Market update - Feb 4th '09

An error slipped in yesterday on EURUSD. Those lines were attached to a short term tick chart... sorry about that.

Back to our longer term outlook:
EUR is still aiming at a soft landing somewhere around the 1.20s. If one has gone long on this upward retracement, our immediate targets are 1.306, then 1.312 and 1.318. There is likely to be uncertainty around this range, until EURUSD breaks 1.294 again. Our scenario would on the contrary possibly fail is EURUSD passed 1.318

ER:
Same upward bias, yet a little range bound now. It is unclear whether there is enough energy left to pass Fib PR1 now, so congestion could prevail a little longer. It is recommended to either hang on and wait for clarity, or trade tick charts.

ES:
Nothing new really... Fib Exp Target1 (~836) has been hit, and ES is still creeping up higher, albeit unconvincingly. Should it find energy to reach 843, a retracement seems inevitable at some point, without however affecting long term outlook as long as prices stay above 812.

( posted 7:30 AM UK )

Market update - Feb 3rd '09

My crystal ball did a good job again on EURUSD... and this will be the last week for FX posts in terms of an exclusivity agreement. We shall gradually return to 2 posts a week on US indices as the financial crisis slowly comes to an end.

So EURUSD bounced as anticipated and should now resume its course south. Selling pressure should however decrease so one may want to follow shorter intraday time frames. Once/if 1.282 is passed, we'll check 1.277 and then 1.2695 again.
Our longer term outlook remains unchanged still.

ER:
Here again, ER behaved as expected, bouncing a little below 437 (physicists will understand that support levels always contain a degree of elasticity on account of volatility).
ER reached Fib PR1 and could higher, but not without a bit of range trading first. 437 could even be tested again.

ES:
ES is also a little undecisive with a willingness to take off, but no real energy to do so right now. We should however eventually leave this trading range on the up side. Resistance levels are placed a few points apart from 828 to 844, so could be as many stumbling blocks indicating the way to recovery is bound to be a little bumpy.

( posted 7:30 AM UK )

Weekly Report on ES - Feb 2nd to Feb 6th '09

Again, markets are very nuch correlated and we'll here only emphacize on specific prices and possible pattern differences.

ES 60mins: We are here a little more bearish than ER (Swing is still down) and definitely aiming at 813, which again is so much anticipated that we may see some 'tug of war' behaviour ahead of target. We then do see some potential for recovery to 843 which will become the next key level, crucial to a longer term recovery. One thing at a time though, as 813 could also break...

ES Daily: Same uncertainty here, forcing us to evaluate the 813 key level on the 60mins chart very carefully. We here also have 2 conflicting Fib patterns whih could send prices either way, i.e. down to 782 then... 725! or otherwise up to 924.

ES Weekly: Here again, we have to be particularly careful as while we have seen Entropy recovering and Swing toggling up, the MTFS pattern is still quite bearish and bars are 'bright' red. We however favour a positive scenario for ES, despite showing a few roadblocks along the way.
We'll come back to those key levels later on (by end 1st quarter '09) but we do already see that on pivot confirmation, recovery could well stumble again near 1000 and 1250, both being strong Fib and MM levels.

( posted &:28 AM UK )

Weekly Report on ER - Feb 2nd to Feb 6th '09

EURUSD:
While being considerably oversold, EURUSD is now aiming straight towards 1.2695 Obviously this level is largely anticipated, so a bit of volatility ahead of (or on) target is likely. Our scenario then is a bounce to 1.295 which would be a test level going forward. Let's first wait for our target to be hit. Our target over the next few weeks is still in the 1.24 area, which we shall confirm upon €/$ behaviour on test level.

ER:
Swings are all UP and yet all bars are red or yellow at best thus indicating a willingness and unsuccessful attempt attempt so far to find support in this area.

ER 60mins: As mentioned above, we do have early signs of a bottom indicated by Entropy recovery, MTFS white line trying to pick up in oversold territory, Swing toggling up etc. Yet, it seems almost inevitable that the market will try and hit its target around 438. That MM support level looks quite strong though, so we'll watch ER's behaviour carefully.

ER Daily: Our configuration despite uncertainty in the last couple of weeks still sustains our scenario of a market recovery on a support to be confirmed still. At this juncture, the pivot point could well be the 438 area already mentioned. As a reminder, i've been giving a "aggressive limit long" notice for long term players, with the additional caveat that this is a early warning only (bars are still red). Most traders will wait for pivot confirmation with blue bars.
Furthermore, we have to remain cautious that we still have two potential opposite Fib patterns forming.

ER Weekly: In agreement with our daily outlook, the weekly chart is also hesitant with Entropy failing to confirm it's recovery. We still favour a 'cup&handle' formation but we certainly have to wait for a confirmation of the forthcoming pivot (~438), blue bars, and at this time frame, see 500 clearly passed and tested for support. Again, one can try an aggressive limit long order with a stop near last year's lows, or wait and hop on the bandwagon a little later.

( posted 7:25 AM UK )

Market update - Jan 30th '09

EURUSD: As expected, US$ is firming up and even broke support level. We're now going to 1.282, with possible volatility as this market is quite oversold. Next target will be 1.2695

ER: Pivot level didn't hold, and ER started retracing in almost a straight line to Fib PR1 (~455). There is still some selling pressure even if support is likely to be found on a nearby Fib level, either 450 or 445.

ES: Easier to read, ES reversed exactly on strong resistance level and retraced clearly to a combined MM/Fib level. We might see some uncertainty in the short term, even if the market is likely to try and push higher later in the day. Again, no substantial recovery before next week.

( posted 5:10 AM UK )

Market update - Jan 29th '09

EURUSD: The anticipated upward retracement is now over (we did rate it with moderate potential only) and the underlying downward trend visible on the daily chart is taking the lead again. It is not yet clear how far it will go though. Our immediate target is 1.305 for now and then somewhere close to Fib Pr2 and Stall i.e. on or just below 1.30 (it is likekly to go lower at a later stage).

ER: should climb to 483, even if again we don't see ER completing the Fib expansion pattern to 520 in the short term. We'll first watch ER's behaviour on 468 which should be a test support level towards our target. Should it fail to hold, retracement will be limited anyhow.

ES: same story, except that ES hit a strong resistance already on 875. Shall we therefore see ES retracing first implying some (momentary?) decorrelation with ER. We do reiterate that our daily patterns do not indicate any sort of strong recovery just yet.

( posted 7:20 AM UK - screenshots available on request)

Market update - Jan 28th '09

EURUSD: Upper momentum is still there, however we do see some uncertainty so a reversal is possible today at this level. We knew this is a retracement trade on the daily chart with moderate potential in the short term.

ER: Overbought and on a Fib resistance level, a retracement would be in order. If ER passes this level (~460), an Expansion pattern is likely to form with a target close to early Jan highs. Should this scenario prove incorrect (always possible, even if unlikely), S&R (Stop&Reverse) levels would be 445 and/or 437.

ES: Same story here, however if we take correlation with ER into consideration, we see that the retracement is almost inevitable even if the underlying trend will remain intact. There is still some upward momentum in the short term, then a retracement to 843, or maybe down to 832 will be necessary. On the daily chart, while a Fib Expansion pattern is forming, it is also clear here that it is not going to be a smooth ride still.

( posted 5:45 AM UK)

Market update - Jan 27th '09

What did i say about EURUSD "short term bullish yet needs to bounce on 1.294" ? That's exactly what happened, however further buying and even testing of the resistance level as new support is likely to send prices higher, possible to 1.353 over the next few days.

ER: still some uncertaintly ABOVE 437, so while we're not overly bullish, this may be a signal that sellers are about to give up.

ES: same here, and despite a strong day yesterday, we can only see a bumpy ride with a few retracements along the way. The level 812 seems behind us though.

Weekly Report on ES - Jan 26th to Jan 30th '09

Again it is almost pointless commenting ES this week as patterns are VERY similar if not identical to ER's (see report and snapshot below). We shall therefore only mention specific key levels here.

NB: it is again recommended to swap the 60mins chart for a 32000V chart.

ES 60mins: ES seems like glued to the [812-822] range. The lower range boundary is however a very strong support, so shall we see this target as a jumping board ?

ES Daily: While MTFS seems to show a possibility of "landing" in oversold territory it is too early to say so we'll remain cautious that we may just as well crash to last year's lows (~722) if this 812 level doesn't hold. Let's just be cautious and not panic. There are early signs that this price area could well be our bottom where ES could climb back. I'm afraid we'll have to wait a little longer to see which scenario will prevail. I'll personally favour the bullish one (Swing has toggled UP after all).

ES Weekly: Same weak or 'failed' recovery pattern as explained on previous reports. Those who chose to go long on an aggressive limit order must have been filled and a stop near or below last year's lows is in order. At the same time there may be no rush to enter long as ES may find it hard to take off in the short term and as mentioned above can come all the way down to test lows again...

Weekly Report on ER - Jan 26th to Jan 30th '09

Dominant TF: 60mins picking up
Swings: DN-DN-UP
Market Direction(daily): looking for a long entry point

Last week Monday, i warned about lower visibility, and this is often the case on key levels where bulls and bear fight on and on... Secondly, one can notice 2 levels 437 and 423 which should technically be apart but are somewhat combined in this high volatility environment. Should we still be bearish? Not necessarily and the aggressive limit long entry mentioned last week may still be valid. To remain cautious, a short stop order on breakout would be also recommended, unless one decides to hold on a bit until we have better visibility on this key levels.

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

EURUSD: The 60mins chart is short term bullish yet needs to bounce on 1.294 to go higher again. It is not yet clear whether it will have enough energy to pass 1.305 anyway. This shows how volatile it is likely to be in the short term. The daily chart is still bearish even if we are clearly approaching landing zone. Shall we hit 1.243 ? That remains the main question for this coming week. We shall probably see some congestion over the next few days, hence if we are still short, stops should be tightened, if flat, one can stay on the sideline or trade tick charts. Key levels there are again 1.294, then 1.288 then 1.282 which we need to see broken to validate our scenario to 1.243 ...

Now back to ER:

ER 60mins: 437 seems rock solid so ER could certainly bounce there even if this is no way visible yet. We already had a bounce to Fib PR1 around 455 which was crushed on Thursday. We can anticipate renewed fighting on that level.

ER Daily: As mentioned earlier, the low to mid 420s also provide a strong support (Fib Pr2) here so a bounce turning into a Fib Expansion pattern is quite possible here. It is way too early though. Bars are still red, and MTFS is nothing bullish yet. Again, we'll have to watch ER's behaviour on this key [424-437] range to make up our mind. I would have a bullish bias here, even if i would advise to hold on to one's horses a little longer still.

ER Weekly: Again, we're in a typical "failed recovery" scenario which should turn into a C&H pattern later on... if current support levels hold! Otherwise, we're on our way to 365...

Market update - Jan 23rd '09

EURUSD:
We're in the exact same situation as yesterday, with that 1.294 level holding on a a last string. If it holds another day or two like that, it may shoot up again. However sellers may just give it a go again. For the time being, we're still short with tight stops, but we can also try trading faster tick charts waiting for this pivot to break or bounce.

ER:
Despite the penetration we've seen earlier, the 437 pivot level is still valid. As mentioned yesterday, no visible change in dynamics and range trading between 437 and 467 can only now derail because of this triangle pattern announcing some forthcoming breakout. A more solid support level could actually be found a little lower in the mid 420s to trigger substantial buying. We need a few days to see this materializing though.

ES:
Again, similar scenario with level on 812 here. A lot of negative pressure still so whichever long pattern can only take time to form. We here stay short with tighter stops (daily chart of course).

( posted 7.40 AM UK - screenshots available on request )

Market update - Jan 22nd '09

EURUSD: we indeed saw some uncertainty with a drop to stall level at ~1.285 then back to intraday range hisg at 1.306 (tick charts). €/$ should resume its drifting down but the support level (~1.294) is still fairly strong. We'll therefore check it carefully as it could trigger substantial selling on breakout.

ER: Spot on! Well, almost... recovery started slightly higher in the high 420s. But was it a one-day spike or is this the start of a longer recovery? We need to see prices rise above 470 to confirm that scenario and the daily chart still shows a significantly different picture so we may see more range trading and volatility before 470 is passed.

ES: Again, same picture here, and only very limited chance to see yesterday's move carry through to break recent highs and pave the way to full on recovery. On the contrary, prices are likely to go south at least one more time. Recovery is about there, but we have to be a little more patient still.

(posted 8AM UK - screenshots available on request )