Saturday, August 02, 2008

Weeky Outlook on ER2 4th to 8th Aug '08

Dominant TF: Daily, Weekly, with 60 mins lagging
Swings: UP-UP-UP (from DN-UP-DN)
Market Direction(daily): flat, looking at going long again
Options (RUT): no change in outlook for August, i.e. condor outside the 625-750 range.

ER2 didn't pass strong resistance level and even retraced early in the week hence my previous weekly recommendation.
We are still in "holiday" mode and will be so until Aug 25th. ER2 has retraced mildly to the mid 700s is now back to resistance level ready to give a go at it again.

EURUSD: We watched the key level and we're happy to see the US$ looking a little healthier now. Obviously, it is way too early to rejoice and more bad news may be coming later on, but there is a general feeling that the worst is now over in the short to medium term that is. The debt level in the US and its dependency on China remains worrying.
US$ may try and test range lows again, but there is still no sign of a straight path there, and the key pivot may be tested again, opening the way for further gains later on.

60mins: strong resistance level here we go again
Not an easy time frame, so traders wishing to play a possible breakout are advised to move to a lower intraday time frame.
We certainly do have an upper bias, but no indication of sufficient energy to pass the 719 resistance level. Should a breakout be confirmed, we would jump to the next level in the mid 730s and eventually 750, but that goes way beyond this time frame.

Daily: trying to move upward
This is the dominant time frame and MTFS lines point higher. Line separation and a weakening entropy do not indicate a straight path to the next important levels (730s and then 750). It is difficult to predict duration of a congestion period or exact timing for a breakout, but at least no significant retracement going forward. Should buyers give up on 719 level, we shall look at the 1st Fib retracement level just below 700 for support.

Weekly: same trading range for now
Swing just oscillated again at current level. Last week has been positive and Swing can toggle up or down in this price area. We do also notice the bar has gone blue again. We however do not get much support from MTFS and Entropy, so one should not expect more than a "summer" recovery within the same [625-750] trading range.
The good news at least is that we are now leaving the stall area which could have led to a Fib expansion to 625. This Fib pattern hasn't technically failed yet, but we have so far no pivot on the daily chart which could lead us to a down Fib pattern. All in all, not quite cheerful just yet, but moderated optimism within the same trading range. This scenario will be valid until either boundary is being tested.