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)