Market update - Jan 13th '09

Looks like charts were kind enough again...

EURUSD: While the direction given on previous reports is still ok, i thought we would have more of a fight to hold support on 1.33 but at the same time the level is clearly 1.324 on the daily chart, and it could even hit 1.321. In the short term, the bias is therefore still down but i reiterate a warning that at that juncture, we may either go all the way to 1.24 (unlikely) or jump back to 1.42+ and energy based indicators favour the latter Fib scenario.

ER: down, oversold, but down. We may have a technical bounce today as the 468 level is still valid but Fib target is 460. In itself, volatility can certainly make this support level stretch to 460 but ER could also fall futher to gather more strength for the cup&handle pattern being formed.

ES: exact same scenario with 875 being the currently valid support level with prices possibly testing 864. As per ER, a lower Fib retracement level could well be the support level from where buyers will jump in (same kind of C&H pattern).

(posted 6.55AM UK)

Weekly Report on ES - Jan 12th to Jan 16th '09

ES and ER are certainly largely correlated hence it is always worth reading both reports (ER report just below). However information is sometimes clearer on either ES or ER.

So, same story as ER's with the "airhole" turning into a sizeable retracement on the lower time frames. Again, no surprise.

We remain relatively bearish in the very short term (the dominant time frame is 60mins) and again we recommend following our 32000V volume chart today. It is difficult to provide an accurate weekly report until we have tested a support level and our patterns redrawn accordingly, so please check back for our daily updates posted early morning.

ES 60mins: Same bearish pattern as ER with a target clearly in sight on 875. Fall may stop on stall level (friday lows) or slow down until it finally comes close to target. If support isn't found there, ES may retrace all the way back to late december lows (low to mid 850s).

ES Daily: While staying in the same channel, ES should hit its low boundary for support (~875) or lower near Fib retracement level (~864). We are however not necessarily bearish over the longer term.

ES Weekly: Same weak or 'failed' recovery pattern, so as for ER we know we can either trade short on lower time frames, or try an aggressive long limit order or... stay on the sideline a little longer.


NB: There will be no market update on Wed 14th.

(posted Monday 12th 7:40AM UK)

Weekly Report on ER - Jan 12th to Jan 16th '09

Dominant TF: 60mins leading, with Daily dropping lately.
Swings: DN-DN-UP
Market Direction(daily): short (contrarian trade)

Last week monday, the word of advice on ER was cautiously long and we indeed saw it peaking. I mentioned the "airhole", so again this retracement is not exactly a surprise even if i admittedly didn't predict a target withany sort of precision. Sometimes we are in a position to read direction, sometimes targets, sometimes both. We sieve through information the best way possible, and always realize we have to deal with uncertainty. Overall, we're not doing too badly here...
(To users of our technique, for better cheart readability we recommend tick/volume charts again)

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

EURUSD: EURUSD has been relatively difficult to read on the daily chart, because of conflicting information on this soft landing scenario. The Swing is still UP, giving some credit to a pivot in the 1.33 area , even is MTFS and Entropy have turned more bearish. Will support be found lower? The next Fib target would be 1.24!! In the short term (60mins chart), we have to give 1.342 a chance to hold even though €/$ should hit recent lows near 1.33 seen on Jan 6th. The weekly chart is now also more hesitant (red bar) yet here again, we'll assume the support level will hold despite volatility levels. Weekly patterns still indicate forthcoming bearishness on the UD$ once support is found. We shall probably see a lot of uncertainty on these low to mid 1.30s this week, so check for daily updates this week.

Now back to ER:

ER 60mins: ER is now engaged in a retracement with a few target levels from 469 to 475. MTFS is somewhat bearish despite being oversold, so our lower target should be hit even if not on a straight path.

ER Daily: MTFS would tend to indicate retracement could take prices back down to 460 (or lower). Volumes are not back to December averages though, and we believe substantial buying may kick back on a salient Fib level. One should trade short using a shorter time frame or possibly position ourself soon on an aggressive limit long order.

ER Weekly: Concurs to possible daily scenario, and virtually no change actually from previous weeks. We still have a better looking entropy and a "failed recovery" MTFS so some may sit and wait, some will soon enter long on an aggressive limit order, and most will trade shorter time frames, with the above context information in mind.

(posted Monday 12th 7AM UK)

Market update - Jan 9th '09

End of this relatively uneventful week.
EURUSD yesterday turned lower but didn't quite reach 1.35 then bounced again. I mentioned this short was counter-trend so conflicting forces always make it more difficult to predict exact turning points ahead of the trading day. EURUSD anyhow followed a Fib pattern exactly to its 1st target at ~1.38 to then retrace again. The situation is the same today with a short term upper bias so we may be near the landing zone mentioned in previous report from which the US$ would weaken again.

ER: short term upper bias seems blocked around the 500 key level and as we mentioned a potential airhole (daily chart) we have to remain careful here. However there is still some buying pressure here which could take prices away from this hesitation zone. We'll cautiously follow Fib targets on the 60mins chart for now.

ES: same situation, just a little easier to read. The "airhole" is here more evident, yet targets around 927 and then 950 look so close... ES probably needs to pull back to gather strength unless some positive economic news helps the market move away from this hesitation zone. NB: the ES tick chart also shows hesitation on 906 resistance level but shows some potential for gains today if 907 now turns to support level. Answer in a few hours...

( posted 5:35 AM UK - screenshots available on request )

Market update - Jan 8th '09

Previous reports anticipate a possible peak as we noticed how fragile the recovery had been last week. Again we have however been a little surprised by the amplitude of the move but it seems that ES losing over 30 points in a single day is almost something normal these days. For instance, let's rank all log returns for ES since beginning of 2004 on an Excel spreadsheet. Then , let's have a look at extreme moves in the top and bottom 3% (out of 1266 prices), we can see that from Sep 1st last year, we've had 90 prices (about 3 months), of which 50 fall in those extreme top/bottom 3% !!! Only 40 don't. To put this into perspective, this represents daily moves over 2%. Now we better visualize what volatility is all about...

Now back to our charts:

I commented EURUSD around noon yesterday and we got our short term move to target since. We do have conflicting patterns on the daily and weekly charts so we put things in context with the current strengthening of the US$ being counter-trend (ECB rate cut expectations). Our 60mins chart shows some erosion on target with a pattern forming on pivot level now turned to strong resistance. US$ should therefore fall further to just below 1.35 . But to stay on the safe side, we'll only confirm this scenario on resistance (~1.367). The daily chart shows a possible target below 1.32 (still counter-trend from weekly pattern).
Anyway, to make it short: check behaviour on MM level (1.367) for reversal to below 1.35.

ER: We anticipated that kind of airhole on the 500 area. It is likely to be tested again for resistance to send prices a little lower. ER could shed more points to settle on a Fib level (60mins chart). Like for €/$, we'll wait for a confirmation by checking ER's behaviour on 500 first, in which case, we would have a 481 target.

ES: Same correlated patterns with prices settling lower either just below 900 i.e. around the corner, or more likely in the 887 area.


Good trading to all,
bv

( posted 6:50 AM UK - screenshots available on request )

Market update - Jan 7th '09

As usual these days, we complement our short term outlook with a tick/volume chart. Obviously it is not quite compatible with a daily/weekly report but gives a better perspective to the 60mins chart, and i invite users of this technique to build their own mix of charts with the same indicator set.

So, what happened yesterday? First EURUSD had to make me lie by a few pips... I was targeting 1.33 (1.33057 to be exact) and the market bounced on 1.33119 ... Not quite an exact science, isn't it ? Anyway, the market bounced to a first Fib retracement target to pause there. EURUSD could retrace to the low 1.34s in the short term (tick chart). Longer time frames seem to show EURUSD looking for support to probably shoot higher later on.

ER carried on its course and hit its target. I conservately gave 510s, but it actually came inches away from the Fib retracement level on 519. Now it is not clear where it's going next, however it may look for support on 500 to then go higher. This however does not mean it will go MUCH higher. The selling point is maybe just a little higher (just above 550s). We are still in a failed recovery scenario on our long term weekly chart. (NB: failed recovery may mean cup&handle or just a choppy recovery with a better limit long entry point in the next few weeks)

ES is again following a very similar path with a substantial resistance level around 937, yet a willingness to go and test 955 before retracing. We'll remain careful as buyers may just give up here in the short term. Too late to enter long anyway...

( posted 7.20 AM UK - screenshots available on request )

NOON UPDATE: a commented chart is available on :
http://ts-trading-technique.blogspot.com/2009/01/eurusd-chart-with-commentaries-2.html

Market update - Jan 6th '09

Yesterday was "back to school - back to reality" and i expected more movement on indices and maybe less on EURUSD.

We do have ER holding just above 500 i.e. between MM and a Fib target, quite overbought, yet we don't know whether it can hover there much longer or is there a airhole coming. Technically, it could hit high 510s before retracing.

ES follows a very similar pattern, i.e. could reach 937 if only energy wasn't getting low. This often happens that apparently obvious targets neverg get hit, and we can find confirmation on our volume charts where 930 is a both a Fib target and a stall level. However, the upper bias is still quite visible there so we shall not rush into conclusion of an imminent retracement.
We also notice again the unusual Daily MTFS with the white line frontrunner. It hasn't reached overbought level yet, but even if we won't probably the well known bell shape MTFS indicating a clear recovery failure, we might see a variation like a double hump with more or less the same results. Again, let's wait & see how this develops.

Now back to EURUSD, where we are seeing the most interesting action. Again, i thought the 1.367 level would hold, maybe because i sometimes read level i can quite believe myself. The daily chart indicates a price stabilization on a close support level but that scenario is battered by the high level of volatility and the 1.33 Fib target is not that far-fetched anymore and on the contrary is now becoming quite realistic. This doesn't change our longer term outlook on the weekly chart. This can be confusing for some, but this is still a counter-trend trade for long term players. Here too, ticks charts provide a pretty good picture.

(posted 6.40 UK - screenshots available on request )

EURUSD Chart: a quick update from last wednesday's snapshot

It certainly wasn't exactly the easiest exercise to predict EURUSD over the New Year's break, but i did nonetheless give it a shot, and again i have to admit that i somewhat underestimated volatility on my Wednesday morning chart. I gave a recommendation for a low potential short which proved more than OK as EURUSD is now reaching its target on pivot level (Daily chart). AN OVERALL VERY GOOD TRADE !
It will now be very interesting to see where it will find enough support (probably around current levels) to then bounce back (the weekly chart still points upwards).

Obviously, this kind of report remains a little off-topic as it concerns mostly those who do run the toolset locally on their machine.

Happy trading,
bv

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

ES and ER are certainly largely correlated hence it is always worth reading both reports (ER report just below). However information is sometimes clearer on either ES or ER.

Last week, i mentioned prospective Fib targets without realising one minute we could be there already... Yet, recovery may be relatively limited in the medium term (longer time frames).

( NB: we here also post a volume chart to show how clearer the picture is here. Our indicators work like wonders... )

ES 60mins: Upper bias is still there despite our targets having been hit yet, a slowdown looks necessary even if we don't see it clearly just yet. It may happen near the 937 pivot level and we might want to take a look at volume charts for accurate targets. At this time frame, we certainly remain long for now, with stops tightened a bit near close Fib retracement levels.

ES Daily: We here have the same hesitation as with ER with the MTFS white line going its way as a frontrunner without much support. We may therefore end up with some retracement or return to the same channel. We'll however give the current upper bias a chance particularly if volumes start coming in. As a matter of fact, we do again recommend long volum charts like 32000V for a clearer direction.

ES Weekly: No change from last week AGAIN, and similar to ER: Swing is up and Entropy has bottomed yet MTFS is not too bullish so one does not anticipate any significant take off, and after all one has already enjoyed a significant 25% recovery since recent lows, so a pause and some profit taking would be quite in order.

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)

EURUSD Chart with commentaries

Here is a commented EURUSD chart for a change.

Today is however not a day to spend watching charts, so i wish you all a great New Year's Eve tonight...

Cheers,
bv

Apathy

Just a few lines in terms of market update today.
Volumes are quite low, impeding good market reading anyway.
Only EURUSD seems to follow patterns. It should hover toward the bottom of its current range i.e. towards low to mid 1.39s. The Fib target is actually lower, but again, on account of low volumes, difficult to say whether we will reach our target today.