Thursday, December 18, 2008

Lull before another storm ?

Sorry i couldn't make it yesterday but i had no connection available 39000 feet a.s.l.

Fantastic action on EURUSD, with a dollar in a near free fall after the rate cut. At least we all know it should be the last one... :) The effect on indices has been minor overall.

Let's see what's in store for today:

EURUSD: short term, stall level is now around the corner just above 1.45, but we have a stronger resistance level around 1.462 to 1.464. The daily MTFS shows that we are entering profit taking zone, so we'll watch carefully for a reversal on the 60mins chart or below to take profits or at least tighten our stops.

ER: 481-484 was a reasonable target area, where we could see some mild profit taking ahead of the 500-506 major target zone. The daily chart shows a pennant or rising triangle pattern* which is not a clear bullish signal in the short term. We still have substantial conflicting forces even if we will eventually reach the low 600s in a matter of weeks.

ES: similar story again. Our target levels here are low 920s which ES almost hit yesterday. It may get there today despite some uncertainty visible from the mild profit taking seen late in the day. Over the next few days, one could see a pullback (MTFS line separation on the daily chart) but we shall only keep that info at the back of our mind since the 60mins time frame dominates by far.

One shall keep in mind that we are approaching triple witching with a lot of position squaring before the festive season hence, stay aside, tighten stops, or move to lower intraday time frames and enjoy the ride...

Til tomorrow, have a great trading day :)


(posted 2AM eastern)