Sunday, January 18, 2009

Weekly Report on ES - Jan 19th to Jan 23rd '09

It is almost pointless commenting ES this week as patterns are VERY similar if not identical to ER's (see report and snapshot below). We shall therefore only mention specific key levels here.

NB: it is again recommended to swap the 60mins chart for a 32000V chart.

ES 60mins: ES is looking overbought yet is resilient and will probably aim at hitting recent highs again, and maybe the 875 area again later on. There is little energy left however so it is likely to be a bumpy ride and prices must hold above 844 to validate this scenario. This long is still a contrarian retracement trade (higher time frames) so there is no guarantee ES will not retrace at some point. For the time being we keep our long target on the high 850s.

ES Daily: Our indicators are still relatively bearish, but we certainly heed this key retracement level in the low to mid 810s which could develop to a Fib pattern back to the former highs around 940 later on. We don't see it happening straightaway though, and prices could well remain range bound for a while (60mins chart).

ES Weekly: Same weak or 'failed' recovery pattern as explained on previous reports. Those who chose to go long on an aggressive limit order must have been filled and a stop near or below last year's lows is in order. At the same time there may be no rush to enter long as ES may find it hard to take off in the short term.

Weekly Report on ER - Dec 19th to 23rd '09

Dominant TF: none really...
Swings: DN-DN-UP
Market Direction(daily): still short or out

Last week monday, i mentioned this short to a a Fib target or 460 or lower. We've now reached Fib PR2 (50%) where prices bounced a bit to target again (see Friday's report). Quite a good week overall, yet a little frustration at this juncture still as it is not easy to figure out where it could be going next. Is it the Obama effect ? We certainly do have 2 opposing scenarios on hand right now.
(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: Last week, i was a little hesitant as €/$ was pointing mildly down and we indeed saw some short term support just above 1.30 where it bounced back to range high just above 1.331 (MM pivot + Fib target).
We are here again in the middle of the road not knowing whether we will be dragged up or down. We are technically still on the 1.323 Fib retracement level where it could bounce to 1.394, or should last Thursday's pivot fail, resume the fall to... 1.24! In the very short term, this uncertainty is represented by this trading range we've seen in the last few days, i.e. [1.305 - 1.331]. We will therefore again watch breakout levels carefully to determine which of the two scenarios will prevail. It is really a 50-50 chance right now, but we should go back to range lows first anyway.

Now back to ER:

ER 60mins: Upper bias is visible but this remains a short term contrarian retracement at the moment.

ER Daily: Last Thursday's pivot on 437 (MM+Fib) may have been the trigger to go substantially higher, yet it still doesn't show on MTFS and Entropy. Our favourite scenario is therefore not bullish even if one may want to grab a few points on the way up on lower time frames. We may see a little bit of uncertainty here in the next few days as there is some negative Entropy to dissipate first. By mid-week, we should have a clearer idea about our recovery scenario. (Please note that we could test low 420s still before going higher even if this is unlikely). I remind readers that i advised either going short last week on lower time frames or place an aggressive limit order going long. It is now probably too late to go short, and now some may want to be long with a stop just below pivot (<440) or try a lower long entry. Possible but never guaranteed to be filled...

ER Weekly: Concurs to our daily scenario, and virtually no change actually from previous weeks. We do have a better looking entropy and a "failed recovery" MTFS so some may sit and wait, some will be long already, some will try to enter lower, some will wait. As said above, going long with a stop below 440 isn't too risky, yet, we shall keep in mind that if 440 breaks we can then go short to 365. Answer this coming week probably...