Market update - Jan 9th '09

End of this relatively uneventful week.
EURUSD yesterday turned lower but didn't quite reach 1.35 then bounced again. I mentioned this short was counter-trend so conflicting forces always make it more difficult to predict exact turning points ahead of the trading day. EURUSD anyhow followed a Fib pattern exactly to its 1st target at ~1.38 to then retrace again. The situation is the same today with a short term upper bias so we may be near the landing zone mentioned in previous report from which the US$ would weaken again.

ER: short term upper bias seems blocked around the 500 key level and as we mentioned a potential airhole (daily chart) we have to remain careful here. However there is still some buying pressure here which could take prices away from this hesitation zone. We'll cautiously follow Fib targets on the 60mins chart for now.

ES: same situation, just a little easier to read. The "airhole" is here more evident, yet targets around 927 and then 950 look so close... ES probably needs to pull back to gather strength unless some positive economic news helps the market move away from this hesitation zone. NB: the ES tick chart also shows hesitation on 906 resistance level but shows some potential for gains today if 907 now turns to support level. Answer in a few hours...

( posted 5:35 AM UK - screenshots available on request )

Market update - Jan 8th '09

Previous reports anticipate a possible peak as we noticed how fragile the recovery had been last week. Again we have however been a little surprised by the amplitude of the move but it seems that ES losing over 30 points in a single day is almost something normal these days. For instance, let's rank all log returns for ES since beginning of 2004 on an Excel spreadsheet. Then , let's have a look at extreme moves in the top and bottom 3% (out of 1266 prices), we can see that from Sep 1st last year, we've had 90 prices (about 3 months), of which 50 fall in those extreme top/bottom 3% !!! Only 40 don't. To put this into perspective, this represents daily moves over 2%. Now we better visualize what volatility is all about...

Now back to our charts:

I commented EURUSD around noon yesterday and we got our short term move to target since. We do have conflicting patterns on the daily and weekly charts so we put things in context with the current strengthening of the US$ being counter-trend (ECB rate cut expectations). Our 60mins chart shows some erosion on target with a pattern forming on pivot level now turned to strong resistance. US$ should therefore fall further to just below 1.35 . But to stay on the safe side, we'll only confirm this scenario on resistance (~1.367). The daily chart shows a possible target below 1.32 (still counter-trend from weekly pattern).
Anyway, to make it short: check behaviour on MM level (1.367) for reversal to below 1.35.

ER: We anticipated that kind of airhole on the 500 area. It is likely to be tested again for resistance to send prices a little lower. ER could shed more points to settle on a Fib level (60mins chart). Like for €/$, we'll wait for a confirmation by checking ER's behaviour on 500 first, in which case, we would have a 481 target.

ES: Same correlated patterns with prices settling lower either just below 900 i.e. around the corner, or more likely in the 887 area.


Good trading to all,
bv

( posted 6:50 AM UK - screenshots available on request )

Market update - Jan 7th '09

As usual these days, we complement our short term outlook with a tick/volume chart. Obviously it is not quite compatible with a daily/weekly report but gives a better perspective to the 60mins chart, and i invite users of this technique to build their own mix of charts with the same indicator set.

So, what happened yesterday? First EURUSD had to make me lie by a few pips... I was targeting 1.33 (1.33057 to be exact) and the market bounced on 1.33119 ... Not quite an exact science, isn't it ? Anyway, the market bounced to a first Fib retracement target to pause there. EURUSD could retrace to the low 1.34s in the short term (tick chart). Longer time frames seem to show EURUSD looking for support to probably shoot higher later on.

ER carried on its course and hit its target. I conservately gave 510s, but it actually came inches away from the Fib retracement level on 519. Now it is not clear where it's going next, however it may look for support on 500 to then go higher. This however does not mean it will go MUCH higher. The selling point is maybe just a little higher (just above 550s). We are still in a failed recovery scenario on our long term weekly chart. (NB: failed recovery may mean cup&handle or just a choppy recovery with a better limit long entry point in the next few weeks)

ES is again following a very similar path with a substantial resistance level around 937, yet a willingness to go and test 955 before retracing. We'll remain careful as buyers may just give up here in the short term. Too late to enter long anyway...

( posted 7.20 AM UK - screenshots available on request )

NOON UPDATE: a commented chart is available on :
http://ts-trading-technique.blogspot.com/2009/01/eurusd-chart-with-commentaries-2.html

Market update - Jan 6th '09

Yesterday was "back to school - back to reality" and i expected more movement on indices and maybe less on EURUSD.

We do have ER holding just above 500 i.e. between MM and a Fib target, quite overbought, yet we don't know whether it can hover there much longer or is there a airhole coming. Technically, it could hit high 510s before retracing.

ES follows a very similar pattern, i.e. could reach 937 if only energy wasn't getting low. This often happens that apparently obvious targets neverg get hit, and we can find confirmation on our volume charts where 930 is a both a Fib target and a stall level. However, the upper bias is still quite visible there so we shall not rush into conclusion of an imminent retracement.
We also notice again the unusual Daily MTFS with the white line frontrunner. It hasn't reached overbought level yet, but even if we won't probably the well known bell shape MTFS indicating a clear recovery failure, we might see a variation like a double hump with more or less the same results. Again, let's wait & see how this develops.

Now back to EURUSD, where we are seeing the most interesting action. Again, i thought the 1.367 level would hold, maybe because i sometimes read level i can quite believe myself. The daily chart indicates a price stabilization on a close support level but that scenario is battered by the high level of volatility and the 1.33 Fib target is not that far-fetched anymore and on the contrary is now becoming quite realistic. This doesn't change our longer term outlook on the weekly chart. This can be confusing for some, but this is still a counter-trend trade for long term players. Here too, ticks charts provide a pretty good picture.

(posted 6.40 UK - screenshots available on request )

EURUSD Chart: a quick update from last wednesday's snapshot

It certainly wasn't exactly the easiest exercise to predict EURUSD over the New Year's break, but i did nonetheless give it a shot, and again i have to admit that i somewhat underestimated volatility on my Wednesday morning chart. I gave a recommendation for a low potential short which proved more than OK as EURUSD is now reaching its target on pivot level (Daily chart). AN OVERALL VERY GOOD TRADE !
It will now be very interesting to see where it will find enough support (probably around current levels) to then bounce back (the weekly chart still points upwards).

Obviously, this kind of report remains a little off-topic as it concerns mostly those who do run the toolset locally on their machine.

Happy trading,
bv

Weekly Report on ES - Jan 5th to Jan 9th '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.

Last week, i mentioned prospective Fib targets without realising one minute we could be there already... Yet, recovery may be relatively limited in the medium term (longer time frames).

( NB: we here also post a volume chart to show how clearer the picture is here. Our indicators work like wonders... )

ES 60mins: Upper bias is still there despite our targets having been hit yet, a slowdown looks necessary even if we don't see it clearly just yet. It may happen near the 937 pivot level and we might want to take a look at volume charts for accurate targets. At this time frame, we certainly remain long for now, with stops tightened a bit near close Fib retracement levels.

ES Daily: We here have the same hesitation as with ER with the MTFS white line going its way as a frontrunner without much support. We may therefore end up with some retracement or return to the same channel. We'll however give the current upper bias a chance particularly if volumes start coming in. As a matter of fact, we do again recommend long volum charts like 32000V for a clearer direction.

ES Weekly: No change from last week AGAIN, 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 - Jan 5th to Jan 9th '09

Dominant TF: 60mins leading, with Daily dropping lately.
Swings: DN-DN-UP (hesitation on peak)
Market Direction(daily): cautiously long

Since this weekly report is always based on the daily chart, i wish to remind readers that visibility on that chart is generally limited to abotu 3 bars, sometimes more, often less, particularly at times of high volatility. This last week was special also on account of the mid-week break, low volumes and the usual "window dressing" with portfolio managers adjusting positions for reporting on Dec 31st and Jan 2nd.
Again we warned that the 60mins time frame (as well as lower intraday in fact) was the dominant time frame so we picked up the nice up move on Friday.

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

EURUSD: the 60mins chart does no longer give us clear indications except maybe the continued hesitation around 1.39 with a strong support level only weaking a little to pivot level. Technically this only tells us that the US$ could bounce from here... or gain further ground. Should it go that way, we already have a prospective Fib target which corroborates a scenario of a lower support level on the Daily chart. On that chart, Fib retracement level is around 1.38 and MM pivot level a little lower. Obviously we always prefer when they concur, but the general trend is there. Furthermore, the MTFS pattern indicates a "slow landing" near current levels although it could later on also turn to "erosion". In such case, support would be even lower. The Weekly chart is still moderatley bullish.
One could see the current dynamics motivated by expectations of ECB cutting rates mitigating the fall of the US$ in the coming couple of months.

Now back to ER:

ER 60mins: This nice ride to 500 wasn't visible when the week started even if we had a possible Fib target around 510. 500 remains a strong psycholigical level where we see energy weakening a bit. We don't see any significant retracement coming right now though. MTFS indeed shows some resilience in overbought territory. A drop to first Fib level below 490 is however possible.

ER Daily: Similar to last week, we are a bit uneasy about the configuration with the MTFS white line going its own way, with little or no support from the rest of the troop. Are we going to see the green and brown lines rallying or will the frontrunners run for cover...? Such hesitation is understandable on key levels, particularly after a period of low volume. So again, we shall remain very cautiously long here.

ER Weekly: No change from last week AGAIN (cf. reports Monday 22nd and 29th). 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.

(posted Monday 5th 7:50AM UK)

EURUSD Chart with commentaries

Here is a commented EURUSD chart for a change.

Today is however not a day to spend watching charts, so i wish you all a great New Year's Eve tonight...

Cheers,
bv

Apathy

Just a few lines in terms of market update today.
Volumes are quite low, impeding good market reading anyway.
Only EURUSD seems to follow patterns. It should hover toward the bottom of its current range i.e. towards low to mid 1.39s. The Fib target is actually lower, but again, on account of low volumes, difficult to say whether we will reach our target today.

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