Monday, July 28, 2008

Weeky Outlook on ES 28th July to 1st Aug '08

Dominant TF: All three, with 60mins still a little behind
Swings: DN-UP-DN (from UP-UP-DN)
Market Direction(daily): long (lighten position) or flat to reenter later

Please read the ER2 post also. Both symbols are undoubtedly correlated yet each has its specificities.

ES went up to 1291 (for a 1295 target and now is retracing to 1250 and possibly below. So, all in all we've had a very easy week for ES.

60mins: will 1250 hold?
MTFS certainly follows price action therefore indicates a lower support. Entropy however is not so bearish hence ES may congest around 1250 or slightly lower without breaking that level (1246).
The Swing indicator announces a possible reversal with a first Fib target back to latest highs. We shall obviously wait for for the indicator to toggle up to confirm such scenario. This would be in line with some congestion at higher time frames.

Daily: slowdown, possible congestion
Again, following a ECO (early MTFS crossover) we knew there was little chance to see the recovery carrying through to higher levels and the 1st Fib retracement proved to be a profit taking level. IT would now make sense to test 1250 to be tested more firmly to go higher later on. We have however remain careful if this daily bar turns red. If we look at Entropy now, it seems that negative energy has almost dissipated. We don't however see ES bounce straight away but a Fib pattern may form later on this week.

Weekly: Caution must be exercised.
No change really... Bars are still red, MTFS still fairly bearish and Entropy has not bottomed yet! It is therefore far too early to rejoice so we'll remain cautious and check on support levels. We can still assume that 1230 will hold.
Next Fib level is way down at 1100 but we'll avoid falling into pessimism and wait for a possible yellow bar and maybe a pivot coming in the next few weeks. In any case, no recovery potential in sight in the short term.