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 )

Market update - Jan 21st '09

EURUSD:
The 1.294 support level is still valid technically even if it has been penetrated right to the 76% retracement level on the daily chart. Levels often do not concur exactly, hence a target zone more than a target price as such.
Now, EURUSD found some stamina to retrace up to 1.305 possibly today, but does not show indication of going much higher then. It is likely to test 1.294 again later on, either as a support level or more likely to resume its course south.

ER:
While direction was clear, one could have expected 437 to hold again. It was a MM pivot level and a Fib target after all. The market decided otherwise, and we're now on our way to the [418-423] range, i.e. close to latest lows. Again, our picture is still more of a 'failed recovery' than a bearish picture, so we'll look at a forthcoming support level, possibly on current target, to see prices rise again.

ES:
Similarly, one would have thought ES would have stayed above 812. At this time, we may actually see that same key level tested as a resistance to then go lower again. A possible target is 787. ES is slightly more bearish than ER.

( posted 6:10AM UK - screenshots available on request )

Market update - Jan 20h '09

Public holiday yesterday, so volumes were obviously a lot lower. Here is a quick report anyway even if one should technically discard yesterday's price actions.

EURUSD: We're now right at the bottom of the trading range (actually 1.294 on tick charts), and we have now to see whether it will breakout from here. Fro the time being, the support should hold but the selling pressure is still quite substantial. We may reach mid 1.20s later on this week (upon breakout of course).

ER: we're following the same "failed recovery" scenario as explained over the last few market reports. We just have to wait for a support to be found where prices will pick up again. 437 seems to be that support level. Short intraday time frames give us more accurate Fib retracement levels from 437 to recent high near 470, from which prices will rise again.

ES: I mentioned on last report that we had a 50-50 scenario but 844 didnt hold so we follow the mildly bearish route, probably back to support level in the low 810s. It is likely to bounce back from there, or a little higher so we'll check for intraday Fibs here too.

Weekly Report on ES - Jan 19th to Jan 23rd '09

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 is looking overbought yet is resilient and will probably aim at hitting recent highs again, and maybe the 875 area again later on. There is little energy left however so it is likely to be a bumpy ride and prices must hold above 844 to validate this scenario. This long is still a contrarian retracement trade (higher time frames) so there is no guarantee ES will not retrace at some point. For the time being we keep our long target on the high 850s.

ES Daily: Our indicators are still relatively bearish, but we certainly heed this key retracement level in the low to mid 810s which could develop to a Fib pattern back to the former highs around 940 later on. We don't see it happening straightaway though, and prices could well remain range bound for a while (60mins chart).

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.

Weekly Report on ER - Dec 19th to 23rd '09

Dominant TF: none really...
Swings: DN-DN-UP
Market Direction(daily): still short or out

Last week monday, i mentioned this short to a a Fib target or 460 or lower. We've now reached Fib PR2 (50%) where prices bounced a bit to target again (see Friday's report). Quite a good week overall, yet a little frustration at this juncture still as it is not easy to figure out where it could be going next. Is it the Obama effect ? We certainly do have 2 opposing scenarios on hand right now.
(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: Last week, i was a little hesitant as €/$ was pointing mildly down and we indeed saw some short term support just above 1.30 where it bounced back to range high just above 1.331 (MM pivot + Fib target).
We are here again in the middle of the road not knowing whether we will be dragged up or down. We are technically still on the 1.323 Fib retracement level where it could bounce to 1.394, or should last Thursday's pivot fail, resume the fall to... 1.24! In the very short term, this uncertainty is represented by this trading range we've seen in the last few days, i.e. [1.305 - 1.331]. We will therefore again watch breakout levels carefully to determine which of the two scenarios will prevail. It is really a 50-50 chance right now, but we should go back to range lows first anyway.

Now back to ER:

ER 60mins: Upper bias is visible but this remains a short term contrarian retracement at the moment.

ER Daily: Last Thursday's pivot on 437 (MM+Fib) may have been the trigger to go substantially higher, yet it still doesn't show on MTFS and Entropy. Our favourite scenario is therefore not bullish even if one may want to grab a few points on the way up on lower time frames. We may see a little bit of uncertainty here in the next few days as there is some negative Entropy to dissipate first. By mid-week, we should have a clearer idea about our recovery scenario. (Please note that we could test low 420s still before going higher even if this is unlikely). I remind readers that i advised either going short last week on lower time frames or place an aggressive limit order going long. It is now probably too late to go short, and now some may want to be long with a stop just below pivot (<440) or try a lower long entry. Possible but never guaranteed to be filled...

ER Weekly: Concurs to our daily scenario, and virtually no change actually from previous weeks. We do have a better looking entropy and a "failed recovery" MTFS so some may sit and wait, some will be long already, some will try to enter lower, some will wait. As said above, going long with a stop below 440 isn't too risky, yet, we shall keep in mind that if 440 breaks we can then go short to 365. Answer this coming week probably...

Market update - Jan 16th '09

EURUSD;
BCE cut 50bp to bring key rate down to 2%, and this incidently happened on a pivot level for EURUSD. Technically, despite yesterday's volatility, we're not far from prices a day earlier but we can notice a change in dynamics. Again the current setup is relatively range-bound and can send prices either down to 1.24 or back to 1.40. We'll check 1.315 on the down side, and 1.332 on the up side.

ER: We would like to believe 437 (target given yesterday) was the support level we were looking for. That may be the case, but some profit taking is inevitable (steep swing on the 60mins chart, and bearish pattern isn't complete on the daily chart). Today may show some uncertainty but things should settle within a few days, and we should then see prices rising to 467, 488 and then attack 500 again.

ES: Exact same story here, with some hesitation on the daily chart, but we should eventually see 862, 875 etc. In the short term it is clear that we need to see prices holding above 844 otherwise some profit taking will be quite in order.

( posted 8:45AM UK - screenshots available on request )

Market update - Jan 15th '09

Eh eh... yesterday's quick report at the airport was spot on, wasn't it ?

ES used the former 875 support as a resistance to then trigger substantial selling. EURUSD hovered around same price range as expected, with also a negative bias. However, BCE will announce a much anticipated rate cut today which may slow down current dynamics.

EURUSD: Relatively directionless in short time frames, with some remaining bearishness yet, the 1.318 support level is technically holding. Longer term, while we do also have a lower bias, we have a potential pivot around current lows, so one should remain careful. The 1.324 level is too close to be considered as broken particularly in this volatile environment. If short, stops should be tightened.

ER: Still quite bearish and heading towards [437-441]. We are still in a "failed recovery" mode, which often turns positive later on (e.g. Cup&Handle pattern) so no panic just yet, and buying opportunities will come up soon (Fib retracement levels).

ES: Quite bearish here too and while entropy seems to have bottomed on the 60mins chart, we have to wait for a support to be confirmed either around current stall level (~828). On the daily chart, we do notice also a potential pivot point which will take a couple of days at least to materialize.

We may therefore see turning points soon... Could that be a "Obama effect" ... ?

(posted 8:15AM UK - screenshots available on request)