Monday, February 23, 2009

Weekly Report on ER - Feb 23rd to 27th '09

Good call last week with our target just above 400. ER indeed is now sitting on a strong support level on the 60mins chart. Yet, we'll see that this may be a short lived reprieve only.

60 mins:
Sometimes the timing is not ideal to assess what comes next. Indeed ER fell to 406 and almost broke it late in the day to only see a very mild bounce on traders squaring their positions ahead of the weekend.
Technically a bounce to Fib PR1 is possible, but isn't likely at this vantage point. Should selling pressure abate (probable scenario), ER could stay for a while in this [406=437] price segment.

To maybe help us draw an overall picture, ER at this level is very oversold with MTFS indicating a likely bounce (however limited in amplitude) at this level. This could confirm a return to Fib retracement level or even a test of the 437 level by mid week if volatility keeps on playing tricks on us.
However, there is NO change in scenario, and the fall should then resume to the bigger Fib pattern expansion target. We therefore still aim at 380s if the 60mins support level breaks.

Again, the bigger picture here supports the overall scenario here. MTFS and Entropy are still quite bearish. Last bar is just as red as the last five daily bars, so let's just try and see where this whole thing might stop.
We've got a Fib retracement level just above 400, confirming Friday's support level, yet it is difficult to see what could stop ER from testing previous lows. Obviously, we'll watch lower time frames carefully to separate the cup & handle scenarios from its double bottom counterpart, the latter looking more probable.

Note on EURUSD after reactions to my Friday's comments: short term players will certainly have jumped in the bandwagon (i.e. long) to Fib target. Longer term positions are still unchanged. The level 1.2695 is key level now.

( posted 5:30 AM UK )