Monday, November 30, 2009

Market update - Midday 30/11/09

11:30 AM Eastern.

I assume you have now noticed the test level on ES mentioned earlier and took a short. Some would have even gone for a options butterfly or placed breakout orders.

EURUSD is also behaving as anticipated.

Weekly Report - Nov 30th to Dec 4th '09

On Friday, ES bounced to 1095 (cf report) responding again pretty well to MM/Fib levels. The Dubai pseudo-bankrupcy was obviously a non-event to manipulate markets on a light volume day. Some traders have made a LOT of money on that kind of hoax.

Anyway, looking at the forthcoming week, we are still in the same daily channel even though the "confusion factor"is increasing. This 1095 area is again a test level to try and test highs again around 1110 or follow the down Fib expansion pattern visible on the 60mins chart. In any case, we have only 2 scenarios either the channel on the daily chart hits 1125, or the pullback starts on current levels (with a high of 1112). In this uncertain environment, an upper bias is likely at first.

TF tested its MM/Fib target around 562, then bounced to 579 which a test level (also Fib/MM). It is following the same dynamics as ES and despite the same upward bias in the short term, lows should be tested again by mid week.

To be quite honest though, I would wait for the market to settle a bit after the long weekend, so a mid day update would be justified.

EURUSD: hit stall level on 1.507 with some residual buying pressure. A lower time frame would be recommended to pick a reversal short signal which could take prices back to 1.496 later on. We will monitor MM/Fib levels when the MTFS is completed and sellers take control. Profit taking should remain limited.

( posted late 8:20 AM UK )

Friday, November 27, 2009

Market Update - Nov 27th '09

ES took a bit of a knock on Thanksgiving, only exacerbated by lighter volumes. It has now hit stall level on 1070 where selling should slow down and maybe even bounce. Reaching strong support level in the low/mid 1060s is however likely. On daily/weekly time frames, even though selling was abrupt we will only validate the "big slide" on a channel breakout.

TF is already on strong support level, and on Fib/MM target on the daily chart. Current levels should hold for a short while, but it looks like the substantial retracement announcement a while ago is under way. If current levels are broken, the next target is in the low 530s.

EURUSD has reversed quite abruptly to also reach a Fib target on current levels (~1.482). Selling pressure is still prevalent in the short run even if lows should hold for now. In case of a bounce, 1.489 (and then maybe 1.495 later on) will be test pivot levels which could send prices further down or not. Mid to long term look a little messy, so shorter time frames are again recommended.

( posted late 8:40 AM UK )

Thursday, November 26, 2009

Mid-day update

What a beautiful slide...
Selling pressure is still strong but target area is now in sight.

Market Update - Nov 26th '09

Same confusion for longer term players, and same fun for intraday traders. The trading range is known, so is our preferred time frame (30mins to 60mins). Levels are nicely demarcated with MM and Fib levels... so much so that the overall chart reading technique is just a little "add-on" to public domain stuff.

So, ES bumped onto the strong resistance level to retrace abruptly. Test level will be the range lows now. Buyers may give up the fight and let the big slide begin. We'll first check 1095 (stall) and 1093 (strong support) for a possible breakout. Note that the daily chart is not indicating anything particular, hence despite this volatility spike, this is just the same congestion on that time frame.

TF is also aiming at range lows around 580. We've been repeating that TF seems to be leading and while there is still a bit of fighting around the current range, a breakout to 560 (and possibly lower) is in the cards.

EURUSD did hit our target on 1.513 to trigger some normal profit taking, probably to 1.5045 now. The low 1.50 have to be tested for support to validate the new range after yesterday's breakout. We have no indication of a major pullback just yet, so intraday time frames are again recommented even if not quite adequate for this daily report...

( posted very late 8:45 AM UK )

Wednesday, November 25, 2009

Market Update - Nov 25th '09

ES hit 1095 briefly, which served as a test for the 1093 level mentioned recently. ES is now clearly testing the top of the range, therefore aiming at 1109. As we generally go with the flow, we have to assume it will try and breakout to go and touch the 1125 level, which would also be a channel high on the daily chart. We'll update the scenario later on. We first have to break current highs, which is in no way obvious.

TF is maybe providing more clues, with a test level around 593 which could send prices back down to recent lows. We do notice that TF is following Fib patterns very precisely on the 60mins chart. If broken, TF may test 598 or even aim for the 606 area. We however believe it will stay congested for now until it is ready for descent (daily/weekly)

EURUSD: on the rise again, and aiming for the strong resistance level (1.5015). Yet, it should lose steam and only a breakout situation to 1.513 could affect the scenario. We are still in the same "hesitation territory" visible in longer time frames, which should translate into congestion for at least a few more weeks until the weekly pattern is completed.

( posted late 8 AM UK )

PS: It must be noted once again that this method is adequate for swing trading as it captures energy level in a quantum way. It does not always capture volatility as the outlook is generally 3 bars ahead, sometimes down to 1, sometimes as long as 5. It is therefore impossible to cover a full day using a 60mins chart, and mid-day updates are too time consuming at the moment. Thanks for your understanding.

Tuesday, November 24, 2009

Market Update - Nov 24th '09

Short report from London while connecting...

ES broke out as we suspected, even if we again didn't quite catch the volatility spike. Not too important for swing trading though. ES should try and test the same 1093 level today, and remain somewhat messy on the daily chart. This pivot announced on the weekly chart is certainly still hesitant.

TF: same situation... Are we now going to see the much expected pullback...? Like ES, i don't think it will happen overnight.

EURUSD: largely oversold on intrady time frames. It could test 1.49 (MM) again or 1.487 (Fib), but a bounce (spike) is likely. Again, the probability of a sizeable retracement is fading, and we could see more of this congestion for at least a few weeks.

( posted late 8:05 AM UK )

Sunday, November 22, 2009

Weekly Report - Nov 23rd to 27th '09

The weekend is always a good time to reflect and gauge how previous reports anticipated forthcoming market action. It's not an exact science, and again, it is impossible to estimate whether this chart reading technique provides some insight 1, 2, 3 or sometimes more bars ahead. Overall, it's not doing a bad job.

ES has lost a bit of ground last week to the high 1080s and despite some buying late in the day on Friday, should try and find support a little lower, more likely around 1078 (Fib/MM). In any case, 1093 is a test level for this last retracement, which could trigger the last bit of selling to 1078 or send prices back to 1102. Should the market opt for the down scenario, we would still be in our same channel (daily chart) but we can't say yet whether ES has engaged into the retracement we've been announcing on the weekly chart. In addition, this weekly chart is still not showing a pivot, and indications of a retracement are starting to fade. This probably means that only a clear channel breakout on the daily chart can confirm the retracement scenario or not going forward.

TF has landed inches away from support (578) which remains a major test level. The short term outlook is hesitant with conflicting pictures across time frames, but the down side is more pronounced than on ES. Here again a breakout of the 578 level would certainly clarify our patterns and confirm a return to the low 500s.

EURUSD has test levels ahead (1.4873 and possibly 1.492) to try and stop the current erosion. There is no indication of a sizeable retracement, and on the contrary looks fairly congested with a support level just below 1.48 hit last Friday. On the upside, we'll keep an eye on test levels above and a possible channel breakout. We'll have to update this rather fuzzy picture as we go along.

( posted Sunday 6:20 AM UK )

PS: Note that on account of traveling, there might be no market update on Tuesday morning.

Friday, November 20, 2009

Market Update - Nov 20th '09

ES broke out on the down side. It was a typical breakout situation but i admittedly advised to cover both sides on a OCA basis. ES wiped the MM level to fall to the Fib level visible on the daily chart. Here again no surprise, and an easy trade overall. Today 1093 will act as a pivot levelto dtermine whether the index resumes south or not. Indicators will point timidly up to 1097 or even to 1102 but the job hasn't been done i.e. there are still a few sellers out there who will try and keep ES below 1093.
TF fell to stall level and should also try and complete the down pattern before moving on to a new formation. So, the strong support on 578 might be hit to make shorters happy, even if TF should try with much difficulty to move slightly higher (Fib Expansion). The 30 mins chart is easier to read and confirms the scenario. Basically, we're looking at a mild retracement up on the 60mins chart, some upward congestion on the daily chart, with the same weekly chart ready to swing down.

EURUSD looks congested with an upward bias. We have an unambitious short term target at 1.494 for now.

( posted 6 AM UK with an awful headache )

Thursday, November 19, 2009

Market Update - Nov 19th '09

ES once again behaved as expected and stayed range bound between 1101 and 1110. In such a situation, a shorter time is always recommended to pick reversal points, the context being provided by the weekly chart. The residual bullishness there is still suprisingly resilient. Again, it is difficult to predict whether ES will hit 1125 before the substantial retracement we've announced for quite some time, but this is in any case a good breakout environment where we can place stop orders outside our 60mins chart's range.
If we take cues from TF, the upside shows good potential after bouncing on MM/Fib levels on 594. Should that scenario materialize, we should see 610 to 612 being hit over the next few days. So, we'll have to be a little bit more patient for our reversal short...
EURUSD follows the same clear patterns. After hitting a high on 1.4990 it retraced to first Fib target and should head further down. This remains a relatively messy situation, congested at daily level, and not quite ready for profit taking. Shorter time frames (30mins) are easier to read with the same support level on 1.4891 for now. A second Fib level is around 1.486 but we again can't guarantee EURUSD is ready to retrace to the 1.46 levels.

( posted 4:45 AM UK )

Wednesday, November 18, 2009

Market Update - Nov 18th '09

The report yesterday indicated ES would try and aim higher, testing 1110 again, even if we are clearly in a 'confusion area' as this is also a reversal zone.
The current Fib expansion pattern had a first target on 1111, i.e. in the same target zone. It could break out to the next one up (1118) or more likely test retracement levels just above 1100 or even lower. In other words, the 60mins chart will probably look congested again, which means that a shorter time frame may be recommended, taking in consideration the context provided by the daily/weekly charts.
TF is hovering high near stall level, looking unconvincingly at creeping higher to around 610. A Fib target has been reached on 602. So, will buyers try and give it one last shot ? We hope to see time frames aligning for a clearer picture soon, and this probably on the way down.

EURUSD: The signs of exhaustion mentioned yesterday actually turned into a sizable retracement to bounce to Fib (~1.489). This pivot level will determine whether selling now resumes or not. Our indicators would rather point down, but rather to congest in this new trading range (yesterday's lows to pivot level) than fall a lot further.

( posted 5:30 AM UK )

Tuesday, November 17, 2009

Market Update - Nov 17th '09

So far, so good... ES climbed as expected to hit resistance level around 1110 where it started retracing. Erosion to ~1100 would be normal (Fib/MM), and although improbably to the next Fib levels. The daily chart still looks very bullish but may be losing steam and even stall ahead of the 1125 target. ES will at least try and give it a go in the next couple of days. The weekly chart is looking at peaking soon, so the context is known and understood. Providing this is in line with your trading style, lower time frames (15mins and 30mins) will be easier to trade.

TF reached the 2nd Fib expansion target (602), i.e. a little higher than expected. It is now more hesitant ahead of stall level (605) and strong resistance (609). If TF carries on leading, it should try and take both indices a tad higher, but certainly with increasing difficulty.

EURUSD was a little spiky yesterday, with larger players out there to clean out the book. €/$ briefly hit the resistance level on 1.501 again to then lose a bit of ground. Hesitation can help keep prices in current high range nicely delimited by both high and low spikes yesterday, but there are more and more signs of exhaustion going forward.

( posted 5:50 AM UK )

Monday, November 16, 2009

Weekly Report - Nov 16th to 20th '09

We've seen ES testing October highs to probably aim at channel highs, at the strong 1125 resistance. Nothing new here...
Bullishness is still indicated there on both the 60mins and daily charts. Our target this week is probably more the 60mins strong resistance level near 1110. It isn't quite clear yet whether ES will push to 1125 as we know a pullback is already announced on the weekly chart.
TF is leading ES and while it is aiming at the 60mins Fib target near 592 or MM resistance on 594, that area is also a strong 61.8% resistance on the daily chart (~597). Since we have here as well the retracement announcement on the weekly chart, we look at the resistance area as a potential reversal point we will monitor closely. We do not change our longer term scenario for the time being.

EURUSD is short term bullish trying to break out the 61.8% fib retracement to aim to stall level (1.4894) and probably higher to resistance level (1.501). That target will however lead to some congestion. I mentioned last week a scenario given by our weekly chart whereby EURUSD would stay high (retracement potential is fading by the day...) probably until year's end or more likely early Jan. That outlook is still valid.

( posted 5:50 AM UK )

Friday, November 13, 2009

Market Update - Nov 13th '09

Confusion area, didn't i say... A spike up early in the day followed by the same pace of selling like if nothing happened. Prices reached a Fib level where they could pause for a short while, or aim a little lower later on to stall (1082) or even to strong Fib/MM support around 1078. More economic news to be expected today, and maybe a "Friday 13th" effect, who knows... :) Still no change however on the daily and weekly charts, so it is too early to say that this is the retracement we've been waiting for...
TF coincidently is also on a Fib/MM support level and is in bounce territory. However the profit taking is market more clearly and the buying pressure should be faster exhausted here. We're not yet in a clear down trend even if the market will try current support.

EURUSD broke on the down side and could still go lower after a pause (early MTFS crossover). The daily chart shows buying pressure fading, and the current channel can only be sustained if we have a series of higher highs, which looks unlikely now. Again risk-adverse longer term players should not rush into selling, but trading a 30mins chart or lower is certainly a lot more fun.

( posted 4:30 AM UK )

Thursday, November 12, 2009

Market Update - Nov 12th '09

I called it a "confusion area" yesterday with a breakout attempt which failed to reach the 1113 target. More of the same today with a possible further erosion to 1085 then 1079. Again, we have conflicting forces with some congestion in intraday time frames, a residual buying pressure on the daily chart and some indication of a forthcoming pivot on the weekly chart ! Overall, we anticipate a reversal even if the exact timing is difficult to predict.

TF also hit the resistance in the low 590s as expected and should also retrace later on... Patience is a virtue, so let's not read too much between the bars. Although a pivot is expected on the weekly chart, one must always go with the flow and refrain from being contrarian and press the button too early. The technique is certainly more than dynamic enough to prevent acting too late in any case.

EURUSD: Again a 30mins time frame gives better reversal points here. The €/$ hit support level to then test the pivot again, behaving almost like clockwork. We should see the same kind of congestion as with indices, with a likely return to support around 1.495. Unlike indices though, retracement potential is limited. Breaking current support could trigger some selling, but congestion is the same range is my favourite scenario for now.

( posted 6:45 AM UK )

Wednesday, November 11, 2009

Market Update - Nov 11th '09

ES behaved as expected, and will now need a extra push to break out again and reach 1113 to 1125. It isn't clear whether this will happen though.
We are really entering a "confusion" area, but having said that, one should always refrain from adopting a contrarian view and go short too early.
Shorter time frames are recommended.

The situation is similar on TF with a strong resistance on low 590s. There is still some residual buying pressure for now, and we may see highs being tested once again, but a reversal point is in the cards within a day or two.

EURUSD: "high and hesitant" i said yesterday. We have clear support and resistance levels provided by yesterday's high and low. A breakout (probably on the low side, but who knows...) is possible, but congestion is more likely. A lower time frame (30mins or less) will provide clearer pivot points.

( posted 6:55 AM UK )

Tuesday, November 10, 2009

Market Update - Nov 10th '09

ES did not hesitate long on 1071 to break out straight to resistance level in the low 1090s where buying pressure is now easing a bit. We could see at best a modest retracement later in the day, but the daily chart is still quite bullish so we could aim to the top of the channel equating with strong resistance level around 1125. The weekly chart is again pointing for retracement but there is no confirmed pivot just yet, so a last bout of buying could indeed be the trigger we're waiting for. Note that dominant time frames are short intraday and weekly, which is unusual, and could indicate more volatility ahead.
TF also followed suit and while it seems to be pausing ahead of its target, it should later on hit mid-590s. We'll try and make some sense out of levels as we get near those levels to gauge whether it could indicate a good reversal point for both our indices. TF is certainly more "ripe" for a reversal even though there is an obvious congestion on the weekly chart now.

EURUSD: hit its target area around 1.499 to 1.502, so some profit taking is good measure now. EURUSD should stay relatively high but hesitant and probably range bound also. It is indeed an important target point on ALL time frames including Monthly.

( posted 6:50 AM UK )

Monday, November 09, 2009

Weekly Report - Nov 9th to Sep 13th '09

ES has indeed broken out to about 1070, as mentioned on Friday. It is very volatile and still fairly bullish, however this 1071 level is the 62.8% Fib retracement level which will dictate a return to the dominant up trend or not. The potential reversal is quite strong but is not confirmed yet on the weekly chart. We therefore recommend being cautious or trading the current hesitation period with lower time frames.
TF is also probably looking at peaking soon, and maybe on current levels actually. It has also been quite volatile around "news time" and briefly penetrated its target resistance level. Like ES, it is still aiming a little higher but energy is fading fast and we might see a pullback over the next few days.

EURUSD: Still very bullish. The channel on the daily chart is still valid, so we could see prices close to 1.5 and maybe higher this week. The retracement potential is being exhausted in the short term on the weekly chart, so we might then enter a congestion period in this price range (above 1.465) instead of a US$ recovery. The correlation with indices (and commodities like Gold) is very strong, and profit taking is very much in the cards there...

( posted Monday 6:40 AM UK )

Friday, November 06, 2009

Market Update - Nov 6th '09

ES took us by surprise to get straight back to range highs (top of our price segment at 1062), making chart reading a little more confusing. In the short term, we may see prices staying pretty high, and can't even exclude a possibility of a breakout to 1071 here. However, if we put information from all our time frames in context, and while the weekly pivot is not confirmed yet, we should take this period as normal hesitation around a reversal point, and switch to a lower time frame, take a step back until the fog clears up, or take a shot at it and now wait to go short again.
TF is also on a strong resistance right now with both a clear upward bias in the short term AND a clearer pivot situation on the weekly chart !!
We'll check Fib levels on the daily chart and keep in mind that both indices are highly correlated to take cues from TF and possibly apply them to ES.

EURUSD: The 1.489 resistance level should be tested again from breakout. As said before, the retracement potential on the weekly chart is weakening, and we may have to see the end of the current pattern through the passage of time (up to 2 months) or a sudden breakout to the 1.56 area...

( posted 6:45 AM UK )

Thursday, November 05, 2009

Market Update - Nov 5th '09

ES found it difficult to pass the mid 1050s as mentioned yesterday to then fall back to a regular Fib level in the low 1040s. Nothing exceptional here. While erosion should continue, we are now entering a phase of uncertainty until lows inthe 1030s are tested and fought again. A new set of time frames will be helpful here. Volume based charts are quite appropriate for instance.
TF is also both bearish and hesitant near support levels. The low 560s must be broken more decisively to open up to new support levels in the mid 540s. There is however some bounce potential along the way at least at daily level for now.

EURUSD: Now that it has retraced to MM/Fib around 1.489, a pause is nothing but normal. We may now enter a period of hesitation with a support level on 1.48 (check Fib levels on 60mins chart). As time goes by, the retracement potential on the weekly chart will keep on fading, and while there could be volatility or congestion, we may have to wait for a MTFS crossover in a couple of months to start seeing a change of regime.

( posted 5:45 AM UK )

Wednesday, November 04, 2009

How far ahead ... ?

Not an update... just a reminder on the topic: How far can we "predict" the market behaviour ?

Indeed, i have said repeatedly that the tool set as it is does not capture volatility very well "mea culpa" but at the same time, if we use it for its intended purpose i.e. swing trading, turning points, targets, energy levels and support/resistance do provide collectively a more than adequate picture.

On average however, the market outlook is valid for 3 to 5 bars, sometimes brought down to 1 bar in case of a high volatility environment. Since the daily chart outlook often does not change enough to justify a regular update, the report tends to focus on the 60mins chart which obviously could warrant 2 reports a day... which i don't necessarily have the time for... A bit of a catch-22 ... So if any one wants to give it a go and post a mid-day update...

Market Update - Nov 4th '09

ES behaved pretty well and stayed above 1032 as expected. It may even try and creep higher as short sellers take their profits. There is no indication that this recovery will last, so we'll just check MM/Fib levels on the daily chart (1052?).
TF follows the exact same path, and again shorter time frames are recommended for those looking for entry points in short term retracement trades. The mid term trend is still down even if the markets are obviously hesitant on a strong support level (562 for TF, 1032 for ES). The longer term support will probably be found within the next price segment down.

EURUSD also behaved nicely and bounced on our support around 1.464 to now aim at the 1.477 area. We're obviously in a channel and the longer term retracement potential is limited, but may see 1.464 tested again in the next few days. If broken, EURUSD could retrace to 1.44 within a few weeks. We'll come back to this scenario in the coming week.

( posted 5:30 AM UK )

Tuesday, November 03, 2009

Market Update - Nov 3rd '09

ES fell back to its support level where it bounced unsurprisingly. We do notice that lower time frames are more than recommended. ES should aim lower this week anyway, but we'll again check the strong 1032 level for support. Prices should stay low, but above that level today.
TF was decidedly below the 562 key level yesterday, which could indicate some further erosion. We are however approaching bounce territory near September lows. Like ES the retracement is now engaged though and prices could shed another 10% in the next few weeks.

EURUSD is hesitant on pivot level (1.477), but despite the short term volatility, the US$ should later on strengthen to around 1.464

( posted 7:15 AM UK )

Monday, November 02, 2009

Weekly Report - Nov 2nd to 6th '09

ES not only turned south again on Friday as expected, but it went straight back to previous lows and further down to strong support level. End of month window dressing probably also caused additional volatility to the market.
The market is obviously bearish and the next breakout (a short term bounce is possible on Monday though) will take prices to the next price segment, with a target area around October lows (next stall level also).
Note that picking the right time frame is not as easy as it looks, and a 30mins time frame can help determine turning points.
TF is also on a strong support on 562. In fact the current configuration is very very similar to ES. A bounce is also possible here but TF is likely to test high 540s and could even reach low 530s later on. It should however not aim back straight at low 510s (weekly) without testing 560 as a resistance, but we'l review this scenario in due course.

EURUSD: We've seen clear swings with a drop on strong resistance down to strong support. Does that mean that the US$ will fall again? Probably not. The MTFS crossover is not indicative of a sustainable turnaround. We'll therefore check for the next Fib level for resistance.
On the Daily chart, selling pressure is still there, so the current support on the 60mins chart will be tested again, and probably lower to around 1.464 .
No change in our longer term outlook.

( posted 6:15 AM UK )