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.