over the coming weeks and months. Please stay with me. Thank you.