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.

Futility

We all have (or should have) something a lot more exciting in mind than charts today... Time to relax and enjoy quality time with close ones, people we really care for, so i won't bore you with market stuff today.

As mentioned previously, high volatility and low volumes make these daily reports almost useless anyway. OK, we've had another good day with tick charts. OK, those who have really nothing better to do today can keep going cautiously short, but we should rather have a thought today for those who are ill, left alone, cast aside, deported, powerless, oppressed...
With a special thought to you, good people of Zimbabwe...

cheers for now,
bv

On my way to the kitchen

You would have noticed my word of warning yesterday. Obviously the ongoing volatility again exacerbated the downward retracement, this making clear swings which were easy to trade in lower intraday time frames.

Now for today:

EURUSD: We have a Fib pattern forming, but little chance it fully expands in the short term. We have to wait it first breaks the triangle pattern, and there is too little energy right now. On the Daily chart, a retracement to Fib PR1 (~1.38) is technically our favourite scenario, but that target was almost hit on Friday already. Wierd movement, wasn't it ? It is now difficult to pinpoint where support level will consolidate this current retracement to then go higher. Maybe a good advice to stick to lower time frames.

ER: Retracement to Fib PR2 leads the way to a Fib expansion back to the 480s then close to 500. Somehow, it isn't clear yet whether there will still be enough energy to fight the level though. This time of the year, some traders may have the Christmas bonus in mind as an incentive, but most are by the fireplace waiting for warmer days. Longer term, i.e. early January? we should see some interesting action and behaviour around 500 remains paramount to determining market's mood.

ES: Yesterday's actual support level almost surprised us late in the trading day. We're now back to that 875 pivot level from which ES can really go either way. Since recovery happened with low volume, another look at volume charts is necessary here. Volume charts are great (32000V are equivalent to a 5 to 15 mins chart). Vol chart shows us an upper bias to 875, and maybe higher to 885 right now. Obviously they are not compatible with a daily report.
Again no indication ES will go much higher so long term players are better off in the kitchen preparing the turkey for now...

Have a great day,
bv

(posted 2:30 AM Eastern)

Weekly Report on ES - Dec 22nd to 26th '08

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. This time ES can indeed provide some clarification.

ES 60mins: ES bounced twice near 875 which is an important pivot level. Yet dynamics are slowly turning a little bearish so ES could certainly test it again, to possibly bounce again. One should give the downturn more credit and anticipate related effects on ER.

ES Daily: Here as well, indicators seem to show prices hovering relatively high waiting to fall to a support level where buyers would jump in again. Our support levels are 870, 840 and then 810. At this stage, we don't see prices falling that low though.

ES Weekly: 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.

(posted 3AM Eastern)

Weekly Report on ER - Dec 22nd to 26th '08

Dominant TF: 60mins leading, with Daily dropping lately.
Swings: UP-UP-UP from UP-UP-UP (60mins swing is hesitant)
Market Direction(daily): cautiously long or taking profit.

Last week monday, we were long while we anticipated the energy exhaustion ahaead of the 500 level. A fairly easy week overall except we had to remain cautious ahead of triple witching. Now comes the festive season with lower volumes, a bit of position squaring writing off losses by Dec 31st, so we can expect again some volatility ahead.

EURUSD: last week, i really thought €/$ would calm down before marching higher, but we remained positioned long and quite amazed by the $ freefall. EURUSD finally pulled back on 1.47 almost exactly on MM SR level, so again our indicators do react well even if again volatility acts as a time compression. Everything happens a lot quicker these days. At this stage, we should see some slow down possibly around 1.37 (retracement stopped on stall level ~1.38), but the overall direction has now changed, and we shall either see a range shift i.e. same dynamics just shifted upwards due to rate cuts, or a continuation of the fall. We are for the time being waiting to check EURUSD behaviour on salient support/resistance levels before updating our scenario. Our short advice would be to sell the US$ following the 60mins charts as well as tick charts. Upward potential is however limited.
(Image posted)

ER 60mins: surprisingly little difference from last week. ER is still inches away from the 500 target, and finds it difficult to go higher. It is only a matter of time though even if there is still a possibility to see ER consolidating around 470. Here as well shorter time frames are recommended to possibly buy in dips (dominant trend is up).

ER Daily: upper bias weakening here too. Momentum trading should take ER to 500 and even maybe to PR1 around 520, but difficult at this stage to figure out whether we shall then see new energy coming from a breakout effect or another pullback. The latter scenario is preferred, hence caution must be exercised. Those who are still long can tighten their stops, otherwise it is probably too late to enter except on a stop entry above 500 (risky).

ER Weekly: With Entropy bottoming out, we now look at the MTFS pattern and realize that while it does show some recovery potential (+33% from recent lows), there very little chance to see ER going much higher. Logic would say selling would start on key MM or Fib level, as mentioned above on lower time frames. This is a time of uncertainty so buyers should look at buying on an aggressive limit price or wait for a consolidation and buy market later on.

Nothing wrong with staying on the sideline and enjoy a quiet festive season after such an eventful year...

(Posted 2.30 AM Eastern)

Euroller-Coaster

What did i say about profit taking zone on EURUSD...? OK, to be honest, volatility still surprises me and i did not anticipate it would retrace to Fib PR1 so quickly. Again and again, high volatility is like time compression, so one just needs to shift time frames and go with the flow...

EURUSD: Our chart seems to indicate some calming down today as with some conflicting forces now brewing. It is difficult to pick a direction for the day, however the oversold situation should push the US$ down. A shorter time frame is recommended. Longer term, the US$ will definitely weaken further.

ER: Yesterday's dip should not have any lasting effect on prices slowly rising to test the almighty 500-520 zone. We do have a slowdown in energy, but this could be understandable hesitation on triple witching day. We expect a clearer picture later on today although volumes could be turn a little lower ahead of the festive season.

ES: Similar scenario at first sight, if only one wouldn't see a more definite exhaustion in the short term. One might therefore test lows near 875 again where one could then possibly gather some strength.


Overall, we see little chance of a rally coming. On the contrary, we might just be heading toward some drifting til the end of the year. More details in the weekly report this weekend.

Good trading to all,
bv

(posted 1AM Eastern)

Lull before another storm ?

Sorry i couldn't make it yesterday but i had no connection available 39000 feet a.s.l.

Fantastic action on EURUSD, with a dollar in a near free fall after the rate cut. At least we all know it should be the last one... :) The effect on indices has been minor overall.

Let's see what's in store for today:

EURUSD: short term, stall level is now around the corner just above 1.45, but we have a stronger resistance level around 1.462 to 1.464. The daily MTFS shows that we are entering profit taking zone, so we'll watch carefully for a reversal on the 60mins chart or below to take profits or at least tighten our stops.

ER: 481-484 was a reasonable target area, where we could see some mild profit taking ahead of the 500-506 major target zone. The daily chart shows a pennant or rising triangle pattern* which is not a clear bullish signal in the short term. We still have substantial conflicting forces even if we will eventually reach the low 600s in a matter of weeks.

ES: similar story again. Our target levels here are low 920s which ES almost hit yesterday. It may get there today despite some uncertainty visible from the mild profit taking seen late in the day. Over the next few days, one could see a pullback (MTFS line separation on the daily chart) but we shall only keep that info at the back of our mind since the 60mins time frame dominates by far.

One shall keep in mind that we are approaching triple witching with a lot of position squaring before the festive season hence, stay aside, tighten stops, or move to lower intraday time frames and enjoy the ride...


Til tomorrow, have a great trading day :)




* http://ts-trading-technique.blogspot.com/2008/02/some-common-visual-patterns.html

(posted 2AM eastern)

US$ on sale...

We anticipate the Euro rally, but again to be honest volatility always amazes us and we didn't quite expect the breakout to take EURUSD to1.37 so quickly. We are long so we're not going to complain, but those who are short vega may be adversely affected.

EURUSD should retrace now that the target has been hit. We'll however wait for some confirmation in the early hours of the European trading day. We are in the meantime tightening stops or even closing our position.

ER: range bound unless one moves to times frames of 30 mins or lower. Bias seems very mildly up for the time being.

ES: same story.

In a nutshell, it looks like our indices are looking at their key target, but are too shy to try them (is that the Madoff scandal?). More exogenous factors may be needed, but one can in any case expect surprises ahead of triple witching day ending a crazy quarter. Once positions are squared off, one can anticipate a better visibility for the next couple of weeks.


NB: There will be no update for tomorrow Wed 17th.

(posted 2:30AM Eastern)

Weekly Report on ES - Dec 15th to 19th '08

Last week's report may have sounded confusing in a way as i clearly indicated a breakout situation while a pullback was also expected. Volatility indeed exacerbated swings on 60mins and lower time frames, and the retracement actually reached PR2 to the 840s even if i thought 875 could have held (it was a strong MM /Fib level).

ES 60mins: despite a fantastic recovery on Friday, our indicators show a possible exhaustion hence the forthcoming high should be lower than most recent ones, at least until new energy is added. We therefore anticipate a pause on the way to low 900s, possibly gathering strength on 875. The swing gradient also looks way too steep to be stable.

ES Daily: we could be tempted to discard the last red bar as it closed near bar friday's high. MTFS line separation is also generally indicative of a lack of underlying forces to carry prices much higher. The bias is however still up and one could see ES hover or even rise a little still. Having said that, a retracement will be necessary at some point this week.

ES Weekly: Entropy has now bottomed so we know prices are likely to recover even though in the usual seemingly chaotic environment. MTFS shows an early crossover, a blue bar and a recovering entropy could all lead to a scenario where price would head to 1000 (Fib + MM) by early January. We however don't anticipate that key level to be passed unless MTFS evolves into a more bullish pattern by then.

Weekly Report on ER - Dec 15th to 19th '08

Dominant TF: 60mins with other time frames not far behind.
Swings: UP-UP-UP from UP-UP-DN (please note a slight modification in swing display)
Market Direction(daily): staying long.
Options (RUT): put spread.

While our outlook proved certainly right, we have to admit that volatility played tricks on us again last week, thus confirming the need for daily raport updates, and positions adjusted accordingly.

EURUSD: last week's reports could not have been moe accurate on €/$. We advanced the move cautiously as the daily range could have held longer for another cycle. We are now on a short term resistance level which could slow down the current rise to ou 1.37 target. Profit taking is indeed expected down to the low 1.30s this week before marching higher. Having said that, the bias is still up so we'll wait for a confirmed downturn on the 60mins chart.

ER 60mins: quite volatile indeed with a dramatic bounce on Fib/MM on friday as expected. ER is now heading towards Fib expansion target in the vicinity of the MM stall level (~490). This is also a range high where prices could certainly pause.

ER Daily: Energy levels seem to be weakening ahead of 500 resistance level, here indicating again some hesitation. However the channel is confirmed broken so we can assume Fib PR1 will be hit this week. We shall however remain cautious about volatility spurt on coming triple witching day.

ER Weekly: Entropy has finally bottomed which is good news, however the MTFS pattern seems to indicate a difficult bumpy recovery even though last week ended on a blue bar. 500 and Fib PR1 ~530 seem close enough but those levels are unlikely to be passed in the short term.

Adrenaline rush...

What did i say yesterday !?!? i sometimes think my crystal ball is worth millions...
€/$ broke out quite strongly and rose about all day. Not a single red bar until 7PM !
A retracement, even if quite mild is now necessary to 1.32, or possibly to 1.3075
We can see that a provisional Fib Expansion pattern would take EURUSD to the highs mentioned recently. Let's wait for support for now though.

ER: we turned to lower time frames as it hovered almost directionless on the 1H chart. WE have now retraced to a strong support level around 440 (MM + Fib) where it could and even should bounce. I have told several times on this blog that we are not heading for a smooth recovery (weekly entropy has not even bottomed yet), so we'll stick to lower time frames or remain very cautious.

ES: similar story... I thought yesterday 875 would hold (MM + Fib) but the market decided to test Fib PR2 from which it could and probably will bounce back. We'll remain cautious until that support level is firmly tested (check MTFS pattern for confirmation)


Great trading to all and see you monday for the weekly report.


(posted 1:20 AM Eastern)