Weeky Outlook on ER for Oct 20th to 24th '08

Dominant TF: Daily, 60mins with the weekly chart obviously a little lost in this environment.
Swings: DN-DN-DN from UP-DN-DN
Market Direction(daily): recovery is now in sight, yet caution is still essential
Options (RUT): Low-prob condor is possible

Last week's report (monday pre-market) indicated we should not give up too quickly as the 500 level was bending but still holding in the storm. The next comment about a "hangover" period is still valid this week even if we are slightly more positive this week. Does that mean volatility will come down now ? maybe, maybe not... Going long on short times frames is possible, but conservative investors/traders may want to wait a little.

Now, let's have a look at our charts:

EURUSD: we may have found a bottom, we have no clear indication of a strong recovery just yet so a congestion (with a lower bias) is likely for now until we get a strong signal. We'll therefore watch Fib levels on the 60mins chart, but on the daily chart, the test level remains 1.3672 which could be the signal we are waiting for.

ER 60mins: the worst is over, so what...
The crisis may be over, futures positions have been squared off on friday, Q3 corporate earnings haven't been too bad, so we're now ready to look a long entry point. However, we are still in a "hangover" period and volatility will stay strong for a while. 60mins may be a little too slow to take advantage of intraday play. We'll try and use this time frame to determine a entry point. We can try and find a better price, we can set our stops below 500, so now it's up to everyone to decide when to jump in.
NB: it is not an invitation to go long at all costs! We can still have bad news coming, so it may still be too early (and for most it definitely is!)

ER Daily: no big expectations
I here more or less repeat the above. We have some uncertainty showing in our indicators, with our MTFS rather typical of a failed recovery and Entropy showing a bottom but no strength yet. The 500 level could well be tested again even if we are now more positive.
Prices are so low that one can always enter small on a shorter time frame and accumulate later on when confirmation comes at this time frame.
A CAUTIOUS APPROACH IS STILL VERY MUCH REQUIRED.

ER Weekly: again this has been a market crash, and this time frame is obviously completely out of synch.
Reading a weekly chart at this point is useless. All we can say is that support levels are still valid with a clear drop in one week from 625 to 500, and this high frequency or spike will have tremors visible on shorter time frames for at least a couple of months. These last low levels should hold, yet we keep in mind there is still more downward potential (~440)

ON ACCOUNT OF THIS EXCEPTIONAL MARKET SITUATION, SNAPSHOT UPDATES WILL BE POSTED ON THIS PUBLIC BLOG THIS WEEK AGAIN