Monday, March 23, 2009

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

Similar picture here (see ES below), and clearer picture too.

ER 60 mins:
Swing quality is higher here, making chart reading a lot easier. The retracement now hit Fib PR2 in the mid to high 390s where it could bounce first. However, support on 390 and even 381 would be our natural target level.

Same mild retracement, same pattern, so while some buying interest is now visible, we shall here as well look for a lower support level (Fib and/or MM). It is however not clear whether we will see 375 again. A number of market participants will now try and enter limit somewhere below 400.
Having said that, we have to keep the same caveat in mind that here as well, the Cup&Handle formation could fail, leading to a downward Fib pattern with a target near lows. We can't discard that scenario even if we are aiming long. A stop level near lows makes it a relatively low risk/reward trade.

Early signs of some weak recovery in the coming weeks. Having said that, too early to rejoice as one could also just as well hit lows again, and even lower (MM stall level is around the corner at 312). It is quite unlikely though, or at least not predictable at this juncture. Like for ES, long term risk adverse players should maybe wait a few more weeks to see selling pressure abate. Any long trade below 500 is a bargain anyway if we have a long term horizon.

( posted 6:15 AM UK )