Monday, December 29, 2008

Weekly Report on ES - Dec 29th '08 to Jan 2nd '09

ES and ER are certainly largely correlated hence it is always worth reading both reports (ER report just below). However information is sometimes clearer on either ES or ER.

ES 60mins: Upper bias with clear strong resistance on 875. MTFS pattern is only mildly bullish so if anything, we are very likely to see a test of that level as a support before going higher then. Our chart also provides prospective Fib targets (882, 900, 930) which should mark the way to recovery in January.

ES Daily: Prices have been hovering a little directionless lately, and MTFS is indicating some consolidation. It is however difficult to read markets correctly with such low volumes and the significance level is low. We shall therefore only reiterate how strong resistance level has been (~920) and rather follow action on the 60mins chart or even bettern on volume charts (16000V and 32000V).

ES Weekly: No change from last week, and similar to ER: Swing is up and Entropy has bottomed yet MTFS is not too bullish so one does not anticipate any significant take off, and after all one has already enjoyed a significant 25% recovery since recent lows, so a pause and some profit taking would be quite in order.

Weekly Report on ER - Dec 29th '08 to Jan 2nd '09

Dominant TF: 60mins leading, with Daily dropping lately.
Swings: UP-DN-UP from UP-UP-UP (range bound on the 60mins chart)
Market Direction(daily): preferably flat, or tight stops at this time frame.

As anticipated, no action on ER last week, and such situation should persist this coming week. As usual, we'll start the report with our outlook on EURUSD which is a lot more exciting:

EURUSD: last week, we indeed saw a retracement to ~1.39 on Monday which quickly proved to be a very strong support, from which the US$ started weakening. Those who followed our recommendation to sell the US$ must be smiling. We probably also have had a bit of luck as the fall of the US$ may however have been exacerbated by lack of volume inducing the US$ to lose ground without much resistance. The long term trend is in any case clearly indicating a return to the high 1.40s (or even higher) but this last spurt above 1.41 should technically only be a short term spike before settling below or at the MM resistance level (~1.4146).

ER 60mins: ER has been a little erratic at this time frame, yet we still have an upper bias hence a breakout is always possible even if there is very little energy right now. Lack of volume can also make market reading a little tricky. Those who wish to trade intraday in equivalent intervals should turn to 16000V bars for instance.

ER Daily: At this time frame, we see buyers resting rather than actively besieging the 500 barrier. This is typical of this time of the year, yet we may see surprising moves this week. At the moment, the time frame is clearly not the dominant one and MTFS is very difficult to read so we'll remain on the sideline or very careful as the situation is definitely affected by lack of energy and lack of volume.

ER Weekly: No change from last week (cf. report Monday 22nd). Entropy certainly looks a lot better but MTFS had an early crossover generally indicating a failing recovery hence should pull back before going higher later on. Like mentioned last week, buyers can maybe wait a little longer, or enter preemptively on an aggressive limit price or wait for a consolidation and buy market later on.