Monday, March 23, 2009

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

We finally got the much anticipated pause on our indices. It is never the most exact science, but it occured more or less on stall level on the 60mins chart, concomitant to salient Fib levels as well.

ES 60 mins:
Healthy profit taking with a test of pivot level was bound to take prices to the low to mid 760s. While we're hitting support here, we could see a probable continuation to stall level in the high 750s or Fib level around 755. Obviously 750 is the ultimate test, but we cannot see at this point whether it will go that low.
Looking at price segments, 781 is a test pivot level for a trading range 16 or 32 points wide. At the moment, we are below that key level, so we could well stay in this trading range. If/when passed, ES would in absence of exogenous factors return and stay in the equivalent price segment above.

This 2% retracement on Friday remains modest compared to the run we've had in the last 2 weeks, and justifies a yellow bar only. Momentum is still up so we can only anticipate a limited pullback to the 750s level. While we are still in "early crossover" mode (aka failed recovery mode), this is likely to turn into a cup & handle formation still. Should selling pressure increase, we already see strong Fib retracement levels on 750 and 715 and targets just below 700 (unlikely scenario).

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 625). It is quite unlikely though, or at least not predictable at this juncture.
Passage of time and a possible bounce could just as well help dissipate the strong selling pressure we've had in the last few months.

( posted 7:30 AAM UK )