Tuesday, September 23, 2008

Mid Week Update

ER: Retraced to 704 as expected (see yesterday's report), and could actually drift lower still but we'll give a possible bounce a chance on this support level even if there no such indication whatsoever yet (bars are all solid red still).

ES: ES retraced deeper than anticipated. Like ER, it could technically bounce here, and like ER, there is no indication it will do so yet. It may take a long time for prices to settle even if the overall bottom is probably behind us now.

EURUSD: bounce on 1.464 or 1.46 is very likely.

(snapshots available on request)

Catching up on the Weekly ER Report

Dominant TF: 60mins, Daily, then Weekly (shorter intraday TFs recommended)
Swings: DN-UP-UP (from UP-DN-DN) strange isn't it...
Market Direction(daily): flat or long (intraday recommended)
Options (RUT): Vega is sky high but no change to our positions

Sorry about yesterday. ER became TF and I reacted a little too late for the open. ER is close to ES anyway, so besides specific levels, dynamics are the same and and market reading similar enough. Here is a shorter report for the rest of the week.

EURUSD: I mentioned gong long on € but the retracement to ~1.47 seemed remote still. Forex also went a little wild so no surprise the € strengthened even we saw it breaking the resistance fairly easily. EURUSD should retrace a bit and now stay above 1.464 (first target is ~1.47) and eventually climb back to reach 1.495. A period of congestion is also possible as we anticipate volatility to subside a bit in the next few days.

60mins: profit taking - retracement
Restrictions on short selling must be impacting trading even if we don't quite see its full extent here on futures. To no surprise, 750 was a resistance too strong to break, and profit taking was obvious. We now see prices possibly stabilising in the price segment above 719, or more likely in the segment below ([704-719]) as there is still some negative pressure to dissipate in the first few bars of the day.

Daily: hmmmm what now....?
Last week's post expressed concern about prices drifting to 690, and volatility even brought prices lower to 675. Now we have to wait and see where prices will settle. Indicators have taken a bit of a knock but seem rather positive, so again we can assume a support to be found and prices eventually testing the almighty 750. It can take days though.

Weekly: upper bias in an extremely volatile environment
Our indicators show how painful it is for ER to try and pass 750. Like last week, we'll rather watch shorter time frames taking in consideration a possible breakout effect. In the short term, uncertainty and volatility need to settle, so the more aggressive investors will jump in now, others will wait for the 750 confirmation.