Monday, January 12, 2009

Weekly Report on ES - Jan 12th to Jan 16th '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.

So, same story as ER's with the "airhole" turning into a sizeable retracement on the lower time frames. Again, no surprise.

We remain relatively bearish in the very short term (the dominant time frame is 60mins) and again we recommend following our 32000V volume chart today. It is difficult to provide an accurate weekly report until we have tested a support level and our patterns redrawn accordingly, so please check back for our daily updates posted early morning.

ES 60mins: Same bearish pattern as ER with a target clearly in sight on 875. Fall may stop on stall level (friday lows) or slow down until it finally comes close to target. If support isn't found there, ES may retrace all the way back to late december lows (low to mid 850s).

ES Daily: While staying in the same channel, ES should hit its low boundary for support (~875) or lower near Fib retracement level (~864). We are however not necessarily bearish over the longer term.

ES Weekly: Same weak or 'failed' recovery pattern, so as for ER we know we can either trade short on lower time frames, or try an aggressive long limit order or... stay on the sideline a little longer.

NB: There will be no market update on Wed 14th.

(posted Monday 12th 7:40AM UK)

Weekly Report on ER - Jan 12th to Jan 16th '09

Dominant TF: 60mins leading, with Daily dropping lately.
Swings: DN-DN-UP
Market Direction(daily): short (contrarian trade)

Last week monday, the word of advice on ER was cautiously long and we indeed saw it peaking. I mentioned the "airhole", so again this retracement is not exactly a surprise even if i admittedly didn't predict a target withany sort of precision. Sometimes we are in a position to read direction, sometimes targets, sometimes both. We sieve through information the best way possible, and always realize we have to deal with uncertainty. Overall, we're not doing too badly here...
(To users of our technique, for better cheart readability we recommend tick/volume charts again)

As usual let's start with the outlook on EURUSD:

EURUSD: EURUSD has been relatively difficult to read on the daily chart, because of conflicting information on this soft landing scenario. The Swing is still UP, giving some credit to a pivot in the 1.33 area , even is MTFS and Entropy have turned more bearish. Will support be found lower? The next Fib target would be 1.24!! In the short term (60mins chart), we have to give 1.342 a chance to hold even though €/$ should hit recent lows near 1.33 seen on Jan 6th. The weekly chart is now also more hesitant (red bar) yet here again, we'll assume the support level will hold despite volatility levels. Weekly patterns still indicate forthcoming bearishness on the UD$ once support is found. We shall probably see a lot of uncertainty on these low to mid 1.30s this week, so check for daily updates this week.

Now back to ER:

ER 60mins: ER is now engaged in a retracement with a few target levels from 469 to 475. MTFS is somewhat bearish despite being oversold, so our lower target should be hit even if not on a straight path.

ER Daily: MTFS would tend to indicate retracement could take prices back down to 460 (or lower). Volumes are not back to December averages though, and we believe substantial buying may kick back on a salient Fib level. One should trade short using a shorter time frame or possibly position ourself soon on an aggressive limit long order.

ER Weekly: Concurs to possible daily scenario, and virtually no change actually from previous weeks. We still have a better looking entropy and a "failed recovery" MTFS so some may sit and wait, some will soon enter long on an aggressive limit order, and most will trade shorter time frames, with the above context information in mind.

(posted Monday 12th 7AM UK)