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.