One day at a time...

OK, yesterday was a bit of a toss of a coin on pivot level, and it could really have gone both ways. The market chose to go up (that was my smart guess also), even if this still looks rather unconvincing. Volatility is still very strong and coud cause more wild swings in the coming days.

EURUSD is certainly looking bearish, so we'll keep this as a sign of more deleveraging and flight to safety in progress, even if the logic would be for the $ to weaken eventually. In the short term, 1.256 - 1.257 is a strong support level.

ER still has some upward potential and could crawl back to latest highs, yet energy isn't quite there so volatility can still play tricks. So let's see if we pass our resistance level around 451
ES follows a similar pattern, and also has a strong hurdle along the way to recent highs. Indeed Fib and MM levels show a resistance level around 873 to 875.
We'll therefore be very cautiously positive today.

Where's the Christmas spirit...?

Sorry i missed some action on Monday. I spent about 16hours in a plane and Internet above 30000ft when available is outrageously expensive.

I remember saying we should not pay too much attention to the rise late last week. ER rtraced a little quicker and stronger than anticipated, but we all know volatility exacerbates movements and support was found close to Fib PR2 above 410. Similar scenario for ES. So, what do we read now?

The 60mins chart shows a mild bounce potential. Swings have high gradients which are hardly ever stable, so we'll now watch ER's behaviour around this pivot level (~440). We can have a Fib pattern going both ways. We should see soon enough whether prices go north or south from here. The upper bias over the next few days is our favourite scenario for now if the daily chart gives us a blue bar today. The target over the next few days would then be the low to mid 480s again, and also more visibility ahead. In the more pessimistic scenario, we are looking at low 400s, then 380... Quieter markets ahead of the festive season would certainly be much appreciated...

Weekly Report on ES - Dec 1st to 5th '08

ES 60mins: stretching resistance level
Same dynamics as for ER although a little more contained. It is difficult to say whether one should take volumes too seriously for the 2nd part of last week as it seems ES has been gliding a little too high and may fly through a air pocket now. Despite being overbought, we foresee no change in the overall bullish sentiment. We just have to check where support will be tested, possibly in the 875 area, or a 1st Fib level below.

Daily: not looking too bad now at last
Obviously the MTFS recovery is a big question mark but a channel breakout could trigger some buying to the 1st Fib level (~960). We do not anticipate it just yet and some consolidation is more likely. Again, even if the worst is probably over, we shouldn't too bullish too quickly at this time frame at least.

Weekly: inches away from Fib target.
Here as well, one should certainly NOT aim at a quick turnaround and start buying frantically already. The situation is similar to the daily chart i.e. bearish and at the same time very oversold. Like for ER, we shall wait a couple of weeks and maybe until January to confirm a reversal even if we do not anticipate more than a crawling back to former higher over at least one year.

NB: NO DAILY UPDATE TOMORROW TUESDAY

Weekly Report on ER - Dec 1st to 5th '08

Dominant TF: 60mins with other time frames not far behind.
Swings: UP-DN-DN from UP-DN-DN (is the worst behind us ??)
Market Direction(daily): staying long.
Options (RUT): put spread.

Last week was short but bullish nonetheless, and we are definitely seeing a possible change in mindset, at least justifying trying going long. ER is now aiming at 484, last step before attacking 500. Let's see whether we have a good plan of attack, with a first look at €/$.

EURUSD: €/$ reached a target we gave last week, and could have then tested further levels, ~1.33 etc. It instead stayed in the same channel, hovering near a support level around 1.27. Indicators are not showing much energy just yet, even we reiterate that the $ must weaken eventually (weekly chart). We will therefore watch the daily channel as well as the price segments. €/$ can indeed crawl back to last week's highs or break current 1.27 to test October lows again. At the moment, a first bounce is likely, until energy picks up to weaken the $ over current resistance levels.

ER 60mins: aiming at 484 (stall level)
At this point in time, and maybe due to the short week, energy seems to be lacking to take ER much higher. We do notice the ~380 lows have turned to very strong MM support level. Pivot level (~440) held for a while before the long weekend, but weaker volumes may indicate that that same pivot level could be tested again for support later on. For the time being we still give the upper bias a chance to hit 484 before retracing.

ER Daily: looking better
we had our entry point last week with a controlled risk as we placed our stops below recent lows. Our indicators do show a definite change in market sentiment so while volatility is remaining high, we are slowly turning bullish (Entropy bottomed up and MTFS show positive gradients in oversold territory). We are here also aiming at 484 then 500 as test levels going forward. Again, we do not anticipate a smooth ride and a return to the 440s or at the very leat the lows 460s is quite possible.

ER Weekly: bottom ?
Entropy could bottom soon if we project current trend (1 week or 2). However we don't have a MTFS conducive to a decisive recovery yet. For the time being, we'll follow the scenario of a weak bounce. We may have some XMas buying or a January bargain hunt once 2008 books are closed out. Conservative long term players should at least wait for a blue bar at this time frame.



ON ACCOUNT OF THIS EXCEPTIONAL MARKET SITUATION, DAILY UPDATES ( --- EXCEPT FOR TOMORROW TUESDAY --- ) WILL BE POSTED ON THIS PUBLIC BLOG THIS WEEK AGAIN.

(posted Monday 1AM Eastern)

How do I read charts ?

No report today. The market behaved as expected yesterday with a bit of shopping spree, maybe indicating the worst is definitely over. We will review that in detail in the weekly report.

Today, I decided to instead just post a commented ES chart for those a little more interested in the technique itself.

Enjoy the long weekend,
bv

I can smell the turkey baking already...

A quick note to readers and users of this TS-TT:
Please tell me about your trading, how you use this report, how successful you are with it. Most non-users take it as context information and make money filtering their own trades with it. Obviously, it is only a daily snapshot, and it is not as good as seeing it live. The reason for this question is that this technology will eventually be sold during the course of 2009, and only users who have expressed interest stand a chance to be listed as exceptions to the license's exclusive rights. Anyway, we still have a few months ahead of us.

Let's have a look at our charts:

EURUSD: The pause announced on 1.295 resistance level lasted about half a day after which € charged in to test a stall level at 1.306. Next resistance level is 1.318, but energy is now lacking a bit. As mentioned on the weekly report, there is now a definite change in mindset and the $ will certainly weaken (is deleveraging coming to an end...?). For the time being €/$ stays in a channel (60mins) and should eventually reach 1.306 and then 1.330. Lack of energy and volatility make it however difficult to detect retracement points along the way.

ER: The resistance level mentioned yesterday is still there, and despite some minor profit taking, ER has proven quite resilient. Here again, energy starts lacking so there is a good chance of erosion. Maybe a good chance to try and enter long on aggressive limit orders. With a bit of luck, one can maybe enter long below 420 within a day or two.

ES: Again, very similar situation. ES found enough impetus to go test the 875 resistance level (yesterday's high of 874 to be exact). Here too, the change in mindset is obvious, but we can also try and enter agressively as we have a typical "failed recovery" pattern on the Daily chart, so a retracement is almost already written. ES may possibly hover high still, but it should eventually retrace to the high 810s, low 820s before breaking the channel and travel to 1000. Obviously, we'll also play the channel breakout if the retracement proves too contained.

Crystal ball

Again, it is interesting to see how accurate a scenario can be with however that same caveat of volatility acting as a time compressor. Oh well, it is a daily report, so users of our technique will obviously adapt to lower time frames, and others can always contact me for custom market analysis.

EURUSD: We saw that bounce to 1.27, which broke easily, so we stayed long to the next very clear resistance level at ~1.295. It is a resistance level which could break later on even if a pause is likely today. We'll provide new targets tomorrow.

ER: A similar story in a way as i announced the 440 target without fully anticipating it could be hit the same day. We do have an upper bias in the short term but profit taking is likely. The high 430s area is a substantial resistance for now, and even if we go higher over the next few days i.e. ahead of the long weekend. A retracement is more than likely so long term players do not have to rush into the market just yet.

ES: Very similar situation with a resistance level around 850. ES is short term overbought so should pause on its way to 875. Again, this is short term play, and not a motivation to buy frantically just yet. ES will retrace to the 810 area at some point.

(posted ~1AM Eastern)

Weekly Report on ES - Nov 24th to 28th '08

Last week monday, the title on the daily comment was "not looking good" and the weekly was on a similar tone. Now that we've hit our target, we're back to our drawing board trying to make some sense out of our charts. Markets being largely correlated, so please also read the ER report below.

ES 60mins: bouncing on key support level
Same dynamics as for ER, ES is aiming back at MM/Fib level around 812. The swing gradient follows the amazing recovery on Friday and is obviously unstable. So ES could hit the target, then retrace back a support around 781 to 784. We'll have to confirm that scenario tomorrow. Should volatility play tricks again, 812 could be passed then tested for support later. I doubt this could happen within a day though ( a lower intraday time frame is needed here )

Daily: hmmm not looking great still
This is where we certainly have to remain cautious. Our indicators are still bearish even if immensely oversold. Secondly, the 750 level appears a little weaker, so while we are moving away from danger zone, we're certainly not out of the woods yet.
We'll wait for a blue bar, a channel breakout and MM/Fib levels to go long at this time frame. For the time being, we remain short with tighter stops or flat.

Weekly: inches away from Fib target.
Here as well, one should certainly aim at a quick turnaroung and start buying frantically already. The situation is similar to the daily chart i.e. bearish and at the same time very oversold. Volatility may push players to test 710 and then only call for the end of the game. As we've seen in other markets, we do have some indications of a pending turnaround, which i call a change in mindset, but it is in no way confirmed on our charts yet.

NB:
- Today's chart snapshot is commented.
- Like for ER, daily updates will be posted on this blog this week again.

(posted 1:20 AM Eastern)

Weekly Report on ER - Nov 24th to 28th '08

Dominant TF: Daily, 60mins with the weekly chart naturally a little behind in this volatile environment.
Swings: UP-DN-DN from UP-UP-DN (have we bottomed ??)
Market Direction(daily): some will take a chance going long with a stop below recent lows.
Options (RUT): a Dec put spread is quite possible.

Last week monday, the scenario for the week was pretty clear, and we anticipated the fall quite well. But now that the purge is done and targets have been hit, what next ?

EURUSD: The daily reports last week have been pretty accurate, anticipating a drift to range lows around 1.245. We now have a recovery attempt and 1.27 is our immediate target. Our weekly chart also confirms the likelyhood of a bottom, but we'll wait for all time frames to agree on a turnaround. At this juncture, the € could strengthen only very slowly, and even stay subject to short term volatility. In a way, it may be a change in mindset rather than a definite signal just yet.

ER 60mins: bouncing on 375
ER is climbing back ground lost last week with hurdles mid way (32points segments again) and ultimately having to face a serious test level at ~440. In the short term, a bounce is more than likely as 380 is a STRONG suppport level, but we don't see any freedom to go high quickly as we have an enormous downward pressure to dissipate first. Aggressive short term players chould however have taken a chance and be long already with a stop below the 375 support level. We may also wait for a confirmation in higher time frames. One could say that a bottom scenario is likely, but is not yet as clear as for EURUSD.

ER Daily: still bearish technically
One may be in a hurry to get back into buying but this time frame should nonetheless help keep our cool. There is no rush to go long unless if one really wants to try and pick a bottom. All pointers are still down, so one may want to wait for an entry point later one this week.

ER Weekly: bottom ?
Last week, i mentioned that TRUE support would be 380. It sounded almost impossible and yet nothing surprises anymore with these markets. Now we've hit it and while we would like to see it as the ultimate bottom (and it could well be!), we have a LOT of negative pressure to dissipate, and we've all seen how much volatility those turbulences of energy have caused. Again, we must prepare for a potential change in mindset, but we should NOT rush into buying as our chart DOES NOT show any indication of a recovery in the short term.

ON ACCOUNT OF THIS EXCEPTIONAL MARKET SITUATION, DAILY UPDATES WILL BE POSTED ON THIS PUBLIC BLOG THIS WEEK AGAIN

(posted Monday 0:01 AM Eastern)

T.G.I.F.

Oh well, yes, i was right. I announced that purge and short sellers are happy today but i won't boast or rejoice in sympathy for millions who are depressed by these markets. To those i just have to say that the bottom is now around the corner. Markets have now reached the levels they were supposed to reach.

EURUSD: Hit the lower boundary of its short term range at ~1.245 where it could try and bounce a little. EURUSD is oversold but not yet ready to turn around. Over the medium term, one cannot discard a target around 1.23 (stall), or even 1.22 (strong support)

ER: There we are. We've hit 380, so we can now rest for a while. Volatility could exarcebate profit taking or some short squeeze, but more realistically, ER should stay low to dissipate the massive negative energy built in the market. Over the medium term, 437 is key level.

ES: Same story. We're now on 750 which is quite a strong support level. Here also a bounce is possible if not likely (tgt: ~781), and here also bear pressure is enormous. Short sellers may want to take profits and/or tighten stops.

Over the longer term, we still have a possible ES target around 710, but 750 could still hold so we'll remain quite careful here. The purge is not technically over and volatility can play more tricks. At this juncture, one can take profits and wait for a clearer picture, otherwise short intraday time frames are recommended.

(posted 00.30 AM Eastern)

Going with the flow...

What did I say yesterday in conclusion of the daily report? Yes, i used the word "purge" on purpose, and there was indeed an easy lucrative short. It may be painful for some but we need to go through it to rebound. Most institutionals have given up on 2008 and are preparing for a better looking 2009 but at the same time, we may have a patch of blue sky before 2008 comes to a close.

EURUSD: A very modest bounce is possible today but the overall trend remains down to a ~1.245 pivot level. Mid term, we however have to notice a likely bottom somewhere between stall level (~1.22) and ~1.245. This is no excuse to go long, but only to take shorts a little more cautiously.

ER: Markets are somewhat correlated and even a bounce on EURUSD may have an impact on ER. However the the trend here remains down until a new support is found. Such support could be near current lows, but is more probably around 390. What's another 20 point drop these days anyway...

ES: yesterday's fall stopped on a strong short term support around 812, but the downward pressure is still strong so we could be heading towards 750.


The purge is not over, yet it does not mean markets will lose 4 or 5% every day until we eventually hit the final bottom (I mentioned a possible ~710 target for ES in previous reports). Again, we'll remain cautiously bearish again today, and as usual, go with the flow...

(posted 11.30 PM Eastern)

Something's brewing here...

A bit of action and some good fun for intraday players yesterday. It seems these low levels are fiercely fought, yet no change in our market outlook...

EURUSD: 1.27 is now a STRONG resistance level but shows weaker energy levels. Our preferred scenario is the continuation of current drifting with steps on 1.257 then [1.251-1.253]. Obviously, in absence of intrinsic energy, EURUSD will be more sensitive to exogenous factors.

ER: Here also, lower highs and lower lows should normally indicate lower support levels. However, the stunning recovery on day close proves that 437 is still going strong. We will check for a channel breakout to change our mind. Until then same drifting, i.e. cautiously short.

ES: Fib/ MM target levels concurrently on 828 have been tested successfully, but there is still no underlying conviction the market is ready to turn around just yet. Here too, we'll check for a channel breakout on the daily chart.

NOTE: We may see a final purge coming these next few days. Our ES target is 812, or even 772 ! (lower time frames recommended)