Wednesday, December 31, 2008

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...


Tuesday, December 30, 2008


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.

Monday, December 29, 2008

Weekly Report on ES - Dec 29th '08 to Jan 2nd '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.

ES 60mins: Upper bias with clear strong resistance on 875. MTFS pattern is only mildly bullish so if anything, we are very likely to see a test of that level as a support before going higher then. Our chart also provides prospective Fib targets (882, 900, 930) which should mark the way to recovery in January.

ES Daily: Prices have been hovering a little directionless lately, and MTFS is indicating some consolidation. It is however difficult to read markets correctly with such low volumes and the significance level is low. We shall therefore only reiterate how strong resistance level has been (~920) and rather follow action on the 60mins chart or even bettern on volume charts (16000V and 32000V).

ES Weekly: No change from last week, 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 - Dec 29th '08 to Jan 2nd '09

Dominant TF: 60mins leading, with Daily dropping lately.
Swings: UP-DN-UP from UP-UP-UP (range bound on the 60mins chart)
Market Direction(daily): preferably flat, or tight stops at this time frame.

As anticipated, no action on ER last week, and such situation should persist this coming week. As usual, we'll start the report with our outlook on EURUSD which is a lot more exciting:

EURUSD: last week, we indeed saw a retracement to ~1.39 on Monday which quickly proved to be a very strong support, from which the US$ started weakening. Those who followed our recommendation to sell the US$ must be smiling. We probably also have had a bit of luck as the fall of the US$ may however have been exacerbated by lack of volume inducing the US$ to lose ground without much resistance. The long term trend is in any case clearly indicating a return to the high 1.40s (or even higher) but this last spurt above 1.41 should technically only be a short term spike before settling below or at the MM resistance level (~1.4146).

ER 60mins: ER has been a little erratic at this time frame, yet we still have an upper bias hence a breakout is always possible even if there is very little energy right now. Lack of volume can also make market reading a little tricky. Those who wish to trade intraday in equivalent intervals should turn to 16000V bars for instance.

ER Daily: At this time frame, we see buyers resting rather than actively besieging the 500 barrier. This is typical of this time of the year, yet we may see surprising moves this week. At the moment, the time frame is clearly not the dominant one and MTFS is very difficult to read so we'll remain on the sideline or very careful as the situation is definitely affected by lack of energy and lack of volume.

ER Weekly: No change from last week (cf. report Monday 22nd). 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.

Wednesday, December 24, 2008


We all have (or should have) something a lot more exciting in mind than charts today... Time to relax and enjoy quality time with close ones, people we really care for, so i won't bore you with market stuff today.

As mentioned previously, high volatility and low volumes make these daily reports almost useless anyway. OK, we've had another good day with tick charts. OK, those who have really nothing better to do today can keep going cautiously short, but we should rather have a thought today for those who are ill, left alone, cast aside, deported, powerless, oppressed...
With a special thought to you, good people of Zimbabwe...

cheers for now,

Tuesday, December 23, 2008

On my way to the kitchen

You would have noticed my word of warning yesterday. Obviously the ongoing volatility again exacerbated the downward retracement, this making clear swings which were easy to trade in lower intraday time frames.

Now for today:

EURUSD: We have a Fib pattern forming, but little chance it fully expands in the short term. We have to wait it first breaks the triangle pattern, and there is too little energy right now. On the Daily chart, a retracement to Fib PR1 (~1.38) is technically our favourite scenario, but that target was almost hit on Friday already. Wierd movement, wasn't it ? It is now difficult to pinpoint where support level will consolidate this current retracement to then go higher. Maybe a good advice to stick to lower time frames.

ER: Retracement to Fib PR2 leads the way to a Fib expansion back to the 480s then close to 500. Somehow, it isn't clear yet whether there will still be enough energy to fight the level though. This time of the year, some traders may have the Christmas bonus in mind as an incentive, but most are by the fireplace waiting for warmer days. Longer term, i.e. early January? we should see some interesting action and behaviour around 500 remains paramount to determining market's mood.

ES: Yesterday's actual support level almost surprised us late in the trading day. We're now back to that 875 pivot level from which ES can really go either way. Since recovery happened with low volume, another look at volume charts is necessary here. Volume charts are great (32000V are equivalent to a 5 to 15 mins chart). Vol chart shows us an upper bias to 875, and maybe higher to 885 right now. Obviously they are not compatible with a daily report.
Again no indication ES will go much higher so long term players are better off in the kitchen preparing the turkey for now...

Have a great day,

(posted 2:30 AM Eastern)

Monday, December 22, 2008

Weekly Report on ES - Dec 22nd to 26th '08

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. This time ES can indeed provide some clarification.

ES 60mins: ES bounced twice near 875 which is an important pivot level. Yet dynamics are slowly turning a little bearish so ES could certainly test it again, to possibly bounce again. One should give the downturn more credit and anticipate related effects on ER.

ES Daily: Here as well, indicators seem to show prices hovering relatively high waiting to fall to a support level where buyers would jump in again. Our support levels are 870, 840 and then 810. At this stage, we don't see prices falling that low though.

ES Weekly: 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.

(posted 3AM Eastern)

Weekly Report on ER - Dec 22nd to 26th '08

Dominant TF: 60mins leading, with Daily dropping lately.
Swings: UP-UP-UP from UP-UP-UP (60mins swing is hesitant)
Market Direction(daily): cautiously long or taking profit.

Last week monday, we were long while we anticipated the energy exhaustion ahaead of the 500 level. A fairly easy week overall except we had to remain cautious ahead of triple witching. Now comes the festive season with lower volumes, a bit of position squaring writing off losses by Dec 31st, so we can expect again some volatility ahead.

EURUSD: last week, i really thought €/$ would calm down before marching higher, but we remained positioned long and quite amazed by the $ freefall. EURUSD finally pulled back on 1.47 almost exactly on MM SR level, so again our indicators do react well even if again volatility acts as a time compression. Everything happens a lot quicker these days. At this stage, we should see some slow down possibly around 1.37 (retracement stopped on stall level ~1.38), but the overall direction has now changed, and we shall either see a range shift i.e. same dynamics just shifted upwards due to rate cuts, or a continuation of the fall. We are for the time being waiting to check EURUSD behaviour on salient support/resistance levels before updating our scenario. Our short advice would be to sell the US$ following the 60mins charts as well as tick charts. Upward potential is however limited.
(Image posted)

ER 60mins: surprisingly little difference from last week. ER is still inches away from the 500 target, and finds it difficult to go higher. It is only a matter of time though even if there is still a possibility to see ER consolidating around 470. Here as well shorter time frames are recommended to possibly buy in dips (dominant trend is up).

ER Daily: upper bias weakening here too. Momentum trading should take ER to 500 and even maybe to PR1 around 520, but difficult at this stage to figure out whether we shall then see new energy coming from a breakout effect or another pullback. The latter scenario is preferred, hence caution must be exercised. Those who are still long can tighten their stops, otherwise it is probably too late to enter except on a stop entry above 500 (risky).

ER Weekly: With Entropy bottoming out, we now look at the MTFS pattern and realize that while it does show some recovery potential (+33% from recent lows), there very little chance to see ER going much higher. Logic would say selling would start on key MM or Fib level, as mentioned above on lower time frames. This is a time of uncertainty so buyers should look at buying on an aggressive limit price or wait for a consolidation and buy market later on.

Nothing wrong with staying on the sideline and enjoy a quiet festive season after such an eventful year...

(Posted 2.30 AM Eastern)

Friday, December 19, 2008


What did i say about profit taking zone on EURUSD...? OK, to be honest, volatility still surprises me and i did not anticipate it would retrace to Fib PR1 so quickly. Again and again, high volatility is like time compression, so one just needs to shift time frames and go with the flow...

EURUSD: Our chart seems to indicate some calming down today as with some conflicting forces now brewing. It is difficult to pick a direction for the day, however the oversold situation should push the US$ down. A shorter time frame is recommended. Longer term, the US$ will definitely weaken further.

ER: Yesterday's dip should not have any lasting effect on prices slowly rising to test the almighty 500-520 zone. We do have a slowdown in energy, but this could be understandable hesitation on triple witching day. We expect a clearer picture later on today although volumes could be turn a little lower ahead of the festive season.

ES: Similar scenario at first sight, if only one wouldn't see a more definite exhaustion in the short term. One might therefore test lows near 875 again where one could then possibly gather some strength.

Overall, we see little chance of a rally coming. On the contrary, we might just be heading toward some drifting til the end of the year. More details in the weekly report this weekend.

Good trading to all,

(posted 1AM Eastern)

Thursday, December 18, 2008

Lull before another storm ?

Sorry i couldn't make it yesterday but i had no connection available 39000 feet a.s.l.

Fantastic action on EURUSD, with a dollar in a near free fall after the rate cut. At least we all know it should be the last one... :) The effect on indices has been minor overall.

Let's see what's in store for today:

EURUSD: short term, stall level is now around the corner just above 1.45, but we have a stronger resistance level around 1.462 to 1.464. The daily MTFS shows that we are entering profit taking zone, so we'll watch carefully for a reversal on the 60mins chart or below to take profits or at least tighten our stops.

ER: 481-484 was a reasonable target area, where we could see some mild profit taking ahead of the 500-506 major target zone. The daily chart shows a pennant or rising triangle pattern* which is not a clear bullish signal in the short term. We still have substantial conflicting forces even if we will eventually reach the low 600s in a matter of weeks.

ES: similar story again. Our target levels here are low 920s which ES almost hit yesterday. It may get there today despite some uncertainty visible from the mild profit taking seen late in the day. Over the next few days, one could see a pullback (MTFS line separation on the daily chart) but we shall only keep that info at the back of our mind since the 60mins time frame dominates by far.

One shall keep in mind that we are approaching triple witching with a lot of position squaring before the festive season hence, stay aside, tighten stops, or move to lower intraday time frames and enjoy the ride...

Til tomorrow, have a great trading day :)


(posted 2AM eastern)

Tuesday, December 16, 2008

US$ on sale...

We anticipate the Euro rally, but again to be honest volatility always amazes us and we didn't quite expect the breakout to take EURUSD to1.37 so quickly. We are long so we're not going to complain, but those who are short vega may be adversely affected.

EURUSD should retrace now that the target has been hit. We'll however wait for some confirmation in the early hours of the European trading day. We are in the meantime tightening stops or even closing our position.

ER: range bound unless one moves to times frames of 30 mins or lower. Bias seems very mildly up for the time being.

ES: same story.

In a nutshell, it looks like our indices are looking at their key target, but are too shy to try them (is that the Madoff scandal?). More exogenous factors may be needed, but one can in any case expect surprises ahead of triple witching day ending a crazy quarter. Once positions are squared off, one can anticipate a better visibility for the next couple of weeks.

NB: There will be no update for tomorrow Wed 17th.

(posted 2:30AM Eastern)

Sunday, December 14, 2008

Weekly Report on ES - Dec 15th to 19th '08

Last week's report may have sounded confusing in a way as i clearly indicated a breakout situation while a pullback was also expected. Volatility indeed exacerbated swings on 60mins and lower time frames, and the retracement actually reached PR2 to the 840s even if i thought 875 could have held (it was a strong MM /Fib level).

ES 60mins: despite a fantastic recovery on Friday, our indicators show a possible exhaustion hence the forthcoming high should be lower than most recent ones, at least until new energy is added. We therefore anticipate a pause on the way to low 900s, possibly gathering strength on 875. The swing gradient also looks way too steep to be stable.

ES Daily: we could be tempted to discard the last red bar as it closed near bar friday's high. MTFS line separation is also generally indicative of a lack of underlying forces to carry prices much higher. The bias is however still up and one could see ES hover or even rise a little still. Having said that, a retracement will be necessary at some point this week.

ES Weekly: Entropy has now bottomed so we know prices are likely to recover even though in the usual seemingly chaotic environment. MTFS shows an early crossover, a blue bar and a recovering entropy could all lead to a scenario where price would head to 1000 (Fib + MM) by early January. We however don't anticipate that key level to be passed unless MTFS evolves into a more bullish pattern by then.

Weekly Report on ER - Dec 15th to 19th '08

Dominant TF: 60mins with other time frames not far behind.
Swings: UP-UP-UP from UP-UP-DN (please note a slight modification in swing display)
Market Direction(daily): staying long.
Options (RUT): put spread.

While our outlook proved certainly right, we have to admit that volatility played tricks on us again last week, thus confirming the need for daily raport updates, and positions adjusted accordingly.

EURUSD: last week's reports could not have been moe accurate on €/$. We advanced the move cautiously as the daily range could have held longer for another cycle. We are now on a short term resistance level which could slow down the current rise to ou 1.37 target. Profit taking is indeed expected down to the low 1.30s this week before marching higher. Having said that, the bias is still up so we'll wait for a confirmed downturn on the 60mins chart.

ER 60mins: quite volatile indeed with a dramatic bounce on Fib/MM on friday as expected. ER is now heading towards Fib expansion target in the vicinity of the MM stall level (~490). This is also a range high where prices could certainly pause.

ER Daily: Energy levels seem to be weakening ahead of 500 resistance level, here indicating again some hesitation. However the channel is confirmed broken so we can assume Fib PR1 will be hit this week. We shall however remain cautious about volatility spurt on coming triple witching day.

ER Weekly: Entropy has finally bottomed which is good news, however the MTFS pattern seems to indicate a difficult bumpy recovery even though last week ended on a blue bar. 500 and Fib PR1 ~530 seem close enough but those levels are unlikely to be passed in the short term.

Friday, December 12, 2008

Adrenaline rush...

What did i say yesterday !?!? i sometimes think my crystal ball is worth millions...
€/$ broke out quite strongly and rose about all day. Not a single red bar until 7PM !
A retracement, even if quite mild is now necessary to 1.32, or possibly to 1.3075
We can see that a provisional Fib Expansion pattern would take EURUSD to the highs mentioned recently. Let's wait for support for now though.

ER: we turned to lower time frames as it hovered almost directionless on the 1H chart. WE have now retraced to a strong support level around 440 (MM + Fib) where it could and even should bounce. I have told several times on this blog that we are not heading for a smooth recovery (weekly entropy has not even bottomed yet), so we'll stick to lower time frames or remain very cautious.

ES: similar story... I thought yesterday 875 would hold (MM + Fib) but the market decided to test Fib PR2 from which it could and probably will bounce back. We'll remain cautious until that support level is firmly tested (check MTFS pattern for confirmation)

Great trading to all and see you monday for the weekly report.

(posted 1:20 AM Eastern)

Thursday, December 11, 2008

Where is the US$ going ... ?

Same easy ride, with €/$ now reaching its target around 1.305. This is the high of the daily range so some profit taking is possible. Again the change in mindset is now visible and a range breakout could lead to 1.37 in a matter of a couple of weeks. We need to check behaviour on this key resistance level. EURUSD could retrace to 1.2966 or right down to pivot level to 1.293 which looks like a much better support level to then take prices higher. At this point in time (12:30 AM) bias is still up.

A daily range of 17 points for ER almost looks like a calm day. We do see a mild upper bias, with prices hovering relatively high but could still go both ways. Maybe a good time to tighten stops.

Exact same scenario for ES where we now see some hesitation after retracing up to the Fib PR2 level . We maybe need now a pullback to 875 to then attack the high 900s. Overall the bias is still up so one should just hang on and safely move stops to just below 875.

--- QUICK UPDATE 12:45 AM ---
€/$ seems to be breaking out already

Wednesday, December 10, 2008

Two weeks to XMas ! :)

A little more calm, a little more visibility at last. To the point to wonder whether an update today is necessary.

EURUSD is still hovering near the high of its range and will eventually break out on the upside, maybe today, maybe within a few days. There isn't much energy right now, so a pullback to 1.275 is always possible, otherwise €/$ will just creep higher to high 1.31s then within a few weeks (days?) to 1.37

ES completed its Fib expansion pattern and is naturally pausing a little. However, despite lack of energy here as well, there is more and more indication of a testing of 1000 within a few days. Does that mean it will go higher still then ? Well... the market needs more vitamins then. Certainly not visible right now.

ER follows the same pattern and now has 500 in sight.
The bias is up anyway, so let's just sit back and wait until a target comes up automatically from our indicators (yes... getting a little lazy ahead of the festive season... )

Good trading day to all

Tuesday, December 09, 2008

Christmas shopping...

Good market reading again yesterday with €/$ reaching our target (1.29395) then retracing a little. Same with ER2 which hit a high of 484.50. Can't do better than that... :)
ES also attempted a breakout and even passed 900 for a while.

So, what's in store for today ?

EURUSD is pausing on resistance level and could retrace a bit (Fib), yet the trend is now most probably up. After the initial pullback, we will wait for confirmation of a range breakout above yesterday's highs.

ER should also see some minor profit taking today which will provide good entry points. ER should test 500 within a couple of days (Fib target ~490, then ~515).

ES was inches away from stall level around 920 and is now gathering energy to reach the next 936 target. ES is certainly lining up to 1000 within a week or two.

( posted 12:30 AM - screenshots available on request )

Monday, December 08, 2008

Weekly Report on ES - Dec 8th to 12th '08

Something is brewing here... After another very volatile week, ES is attempting a recovery (breakout).

ES 60mins:
What an amazing recovery on Friday afternoon !!! Despite the 875 level which should normally be tested for support we do have some evidence of a potential runaway situation. It is a difficult environment and to be honest, I myself have been rather following 16K and 32K volume charts lately. Alternatively, a lower time frame is recommended. We will also make sure we take trades in the dominant trend given by a higher time frame.

Daily: breakout situation
We do see signs of a recovery in the MTFS yet the pattern is not indicative an easy ride up so we should see a pullback possibly on 875 key level to provide enough energy to takes prices higher then. For the time being, we have to pass recent highs inches away from 900. Should those highs be passed, we'll check Fib levels on the way to 1000, but we'll remain very cautious in this volatile environment.

Weekly: a blue bar !
Yes, like for ER, even if Entropy hasn't bottomed yet, even if MTFS is about stuck in oversold territory, even if Swing is desperately down... we have a blue bar ! It obviously doesn't mean much but we can get ready for a forthcoming turnaround. Oh well, we all know a swallow does not make a summer, but we might have a good week ahead of us.

Daily updates will be posted on this blog.

(posted 2:20 AM Eastern)

Weekly Report on ER - Dec 8th to 12th '08

Dominant TF: 60mins with other time frames not far behind.
Swings: UP-UP-DN from UP-DN-DN (looking better by the day)
Market Direction(daily): staying long.
Options (RUT): put spread.

Last week i mentioned markets would be up overall and yet quite volatile. The situation is about the same now, except maybe that bigger players are ready to move in now more convincingly. We'll see that we still have a lot of volatility ahead, but the change in mindset we picked up last week will be more and more visible.

EURUSD: €/$ is now aiming at 1.288 then 1.293. It could crawl higher even if ever so slowly, and despite the high volatility, we keep our target at 1.37 in January. Over the medium term, we however do have a trading range with a pivot level ~1.27. We'll watch cautiously for higher support levels to confirm the current upper bias.

ER 60mins: aiming at 484 (stall level)
ER is more or less back to the same price area we saw early last week, and the same target around 480 is still valid. We however notice swings being way to steep and MTFS reaching extreme levels again. We don't anticipate a smooth ride to 500 and consolidation will be necessary during the course of the day.

ER Daily: looking better
Even if our long position has shown a pretty shallow take-off, we're believe that ER should reach its first target levels (480 then 500) where we will cautiously tighen our stops. We have a potential channel breakout and Entropy has clearly bottomed. MTFS however reminds us to be cautious, probably indicating some difficulty to pass our first resistance levels on the way to a clearer recovery. If 500 is passed and tested for support, we will update our targets (Fib/MM).

ER Weekly: bottom ?
The weekly chart shows little change from last week. Entropy hasn't bottomed yet, so we'll wait for another week or two at this time frame to see current prices stabilize. However we do notice a blue bar at last and a MTFS while still not looking great shows some upward inflexion now. We do still believe the worst (~380) is behind us but we may (and probably will) see some retracement when our first targets (daily charts) are hit.
Behaviour on that key target area [480-500] will however determine market direction for at least 4 to 6 weeks. We do start plotting Fib target areas in case of a breakout. We are not at a decision point yet at this time frame, so we'll have to review our scenario next week.


(posted Monday 2:50 AM Eastern)

Friday, December 05, 2008


Always good to see that my good old crystal ball is still working as new... :)
€/$ bounced exactly on my support level, and a fantastic long followed right to top resistance level. Former resistance level i should say as range is now expanding north. €/$ should consolidate just above 1.27 to then march higher probably to ~1.287
ER also crept higher, although unconvincingly, so the following retracement was very much expected. Here again we are looking at a support in the current area although we'll keep an eye on an alternative support around 423 if 437 breaks.
ES was kind enough to behave and reach spot-on our resistance level before retracing. It could try and reach ~870 again to attempt a breakout north. Conditions don't seem right just yet though, but we'll be watching.
More likely is a continuation of our market consolidation. The market is almost ready to recover so as always patience is a virtue...

(posted Fri 5th 12:24 Eastern)

Thursday, December 04, 2008

One day at a time...

OK, yesterday was a bit of a toss of a coin on pivot level, and it could really have gone both ways. The market chose to go up (that was my smart guess also), even if this still looks rather unconvincing. Volatility is still very strong and coud cause more wild swings in the coming days.

EURUSD is certainly looking bearish, so we'll keep this as a sign of more deleveraging and flight to safety in progress, even if the logic would be for the $ to weaken eventually. In the short term, 1.256 - 1.257 is a strong support level.

ER still has some upward potential and could crawl back to latest highs, yet energy isn't quite there so volatility can still play tricks. So let's see if we pass our resistance level around 451
ES follows a similar pattern, and also has a strong hurdle along the way to recent highs. Indeed Fib and MM levels show a resistance level around 873 to 875.
We'll therefore be very cautiously positive today.

Wednesday, December 03, 2008

Where's the Christmas spirit...?

Sorry i missed some action on Monday. I spent about 16hours in a plane and Internet above 30000ft when available is outrageously expensive.

I remember saying we should not pay too much attention to the rise late last week. ER rtraced a little quicker and stronger than anticipated, but we all know volatility exacerbates movements and support was found close to Fib PR2 above 410. Similar scenario for ES. So, what do we read now?

The 60mins chart shows a mild bounce potential. Swings have high gradients which are hardly ever stable, so we'll now watch ER's behaviour around this pivot level (~440). We can have a Fib pattern going both ways. We should see soon enough whether prices go north or south from here. The upper bias over the next few days is our favourite scenario for now if the daily chart gives us a blue bar today. The target over the next few days would then be the low to mid 480s again, and also more visibility ahead. In the more pessimistic scenario, we are looking at low 400s, then 380... Quieter markets ahead of the festive season would certainly be much appreciated...

Monday, December 01, 2008

Weekly Report on ES - Dec 1st to 5th '08

ES 60mins: stretching resistance level
Same dynamics as for ER although a little more contained. It is difficult to say whether one should take volumes too seriously for the 2nd part of last week as it seems ES has been gliding a little too high and may fly through a air pocket now. Despite being overbought, we foresee no change in the overall bullish sentiment. We just have to check where support will be tested, possibly in the 875 area, or a 1st Fib level below.

Daily: not looking too bad now at last
Obviously the MTFS recovery is a big question mark but a channel breakout could trigger some buying to the 1st Fib level (~960). We do not anticipate it just yet and some consolidation is more likely. Again, even if the worst is probably over, we shouldn't too bullish too quickly at this time frame at least.

Weekly: inches away from Fib target.
Here as well, one should certainly NOT aim at a quick turnaround and start buying frantically already. The situation is similar to the daily chart i.e. bearish and at the same time very oversold. Like for ER, we shall wait a couple of weeks and maybe until January to confirm a reversal even if we do not anticipate more than a crawling back to former higher over at least one year.


Weekly Report on ER - Dec 1st to 5th '08

Dominant TF: 60mins with other time frames not far behind.
Swings: UP-DN-DN from UP-DN-DN (is the worst behind us ??)
Market Direction(daily): staying long.
Options (RUT): put spread.

Last week was short but bullish nonetheless, and we are definitely seeing a possible change in mindset, at least justifying trying going long. ER is now aiming at 484, last step before attacking 500. Let's see whether we have a good plan of attack, with a first look at €/$.

EURUSD: €/$ reached a target we gave last week, and could have then tested further levels, ~1.33 etc. It instead stayed in the same channel, hovering near a support level around 1.27. Indicators are not showing much energy just yet, even we reiterate that the $ must weaken eventually (weekly chart). We will therefore watch the daily channel as well as the price segments. €/$ can indeed crawl back to last week's highs or break current 1.27 to test October lows again. At the moment, a first bounce is likely, until energy picks up to weaken the $ over current resistance levels.

ER 60mins: aiming at 484 (stall level)
At this point in time, and maybe due to the short week, energy seems to be lacking to take ER much higher. We do notice the ~380 lows have turned to very strong MM support level. Pivot level (~440) held for a while before the long weekend, but weaker volumes may indicate that that same pivot level could be tested again for support later on. For the time being we still give the upper bias a chance to hit 484 before retracing.

ER Daily: looking better
we had our entry point last week with a controlled risk as we placed our stops below recent lows. Our indicators do show a definite change in market sentiment so while volatility is remaining high, we are slowly turning bullish (Entropy bottomed up and MTFS show positive gradients in oversold territory). We are here also aiming at 484 then 500 as test levels going forward. Again, we do not anticipate a smooth ride and a return to the 440s or at the very leat the lows 460s is quite possible.

ER Weekly: bottom ?
Entropy could bottom soon if we project current trend (1 week or 2). However we don't have a MTFS conducive to a decisive recovery yet. For the time being, we'll follow the scenario of a weak bounce. We may have some XMas buying or a January bargain hunt once 2008 books are closed out. Conservative long term players should at least wait for a blue bar at this time frame.


(posted Monday 1AM Eastern)

Thursday, November 27, 2008

How do I read charts ?

No report today. The market behaved as expected yesterday with a bit of shopping spree, maybe indicating the worst is definitely over. We will review that in detail in the weekly report.

Today, I decided to instead just post a commented ES chart for those a little more interested in the technique itself.

Enjoy the long weekend,

Wednesday, November 26, 2008

I can smell the turkey baking already...

A quick note to readers and users of this TS-TT:
Please tell me about your trading, how you use this report, how successful you are with it. Most non-users take it as context information and make money filtering their own trades with it. Obviously, it is only a daily snapshot, and it is not as good as seeing it live. The reason for this question is that this technology will eventually be sold during the course of 2009, and only users who have expressed interest stand a chance to be listed as exceptions to the license's exclusive rights. Anyway, we still have a few months ahead of us.

Let's have a look at our charts:

EURUSD: The pause announced on 1.295 resistance level lasted about half a day after which € charged in to test a stall level at 1.306. Next resistance level is 1.318, but energy is now lacking a bit. As mentioned on the weekly report, there is now a definite change in mindset and the $ will certainly weaken (is deleveraging coming to an end...?). For the time being €/$ stays in a channel (60mins) and should eventually reach 1.306 and then 1.330. Lack of energy and volatility make it however difficult to detect retracement points along the way.

ER: The resistance level mentioned yesterday is still there, and despite some minor profit taking, ER has proven quite resilient. Here again, energy starts lacking so there is a good chance of erosion. Maybe a good chance to try and enter long on aggressive limit orders. With a bit of luck, one can maybe enter long below 420 within a day or two.

ES: Again, very similar situation. ES found enough impetus to go test the 875 resistance level (yesterday's high of 874 to be exact). Here too, the change in mindset is obvious, but we can also try and enter agressively as we have a typical "failed recovery" pattern on the Daily chart, so a retracement is almost already written. ES may possibly hover high still, but it should eventually retrace to the high 810s, low 820s before breaking the channel and travel to 1000. Obviously, we'll also play the channel breakout if the retracement proves too contained.

Tuesday, November 25, 2008

Crystal ball

Again, it is interesting to see how accurate a scenario can be with however that same caveat of volatility acting as a time compressor. Oh well, it is a daily report, so users of our technique will obviously adapt to lower time frames, and others can always contact me for custom market analysis.

EURUSD: We saw that bounce to 1.27, which broke easily, so we stayed long to the next very clear resistance level at ~1.295. It is a resistance level which could break later on even if a pause is likely today. We'll provide new targets tomorrow.

ER: A similar story in a way as i announced the 440 target without fully anticipating it could be hit the same day. We do have an upper bias in the short term but profit taking is likely. The high 430s area is a substantial resistance for now, and even if we go higher over the next few days i.e. ahead of the long weekend. A retracement is more than likely so long term players do not have to rush into the market just yet.

ES: Very similar situation with a resistance level around 850. ES is short term overbought so should pause on its way to 875. Again, this is short term play, and not a motivation to buy frantically just yet. ES will retrace to the 810 area at some point.

(posted ~1AM Eastern)

Monday, November 24, 2008

Weekly Report on ES - Nov 24th to 28th '08

Last week monday, the title on the daily comment was "not looking good" and the weekly was on a similar tone. Now that we've hit our target, we're back to our drawing board trying to make some sense out of our charts. Markets being largely correlated, so please also read the ER report below.

ES 60mins: bouncing on key support level
Same dynamics as for ER, ES is aiming back at MM/Fib level around 812. The swing gradient follows the amazing recovery on Friday and is obviously unstable. So ES could hit the target, then retrace back a support around 781 to 784. We'll have to confirm that scenario tomorrow. Should volatility play tricks again, 812 could be passed then tested for support later. I doubt this could happen within a day though ( a lower intraday time frame is needed here )

Daily: hmmm not looking great still
This is where we certainly have to remain cautious. Our indicators are still bearish even if immensely oversold. Secondly, the 750 level appears a little weaker, so while we are moving away from danger zone, we're certainly not out of the woods yet.
We'll wait for a blue bar, a channel breakout and MM/Fib levels to go long at this time frame. For the time being, we remain short with tighter stops or flat.

Weekly: inches away from Fib target.
Here as well, one should certainly aim at a quick turnaroung and start buying frantically already. The situation is similar to the daily chart i.e. bearish and at the same time very oversold. Volatility may push players to test 710 and then only call for the end of the game. As we've seen in other markets, we do have some indications of a pending turnaround, which i call a change in mindset, but it is in no way confirmed on our charts yet.

- Today's chart snapshot is commented.
- Like for ER, daily updates will be posted on this blog this week again.

(posted 1:20 AM Eastern)

Weekly Report on ER - Nov 24th to 28th '08

Dominant TF: Daily, 60mins with the weekly chart naturally a little behind in this volatile environment.
Swings: UP-DN-DN from UP-UP-DN (have we bottomed ??)
Market Direction(daily): some will take a chance going long with a stop below recent lows.
Options (RUT): a Dec put spread is quite possible.

Last week monday, the scenario for the week was pretty clear, and we anticipated the fall quite well. But now that the purge is done and targets have been hit, what next ?

EURUSD: The daily reports last week have been pretty accurate, anticipating a drift to range lows around 1.245. We now have a recovery attempt and 1.27 is our immediate target. Our weekly chart also confirms the likelyhood of a bottom, but we'll wait for all time frames to agree on a turnaround. At this juncture, the € could strengthen only very slowly, and even stay subject to short term volatility. In a way, it may be a change in mindset rather than a definite signal just yet.

ER 60mins: bouncing on 375
ER is climbing back ground lost last week with hurdles mid way (32points segments again) and ultimately having to face a serious test level at ~440. In the short term, a bounce is more than likely as 380 is a STRONG suppport level, but we don't see any freedom to go high quickly as we have an enormous downward pressure to dissipate first. Aggressive short term players chould however have taken a chance and be long already with a stop below the 375 support level. We may also wait for a confirmation in higher time frames. One could say that a bottom scenario is likely, but is not yet as clear as for EURUSD.

ER Daily: still bearish technically
One may be in a hurry to get back into buying but this time frame should nonetheless help keep our cool. There is no rush to go long unless if one really wants to try and pick a bottom. All pointers are still down, so one may want to wait for an entry point later one this week.

ER Weekly: bottom ?
Last week, i mentioned that TRUE support would be 380. It sounded almost impossible and yet nothing surprises anymore with these markets. Now we've hit it and while we would like to see it as the ultimate bottom (and it could well be!), we have a LOT of negative pressure to dissipate, and we've all seen how much volatility those turbulences of energy have caused. Again, we must prepare for a potential change in mindset, but we should NOT rush into buying as our chart DOES NOT show any indication of a recovery in the short term.


(posted Monday 0:01 AM Eastern)

Friday, November 21, 2008


Oh well, yes, i was right. I announced that purge and short sellers are happy today but i won't boast or rejoice in sympathy for millions who are depressed by these markets. To those i just have to say that the bottom is now around the corner. Markets have now reached the levels they were supposed to reach.

EURUSD: Hit the lower boundary of its short term range at ~1.245 where it could try and bounce a little. EURUSD is oversold but not yet ready to turn around. Over the medium term, one cannot discard a target around 1.23 (stall), or even 1.22 (strong support)

ER: There we are. We've hit 380, so we can now rest for a while. Volatility could exarcebate profit taking or some short squeeze, but more realistically, ER should stay low to dissipate the massive negative energy built in the market. Over the medium term, 437 is key level.

ES: Same story. We're now on 750 which is quite a strong support level. Here also a bounce is possible if not likely (tgt: ~781), and here also bear pressure is enormous. Short sellers may want to take profits and/or tighten stops.

Over the longer term, we still have a possible ES target around 710, but 750 could still hold so we'll remain quite careful here. The purge is not technically over and volatility can play more tricks. At this juncture, one can take profits and wait for a clearer picture, otherwise short intraday time frames are recommended.

(posted 00.30 AM Eastern)

Thursday, November 20, 2008

Going with the flow...

What did I say yesterday in conclusion of the daily report? Yes, i used the word "purge" on purpose, and there was indeed an easy lucrative short. It may be painful for some but we need to go through it to rebound. Most institutionals have given up on 2008 and are preparing for a better looking 2009 but at the same time, we may have a patch of blue sky before 2008 comes to a close.

EURUSD: A very modest bounce is possible today but the overall trend remains down to a ~1.245 pivot level. Mid term, we however have to notice a likely bottom somewhere between stall level (~1.22) and ~1.245. This is no excuse to go long, but only to take shorts a little more cautiously.

ER: Markets are somewhat correlated and even a bounce on EURUSD may have an impact on ER. However the the trend here remains down until a new support is found. Such support could be near current lows, but is more probably around 390. What's another 20 point drop these days anyway...

ES: yesterday's fall stopped on a strong short term support around 812, but the downward pressure is still strong so we could be heading towards 750.

The purge is not over, yet it does not mean markets will lose 4 or 5% every day until we eventually hit the final bottom (I mentioned a possible ~710 target for ES in previous reports). Again, we'll remain cautiously bearish again today, and as usual, go with the flow...

(posted 11.30 PM Eastern)

Wednesday, November 19, 2008

Something's brewing here...

A bit of action and some good fun for intraday players yesterday. It seems these low levels are fiercely fought, yet no change in our market outlook...

EURUSD: 1.27 is now a STRONG resistance level but shows weaker energy levels. Our preferred scenario is the continuation of current drifting with steps on 1.257 then [1.251-1.253]. Obviously, in absence of intrinsic energy, EURUSD will be more sensitive to exogenous factors.

ER: Here also, lower highs and lower lows should normally indicate lower support levels. However, the stunning recovery on day close proves that 437 is still going strong. We will check for a channel breakout to change our mind. Until then same drifting, i.e. cautiously short.

ES: Fib/ MM target levels concurrently on 828 have been tested successfully, but there is still no underlying conviction the market is ready to turn around just yet. Here too, we'll check for a channel breakout on the daily chart.

NOTE: We may see a final purge coming these next few days. Our ES target is 812, or even 772 ! (lower time frames recommended)

Tuesday, November 18, 2008

Just another Prozac day...

In this all gloom & doom, the good thing is that markets are relatively easy to read. We'll refer to yesterday's weekly report.

EURUSD: Clear swings. €/$ is aiming at range lows again, more like a continued drifting situation until a strong support is tested. Technically such support should not be too far, so market participants are now a little hesitant.

ER: Should aim at lows again (~440) or lower. That support level is very strong yet there is a potential to break it to finally purge the market right down to 380. Too early to say though.
Energy is low on the 60mins chart, so we may see the eye of the storm today.

ES: Same situation with a possible return to 830. Low short term energy here too, with the same possible scenario of a purge to the low 700s in the longer term.

(Posted 0.01 AM Eastern)

Monday, November 17, 2008

Weekly Report on ES - Nov 17th to 21st '08

Last week, i recommended remaining very cautious about turning bullish too quickly and it proved certainly wise didn't it? 1000 is now remote and just like ER, we're now back to lows. ES hit a first Fib target (~820) and staged a modest bounce but bars remained red all the way...

NB: The ER report is more detailed. Please refer to it as markets are largely correlated.

ES 60mins: aiming at lows again
ES follows the same general market direction (c.f. ER below) and could aim back to lows with a target sitting on a Fib/MM level : 827.
However we have some indicator divergence on our adaptive MTFS so we'll wait for a bar or two after the open to review the scenario here too. We cannot exclude the 875 key level being tested again as resistance now.

Daily: not looking good
Same as for ER, we have all indicators pointing down. We will however notice that since the Fib/MM target has already been hit on friday we may see a retracement to the 855 area (Fib PR2) to possible bounce back. In such case, like on the 60mins chart, we would need to pass 875 clearly to pave the way to 1000 again. We have yet NO such indication right now.

Weekly: desperately low...
MTFS is so oversold and entropy is so low that we all know a recovery is bound to happen but this is not at this time frame that we'll time it properly. We will however watch Entropy bottoming up to signal it. We might be just a few bars away, so we'll certainly keep our finger on the pulse...

NB: Like for ER, daily updates will be posted on this blog this week again.

Weekly Report on ER - Nov 17th to 21st '08

Dominant TF: Daily. Gradient is too high on the 60mins chart.
Swings: DN-DN-DN from UP-UP-DN (where's my Prozac ??)
Market Direction(daily): bearish

Last week monday, we were right on the 500 level waiting for it tested, passed and confirmed. It again failed and dropped 2 price segments (32 points wide, so we got our target right around 440, then am amazing bounce to only fail again short of our key 500 level. In a way the good thing is that moves are relatively clear again, yet we see longer time frames taking the lead hence we shall carefully take signals in the dominant trend i.e. short, and volatility tells us to pay a lot more attention to shorter time frames. So, being short in a bear market does not stop us from being cautious.

So, let's have a look at our charts, starting with EURUSD:

EURUSD: The 1.27 level broke to expand the range to [ 1.245 - 1.29 ]. Volatility picked up on Friday again with a down move which stopped on stall level just above 1.25. We could see a minor bounce, but EURUSD should generally stay in the lower part of the range i.e. below 1.27 and even aim back at the support line. In the medium term, we still target previous lows or even 1.22 as mentioned in previous reports.

ER 60mins: looking for support
Volatility is again quite high as it looks like buyers have given up on the 500 level for now. We now have to see whether a support level can be found in the 440 area or lower. There is some good chance of a slow-down and the 437.5 is quite a strong support level. We have lower targets also, but we'll have to wait one hour in the trading day to update our scenario at this time frame.

ER Daily: not looking good...
Obviously, like on the 60mins time frame, we're looking at a bottom in the 440 area or ... lower... All indicators are still pointing decisively down, so we we could see ER drop further in 32 points segments. At the back of our mind we still have a target in the 380 area. Should 440 hold we have far too much negative pressure remaining that while we could have a bounce, ER should remain range bound for a while. We indeed have a [~440 - ~560] range with a key pivot level, i.e. 2x32 points below and above that key level.

ER Weekly: is there light at the end of the tunnel?
Yes there is, but we probably have to wait a little longer still. Like on the daily chart, all indicators are bearish and we can only (faintly) hope these recent lows will hold. At this time frame, the target level is rather around 380 and we may see buyers momentarily give up to gather forces at that level.


Friday, November 14, 2008

Oops... wrong button...

I don't what some top traders at big financial institutions had for lunch yesterday, but they certainly had some appetite left in the early afternoon !! Some massive program buying was indeed triggered on key levels. We indeed saw yesterday some substantial selling in the morning as anticipated and key levels hit on major indices. On ES thet key level was close to previous lows, and as said before would open the way to a sell-off to the low 700s. That scenario is temporarily rejected.
Again, it would take quite a few more days like yesterday to see sunny skies again.
This short term recovery may stop the hemorrhage for now, but we shall remain a little cautious at our time frames.
Today again, shorter time frames (<30mins) will be recommended.

EURUSD: A bounce on 1.245 came back to the level as a springboard to trigger the afternoon rally very close to the stall target level at 1.87. Short term trader should now take some profits, and try and test the 1.269 pivot level for support. Long term trend hasn't changed yet, but some upper bias remains for this end of the week.

ER: ER hit a rock solid 437 support level then went on a nice afternoon rally, probably exacerbated by some short squeezing. Bears have to learn to give back sometimes... This retracement has a target level around day close (~489) but could well test 500 again on momentum trading. Indicators are actually short term bullish even if there is no change yet on the daily chart. We'll wait at least a few more days to confirm a double bottom. We recommend staying quite cautious.

ES: Exact same scenario except maybe the stall level was deeply penetrated and buying actually occured inches before the strong level around 813. Market correlations and program trading do explain the slight discrepancy to calculated level and confirm that ES is not a 'driver' at the moment. Today, we can see momentum fading a little on Fib target but one could maybe still see more buying to 920. A pullback to [875-880] levels (Fib,MM) is however more likely to test how solid is this short term recovery.

Thursday, November 13, 2008

Ice Age

Some will start finding these markets a little depressing, yet sailors also don't often suntan on the deck either and have to go through rough seas now and then. Some traders/investors paid too much attention to their skin and can't take the pressure now.

Anyway, yesterday was again a little more abrupt than anticipated but we hade seen a lot of buyers giving up (500 tested as resistance on ER for instance) so a support level breaking induces a lot of selling searching for the next level.

Today, on EURUSD a substantial level has been hit around 1.245 even if the underlying trend is still there. Maybe a pause or a bounce today or tomorrow, but now aiming at 1.22 as mentioned in previous posts.

ER: Negative sentiment has to take ER to 437 close to recent lows, which will be the recent test. This revives a scenario of mine in recent weeks of an absolute bottom around 380.

ES: Again, same story here with a first target around 828 very close to recent lows at 827 and a Fib target at 821. Here again looms that same bearish scenario of an absolute bottom around 710...

At least, in this period of climate change, some bear species are still thriving...

Wednesday, November 12, 2008

Quick sands...

Tuesday was a down day as expected. EURUSD broke the support level to settle on the next support just above 1.25 which should hold today. A bounce would likely be contained below 1.26

ER: I mentioned yesterday that ER would try and find support somewhere above 482. There we are now and even if we could see some reprieve today or even a minor bounce, 500 has now been tested again as resistance and we could actually go lower in the next few days. Indicators however indicate more a drifting situation than an outright fall, so this support (or the next one) can hold.

ES: Same situation with a support level aroun 890. A short term bounce is possible but here again, the drifting continues...

Tuesday, November 11, 2008

Oh well, just another day...

Will this ever end... ? Have buyers decided to enter into hibernation already ? No, one should not dispair and a trading range is a good way to slowly dissipate sellers'pressure. Obviously, there is still some 20% risk of a fall to the 700s on ES, but a support should be found near current lows.

Let's have a look at our charts:

EURUSD: 1.2695 is a good support with a limited bounce potential. The trading range is now reduced to [ 1.27 : 1.29 ] with a lower bias.

ER: We have 500 slightly penetrated, but that's not a problem since we have multiple support levels on 500, 496 and even 482 so the market will probably settle on one. While sellers'pressure is there, there is no indication of one of those support levels breaking.
No bounce either...

ES: Same story, but downward pressure is a little stronger. Last week's lows 900-905 could be tested again or even hit a target on 890-890. No major fall expected though.

Monday, November 10, 2008

Weekly Report on ES - Nov 10th to 14th '08

Last week, the report was announcing the 1000 battle, but i certainly expected a bit more action there. Anyway, better luck next time...

ES 60mins: same hurdles just below 940 and then ~965
We do not have a strong indication of a new round coming on Monday, but we may get there in stages testing ground. First step would be to confirm 940 as support.

Daily: Aren't we all a little tired of this all?
While we start seeing some upper bias in this market, there is certainly not enough energy to even think of passing 1000 in the short term. Will we gather forces or will market players heal wounds and rest a bit in this trading range? We'd all love to turn the page and be bullish again but who's pulling the trigger first?
Like everyone, we have to be very cautiously optimistic this week again.

Weekly: possible bounce but...
Some indicators show a bounce coming but at the same time do not anticipate enough energy to carry through to any sort of full strength recovery just yet. It could take a few more weeks, so we'll call it a pre-alert or early warning and will check lower time for confirmation as signal later on. Please don't read more into these lines: we are NOT buying yet!

NB: Like for ER, daily updates will be posted on this blog this week again.

Weekly Report on ER - Nov 10th to 14th '08

Dominant TF: Daily, 60mins with the weekly chart naturally a little behind in this volatile environment.
Swings: UP-UP-DN from UP-UP-DN (have we bottomed ??)
Market Direction(daily): some will take a chance going long with a stop below recent lows.
Options (RUT): put spread / split butterfly still a reasonable option but caution is required. Nothing with taking profits now.

Last week monday, i clearly mentioned a "cautious retracement trade" was possible, like a put spread or a split butterfly. We certainly had no indication of a strong bounce just yet. Hmmm, can we really say more this week? Dynamics are still the same, so is our word of advice to follow charts on shorter time intraday time frames.

Now, let's have a look at our charts:

EURUSD: I was almost spot on last week saying we had a clear support and yet only limited bounce potential to 1.29. Again €/$ should remain fairly range bound in the short term with a slightly lower bias (no indication yet of ~1.2695 support level breaking). Upper resistance remains around 1.293. Long term we still have a possible target around 1.22 almost hit already on Oct 28th, should this 1.27 key support level break eventually during the course of the week. This ~2cts range is however relatively tight and we should therefore remain cautious of breakouts in either direction.

ER 60mins: support must be confirmed or...
Playing a dangerous game again around key 500 level. Our chart shows limited bounce potential and yet at the same time does not indicate that level breaking (c.f. MTFS). We'll have to remain cautious and review our scenario using a shorter time frame. For the time being, since swings are 'up' we can always try a long with a tight stop below recent lows. Breaking the first Fib retracement level could level to a recovery to the 560 area (see daily below)

ER Daily: Key 500 level!
There is no guarantee 500 will hold, yet it is likely to do. There is still some remaining downward pressure which could dissipate to open the way to a target around 560. We'll keep checking price segments about 32 points apart. Should 500 break, price segments work the same on the way down with a support on recent lows exactly 2x32 points lower. For the time being, "hangover" mode still prevails though, so ER could remain range bound for a few days.

ER Weekly: ?
Significance level is lower so we will not pay too much attention to MTFS and Entropy. However a straightforward recovery (blue bar) is very very unlikely. We have to admit this crisis has surprised us already but there is nevertheless still a tremendous amount of downward pressure to dissipate, so it is way too early to rejoice and buy frantically into this market even if we may have an up week this week. We must keep at the back of our mind that if 500 and 440 break, the TRUE support is around 380. Sounds frigthening doesn't it?
Again, we'll have to keep this time frame as background info only for now and follow the 60mins charts rather.


Friday, November 07, 2008


Just a gentle reminder that a swallow does not make a market rally (euh?) and i warned that the "1000" battle on ES would not be an easy one. I'm afraid we'll need at least another round and for now we'll have to see how and where buyers gather forces...

EURUSD: As mentioned yesterday, we have a strong support level just below 1.27 and while we have some bounce potential at this point, the underlying forces should keep some pressure on any substantial recovery.

ER: We're now sitting on 500 with some remaining downward pressure. However the market will try and dissipate that energy without breaking that support level. Should it break, the next level is 483, but odds are more in favour of a bounce right now.

ES: The fall stopped on Fib PR2 and we're back into a [906-937] price segment, and as a matter of fact, we'll have to break that 937 level to go higher and eventually battle again. We're not there yet though and we should end this eventful week on a relatively uneventful day, probably slightly up. Time to heal the wounds now...

Thursday, November 06, 2008

"Sell the news"

We're all happy for America, and yesterday's retracement doesn't do that extraordinary day any justice. Markets dynamics were widely anticipated, so no surprise whatsoever. Now let's see what charts tell us today:

EURUSD: taking a breather, but 1.27 is a strong short term support for now. We don't have any significant forces taking €/$ either way in the short term, but this drifting should continue for now.

ER: Volatility is certainly still around and retracement was stronger than anticipated. It is now in oversold zone, so not clear whether the 500 level will actually be hit. There is no reason to believe ER would actually go lower, and if one goes back to previous reports, one may actually be in the predictable situation of the 500 area being the actual start of a better looking recovery.

ES: Same scenario here, where 937 being so anticipate that it could bounce anytime. Obviously, if the bounce does not happen, things could get very wrong (bearish outlook to the low 700s already mentioned a couple of weeks ago). Probability is however low.
We're now back to a more normal trading environment with price segments in place (32 points wide). Recovery can therefore bring ES back to the high 960s, to then in the medium term attack 1000 again...

... to be continued ...

Wednesday, November 05, 2008

"Yes, we can"

Great day for America and for the world at large. Not much of a surprise, but a great day nonetheless. Difficult to gauge the short to medium effect to the markets as this is virtually a non event i.e. been priced in already, but we can probably assume the worst is over even if we're now in for a long convalescence.

So, is this going to be just another day today?

EURUSD: taking a pause right now, but swings are clearly identifiable on the 60mins chart. Over the medium term, the US$ should weaken a bit the the next Fib/MM level.

ER: also taking a pause at stall level just south of 550. Difficult to say whether the market is ready to test 562, and as we all know the adage says "buy the rumour, sell the news" so we may just see some retracement today. Shorter time frames will help with determining a direction for the day. Mid term, i.e. by end of week, it is clear that we have to test the 562 level.

ES: Here the 1000 level has been already hit, and we have a target in the 1000-1010 range so it is difficult to anticipate what's coming next except these are serious resistance levels. No offence to the new President Obama, but the markets may not necessarily rally as much as voters and citizens of the world on this new dawn for America.

Tuesday, November 04, 2008

Obama Day

Are we waiting for a big Obama party today ? Are we confused between this early market recovery while the mess is not fully cleaned up still ? Is it yet another eye of the storm ? Yesterday was certainly calm in relation to the volatility we're now almost used to, except maybe for €/$ which broke the 1.27 MM support level to reach a Fib target around 1.255.

EURUSD should carry on hovering around same levels, and we recommend using a tick chart for intraday movements. The lower bias is still there at the moment but as said earlier, it could well bounce because 1.27 is actually stronger than the deep penetration we've seen could imply. If now tested as resistance then we will look at a lower target maybe back down to the 1.22 levels.

ER: Stalled short of 550, on its way to 562. A retracement would be in order but ER is holding nicely at these levels. One cannot discard either scenario right now, so ER can just as well go and test 562 or retrace back to low 500s again. In the short term, ER is still pushed slightly upward but the bias is fading at the moment. Will volatility play tricks again on Obama Day?

ES: If we try and make an overall picture of the markets, ES is not so bullish and is certainly indicating a need for a lower time frame. Secondly, MM resistance level has come down so we may find difficult to even come closer to the 1000 battlefield. Are belligerants ready for it? The target is there, but here again are we going to retrace first? Like for ER, we still have a very weak unconvincing upper bias for now...

(snapshots available on request)

Monday, November 03, 2008

Weekly Report on ES - Nov 3rd to 7th '08

Markets are again largely correlated so we again always recommended reading this report in conjunction with our latest ER report below. Dynamics are indeed similar except that we may be tempted to look at shorter time frames such as 30mins. In terms of levels, we do notice a bottom last week on MM stall level (60mins) where it was even clearer on ER, but the picture is clearer overall, and we now have to gauge whether the market is now ready for the "1000" battle...

ES 60mins: on stall level
ES is slowing down on stall level (~968) as we could expect it. We may lack sufficient energy to reach 1000 this monday but this will happen sooner or later anyway. We'll check Fib/MM levels both from this stall level as well as from 1000, and our MTFS/Entropy shall tell us which we to navigate. A lower time frame will also be helpful here.

Daily: Preparing for battle
1000 is now around the corner. However, at this point in time, we don't see ES sailing through that important level and some retracement on 1000-1010 seems inevitable. Such retracement could send prices back to current levels, so we may have high volatility, wild swings... to maybe end the week almost unchanged. We'll follow the possible scenario day after day anyway.

Weekly: no rejoicing just yet!
We still have no evidence whatsoever of a forthcoming recovery and current volatility may cause amazing whipsaw movements. We have to remain very cautious if we want to invest long term. This is a time for intraday traders...

NB: Like for ER, daily updates will be posted on this blog this week again.

Weekly Report on ER - Nov 3rd to 7th '08

Dominant TF: Daily, 60mins with the weekly chart obviously a little lost in this environment.
Swings: UP-UP-DN from DN-DN-DN (have we bottomed ??)
Market Direction(daily): cautious retracement trade, i.e. a backlash is still possible
Options (RUT): good time to sell a put spread, but staying on the sideline a little longer is also fine

Last week monday, we had that moment of hesitation between a 500 level that wasn't technically broken, stretched to the limit because of the extreme volatility we've been going through... and a continued down pressure that anticipated a much lower target. We therefore recommended to stick to the 60mins chart and possibly even lower. The 60mins chart indeed confirmed a strong support level around 440, which triggered some substantial short term buying.

We still have some uncertainty regarding the effect of deleveraging on the markets now, so it remains difficult to anticipate a strong recovery. We shall therefore remain cautious this week again.

Now, let's have a look at our charts:

EURUSD: €/$ came very close to MM stall level, bounced, and now found support on 1.27. We now have a first target on 1.29, and while we still have an upper bias, €/$ may hover around low levels for a while. Again, deleveraging and banks recalling US$ loans massively can cause the US$ to strengthen further. We all know the amount of US debt could and even should send the US$ to recent lows so... again caution must be exercised on our usual time frames. We will stick to the 60mins (and lower) charts this week again.

ER 60mins: stall level in sight.
We've seen a good recovery and a target is now close. ER should hit the MM stall level just belo 550, or even MM resistance later on (~562)
Again volatility keeps on playing tricks on us, so the normal subsequent retracement could happen this monday, or by mid week. 500 would be a good support to take prices higher.

ER Daily: are lows behind us ?
We now have substantial evidence to believe so and we have a target price (563) which is exactly on the 60mins resistance level. On the medium term though, we need more energy which could be found on a 500 support level again. We have the US elections tomorrow, so market dynamics may obviously be somewhat affected. We will be cautiously optimistic and look for buying points this week. We can always set stops below 500 in case a forthcoming recovery fails this time again.

ER Weekly: ?
Significance level is lower so we will not pay too much attention to MTFS and Entropy. However a straightforward recovery (blue bar) is very very unlikely. We have to admit this crisis has surprised us already but there is nevertheless still a LOT of downward pressure to dissipate, so it is way too early to rejoice and buy frantically into this market. Again, we'll have to keep this time frame as background info only and follow the 60mins charts rather.


Thursday, October 30, 2008

... going with the flow ...

Is the bottom behind us? I've been undecisive lately as it can be so, or at the same time, we may still see a full-on purge to the low 700s on ES. We have certainly seen some improvement, now let's have a look where it could lead.

Note: there will be no report tomorrow, but i'll try and post a short update on market close.

EURUSD: good recovery and resistance have been broken leading the way to 1.32 ... or even all the way to 1.37 ! Our MM stall level (~1.22) was not quite reached and our scenario is now updated to a possible return to 1.27 Obviously, we have conflicting pressure from deleveraging currently strengthening the US$ and the phenomenal amount of public debt which should weigh on the US$, so volatility is here to stay in the short term.

ER: Testing 500 now. Is it going to break it...? Probably not, but who knows. Most would be long now (60mins chart) and would just tighten stops a bit just in case. It is so far only a retracement trade (contrarian) on the Daily chart. Again, on a middle term outlook, ER is likely to go lower at least once more.

ES: Are we now going for the big "1000" battle? Possible... Again, one should only go with the flow. 967 is a MM stall level that was hit yesterday, so we'll watch that level again today. One could then either try and hit 1000 or just as well retrace back to 930s.

Keep an eye on shorter time frames, and watch out for more volatility on GDP Q3 announcement tomorrow.

Wednesday, October 29, 2008

... a ray of light ...

Oh well, yes, i got it wrong yesterday. It does not happen too often, so i won't take it too badly. We had a support level around 843 on ES, and a pivot level around 875 and those levels were cleared marked on our charts. What happened was a sudden breakout effect to the next resistance level. This is nothing new and charts reacted very well. Regular readers now know that we always have to analyse those price jumps in the light of quantum dynamics, i.e. prices being attracted to predefined levels.
Secondly, i repeat again that high volatility acts as a time compressor which requires looking at shorter time frames. This is also why i still publish daily updates on this blog dedicated to weekly market reports, and it is sometimes not even enough.

Do we have to now jump and buy frantically? I'm afraid not. But let's first have a look on our charts:

EURUSD: We have a target around 1.27 to 1.274, and we have to see whether 1.27 will now act as a support to go higher. It is unlikely though. This bounce is likely purely technical. We keep our mid term objective in the 1.22 area, with continued volatility. A bottom may be near.

ER: Nice rebound to Fib PR1. Obviously one would need to see 500 passed and even tested for support to see a change in trend. We may have a 2nd up day but no major reversal right now even if again volatility plays tricks on us.

ES: Levels are even clearer here, with 930 being a strong resistance ahead. There could be some carry-through, either technically motivated, or from some start of herd effect, but we're not out of the woods yet, and there will be opportunities at cheaper prices still.

Over the longer term, we know we have an absolute bottom either around 843-875, i.e. just behind us, or in the low 700s still. The massive amount of negative pressure has to dissipate in one way or the other, with a much awaited decrease in volatility. This has to take at least a few weeks and possibly until the end of the year. Difficult to say whether markets will sink or hover, but the clear buy signal later on will be the test of 1000 on ES. We may have a few interesting battles before we count the dead and feast among victors...

(Snapshots available on request)

Tuesday, October 28, 2008

"Waiting for Godot" (S.Beckett)

I was bearish yesterday yet wanted to give current lows a chance to hold. That's what happened for a while with the confirmation of the 875-894 resistance area, to then see the negative tone resuming strongly, to the point that whether one wants or not, the market is VERY likely to go lower still... Maybe another 15% drop by year end (!) The good thing is that it would be at last the absolute bottom we are waiting for.
We however have Q3 GDP and a few other economic indicators coming so again we can't discard a minuscule chance of the bloodshed stopping soon.

"CAVEAT OF THE DAY": It must be said however, to those who still believe that markets will bounce and this crisis will be soon history, that they just fool themselves! Long term investors who have held tight so far and have not materialised their losses, certainly haven't lost anything as such. However returning to previous highs may take years and years ! Therefore once this painful deleveraging process is completed, it will stay that way! Even if there are TONS of (hard) cash waiting to be poured in the markets, leveraging will be limited, and there will be lots of arbitrage between sectors. The "sticking your head in the sand" ostrich behaviour is therefore certainly not recommended...

Back to our charts now for today:

ER: we're confronted to the same support level (~438-443) and again little chance it will hold. Difficult to say whether it will be a up day or a down day in the very short term, but NO significant bounce potential over a couple of days. We still aim at ~380 over the medium term.

ES:same story... short sellers may take some profit but except if Q3 GDP proves good end of the week, it will be a chaotic path to the low 700s...

EURUSD: still aiming at 1.22. Short term, MM stall level is 1.2329.


Monday, October 27, 2008

Weekly Report on ES - Oct 27th to Oct 31st '08

Last week's upper bias quickly evaporated, but we followed it day by day so didn't fall for it.
The 1000 level is now remote and we are now more wondering wheter 875 will hold.... probably not...

This report is short: all markets are tuned the same way. Please also read the ER report below.

ES 60mins:
Lows will be tested and then... lower again probably. There is some support level around there (~843), but buyers are certainly not coming back just yet. MM levels give us a support level below 820, and then... is there an end to it...?

Daily: Same as ER
oh well, should i repeat myself... if current lows fail to hold, support is probably to be found somewhat lower... the markets could slide to the low 700s... I shall update targets during the course of the week. Let's give current lows a chance still..

Weekly: bottomless
Fib and MM converge to the low 700s, and we'll see whether there is a slight chance of a support level along the way. Please check daily updates this week.

Weeky Outlook on ER for Oct 27th to 31st '08

Dominant TF: Daily, 60mins with the weekly chart obviously a little lost in this environment.
Swings: DN-DN-DN from DN-DN-DN (no change)
Market Direction(daily): down yet again...
Options (RUT): directional if current lows break (likely)

Last week monday, we indeed reported a short term recovery attempt which failed as expected, we could therefore make a few points on the way up and then make a lot more on the way down...
More worrying maybe is to see 500 barely holding on a string, as we know that volatility has the annoying effect of stretching support levels without breaking sometimes. Hence while we penetrated it quite deep (to below 440 correctly anticipated during the course of the week), there is still a bounce potential. Do we really believe it will? I'm afraid not. Current deleveraging on many many many billion US$ worth of positions is a very very very painful adjustments. I would recommend to sit tight for now. We may however have a much better looking 2009 ahead of us.

Now, let's have a look at our charts:

EURUSD: When 1.36 broke, we knew it had to go further south and while current levels offer modest support, we will probably hit ~1.22 later on this coming week. We have an extraordinarily strong tension to release offering an amazing bounce potential but it's just not there yet. 1.22 is a MM stall level, so could be the ideal point for it. One must however always be wary of any "reading between the bars". In the short term, 1.255 could hold for a while.

ER 60mins: one way only...
Drifting should continue, probably towards friday's lows. The market resisted to the bout of panic selling on the futures markets prior to the open on friday, and this may indicate a bottom for many market participants. I should still remain cautiously short and check lower time frames where we have a target in the low 450s.

ER Daily: waiting for some support level
Same story again and again... down down and looking for a potential support... While 500 is not 'officially' broken, we have little hope and the market could well fall further to the low 400s. Technically, it can only go down but we'll give lower time frames a chance to provide clearer support informaion hence again. At this level, no hope yet, i'm afraid...

ER Weekly: again this has been a market crash.
Significance level is lower so we will not pay too much attention to MTFS and Entropy. Going down anyway... We'll therefore only look at MM and Fib levels and we certainly have convergence in the low 400s... I hesitate again about the 500 level which could be stretched to the limit and still be valid. Again, we'll have to keep this time frame as background info and follow the 60mins charts rather.


Friday, October 24, 2008

Let's tighten our seatbelts... but shall we soon hear the "Brace" command now...?

Crazy volatility... Daily reports prioir to this crisis used to be good enough as the techniques generally gives a market outlook about 3 to 5 bars ahead. Nowadays, one would need at least 1 or 2 intraday updates to keep up with this market chaotic behaviour.

So yesterday, we played the bounce to around 920 on ES in the first hour of regular session or so, but the recovery failed to look for support back on the 875 level. More worrying maybe is that 875 level being penetrated to below 860. Today we'll watch that level very carefully again as we may just see buyers giving up the battle...

EURUSD: as mentioned yesterday, despite being on a target level, there is indication of the US$ strengthening for technical reasons (deleveraging). Next target is just below 1.27 and will be hit sooner or later.

ER: i said yesterday that ER should stay in low levels... and we'll have the same scenario today with renewed selling to recent low just under 470. Will it hold there? Difficult to say, but we can enter another price segment and forget the "500" battle. The target would then... 453! Extreme volatility can make support/resistance levels being penetrated deep without breaking thus creating more volatility. To avoid breaking (and another free fall) we now have to release some energy and get back to the 500 area very soon, otherwise 453, here we come...

ES: As said above, we had the anticipated bounce and then down and up... and down again. If a support is not found just below 870, we could see ES fall to below 840!

Conclusion: Let's forget any recovery potential for now. The 1000 battle on ES is now a stuggle to stay above 875. And more hardship to expect if these low levels do not hold today... Again, i recommend long term investors to stay out of it, or cash in on volatility with WOTM options (WAY Out of The Money). Trading short intraday time frames is still possible if not easy (10mins max).

Thursday, October 23, 2008

This market is for the brave-hearted only...

Oh well, another pullback... at least direction should not have surprised any of us. We're still in "hangover mode" and this situation is severe enough to keep markets tumultuous for a while.

To the critical ones who will say i've been too shy or conservative, i will reply that again volatility is a form of time compression and as such there is so much one can publish on a daily report. For intraday updates, market commentaries are also available (restricted access).

EURUSD: yesterday, i gave a warning that stops should be tightened as as we now hitting a target. We have no indication of a recovery today either. Over the longer term, the US$ could strengthen further because of continued deleveraging of many many funds.

ER: I thought the drop would stop short of 500, but it somehow had to be penetrated, without breaking though. ER should remain in low levels, yet with the assistance of this sky-high volatility, a bounce to 530 is also possible. Intraday play is recommended, so is staying on the sideline for longer term investors.

ES: similar situation with 875 being the defense line, equivalent to the 500 level on ER. Good bounce potential for the exact same reasons i.e. volatility. A bounce to almost 920 in normal times could reach 935, or even 950 these days...

Despite difficulties in capturing volatility, we still believe we need at least a few more weeks to dissipate negative pressure, and we are still waiting for the "1000" battle on ES to unleash some substantial buying. There is a LOT of cash on the sideline right now... A LOT !!!

Wednesday, October 22, 2008

Gathering strength... or is it just a retreat...?

Yesterday, i anticipated there wouldn't be much room upward and that the market had to pull back a little to "prepare for battle" particularly 1000 on ES. The retracement occurred stronger than i anticipated, but can we really be surprised still in this high volatility environment.

At least the retracement is now engaged and we just have to gauge where support will be found.

EURUSD: I had that Fib/MM target, but admittedly did not dare publishing it. It is a Fib target on the Daily chart (1.272), it is a MM level (1.281) on many time frames, but here again, volatility really took us all by surprise. At this point though, stops must be tightened. No reversal at this early stage, but the drop can be stopped near this low level.

ER: drifting should continue, but this is only congestion at a higher level even if one can see wild swings in an intraday basis. ER could retrace to below 520 (511?) but this is not a return to bear mode yet. We're only gathering strength for now... Will that be enough? We'll know soon enough.

ES: same situation... Yesterday i anticipated a return to ~968 levels, but it was traversed and even tested for resistance later in the day, so selling should normally continue. Having said that, again this is only a 'drifting congestion' here too, so while we may reach a target support in the low 940s, there is still no indication of a return to bear mode. At the same time, 1000 looks now a notch stronger so that's a real battle we may have up there later on...

(snapshots available on request)

Tuesday, October 21, 2008

Preparing for battle...

A good day yesterday with more investors jumping in in shorter time frames to make sure they don't miss the train. Long time frames still show uncertainty and fear and it is true that we're not out of the woods yet. Volatility can still make us sweat a little going forward...

EURUSD: as said before, we've left the [1.354 -1.3672] range to settle lower and [1.33-1.3328] is where it could happen. No recovery potential here for the time being though. We have to wait for the current drifting down to stop first.

ER: Could reach 560, but indicators are not very convincing. We don't see any reason to rush into the market using long term scenarios. It is probably easier to swing trade using shorter intraday time frames, or wait a little using daily/weekly charts.

ES: We can see a bit of angst ahead of the 1000 key level, but current resistance level inches away from the much anticipated 1000 is also a strong technical level on short tick/volume charts, where action actually is. For now bounce level can be 984, or 8 or 16 points lower. 969 is now a very strong support level and it is clear ES needs a stronger base to prepare for the "final batte" ... :) It is only when 1000 is attacked that we will see more energy being released in the market.
A caveat though: volatility is still very strong so one may just as well hit 1000 first on a positive news then retrace, bounce etc

Watching short time frames is again most recommended.

Monday, October 20, 2008

Weeky Outlook on ES for Oct 20th to 24th '08

Last week's comment that we would see congestion (yet with high vol) until we pass 1000 again was valid and still is. Like with ER, we certainly have an upper bias now which we must observe with a lot of caution.

ES 60mins: 1000 is now in sight
ES has difficulties reaching overbought levels but should try and creep to 1000 indeed. Volatility is still high so i venture seeing the target onthe 60mins chart, but it could a little longer of course. If such attempt fails, we will look at 925 holding for a another round of buying then.

Daily: Same as ER
Yes, the situation is SO similar that i could almost repeat the same analysis. It is difficult to gauge how long the hangover period will last now, but 1000 is undoubtedly THE test level going forward, and at the same time, we'll watch carefully a possible support level (925) if the recovery fails (likely scenario) and if ES is then range bound for a while.

Weekly: quite dangerous still
We still have a pretty bleak picture here and Fib/MM targets do not look too good. Obviously extreme volatility often causes levels to be stretched without breaking making scanerios difficult to separate. Again, we'll see whether 1000 is tested and passed soon, taking into consideration that bears could try and take the market somewhat lower...


Weeky Outlook on ER for Oct 20th to 24th '08

Dominant TF: Daily, 60mins with the weekly chart obviously a little lost in this environment.
Swings: DN-DN-DN from UP-DN-DN
Market Direction(daily): recovery is now in sight, yet caution is still essential
Options (RUT): Low-prob condor is possible

Last week's report (monday pre-market) indicated we should not give up too quickly as the 500 level was bending but still holding in the storm. The next comment about a "hangover" period is still valid this week even if we are slightly more positive this week. Does that mean volatility will come down now ? maybe, maybe not... Going long on short times frames is possible, but conservative investors/traders may want to wait a little.

Now, let's have a look at our charts:

EURUSD: we may have found a bottom, we have no clear indication of a strong recovery just yet so a congestion (with a lower bias) is likely for now until we get a strong signal. We'll therefore watch Fib levels on the 60mins chart, but on the daily chart, the test level remains 1.3672 which could be the signal we are waiting for.

ER 60mins: the worst is over, so what...
The crisis may be over, futures positions have been squared off on friday, Q3 corporate earnings haven't been too bad, so we're now ready to look a long entry point. However, we are still in a "hangover" period and volatility will stay strong for a while. 60mins may be a little too slow to take advantage of intraday play. We'll try and use this time frame to determine a entry point. We can try and find a better price, we can set our stops below 500, so now it's up to everyone to decide when to jump in.
NB: it is not an invitation to go long at all costs! We can still have bad news coming, so it may still be too early (and for most it definitely is!)

ER Daily: no big expectations
I here more or less repeat the above. We have some uncertainty showing in our indicators, with our MTFS rather typical of a failed recovery and Entropy showing a bottom but no strength yet. The 500 level could well be tested again even if we are now more positive.
Prices are so low that one can always enter small on a shorter time frame and accumulate later on when confirmation comes at this time frame.

ER Weekly: again this has been a market crash, and this time frame is obviously completely out of synch.
Reading a weekly chart at this point is useless. All we can say is that support levels are still valid with a clear drop in one week from 625 to 500, and this high frequency or spike will have tremors visible on shorter time frames for at least a couple of months. These last low levels should hold, yet we keep in mind there is still more downward potential (~440)