Monday, January 05, 2009

Weekly Report on ER - Jan 5th to Jan 9th '09

Dominant TF: 60mins leading, with Daily dropping lately.
Swings: DN-DN-UP (hesitation on peak)
Market Direction(daily): cautiously long

Since this weekly report is always based on the daily chart, i wish to remind readers that visibility on that chart is generally limited to abotu 3 bars, sometimes more, often less, particularly at times of high volatility. This last week was special also on account of the mid-week break, low volumes and the usual "window dressing" with portfolio managers adjusting positions for reporting on Dec 31st and Jan 2nd.
Again we warned that the 60mins time frame (as well as lower intraday in fact) was the dominant time frame so we picked up the nice up move on Friday.

As usual let's start with the outlook on EURUSD:

EURUSD: the 60mins chart does no longer give us clear indications except maybe the continued hesitation around 1.39 with a strong support level only weaking a little to pivot level. Technically this only tells us that the US$ could bounce from here... or gain further ground. Should it go that way, we already have a prospective Fib target which corroborates a scenario of a lower support level on the Daily chart. On that chart, Fib retracement level is around 1.38 and MM pivot level a little lower. Obviously we always prefer when they concur, but the general trend is there. Furthermore, the MTFS pattern indicates a "slow landing" near current levels although it could later on also turn to "erosion". In such case, support would be even lower. The Weekly chart is still moderatley bullish.
One could see the current dynamics motivated by expectations of ECB cutting rates mitigating the fall of the US$ in the coming couple of months.

Now back to ER:

ER 60mins: This nice ride to 500 wasn't visible when the week started even if we had a possible Fib target around 510. 500 remains a strong psycholigical level where we see energy weakening a bit. We don't see any significant retracement coming right now though. MTFS indeed shows some resilience in overbought territory. A drop to first Fib level below 490 is however possible.

ER Daily: Similar to last week, we are a bit uneasy about the configuration with the MTFS white line going its own way, with little or no support from the rest of the troop. Are we going to see the green and brown lines rallying or will the frontrunners run for cover...? Such hesitation is understandable on key levels, particularly after a period of low volume. So again, we shall remain very cautiously long here.

ER Weekly: No change from last week AGAIN (cf. reports Monday 22nd and 29th). Entropy certainly looks a lot better but MTFS had an early crossover generally indicating a failing recovery hence should pull back before going higher later on. Like mentioned last week, buyers can maybe wait a little longer, or enter preemptively on an aggressive limit price or wait for a consolidation and buy market later on.

(posted Monday 5th 7:50AM UK)