Weekly Report - Nov 9th to Sep 13th '09

ES has indeed broken out to about 1070, as mentioned on Friday. It is very volatile and still fairly bullish, however this 1071 level is the 62.8% Fib retracement level which will dictate a return to the dominant up trend or not. The potential reversal is quite strong but is not confirmed yet on the weekly chart. We therefore recommend being cautious or trading the current hesitation period with lower time frames.
TF is also probably looking at peaking soon, and maybe on current levels actually. It has also been quite volatile around "news time" and briefly penetrated its target resistance level. Like ES, it is still aiming a little higher but energy is fading fast and we might see a pullback over the next few days.

EURUSD: Still very bullish. The channel on the daily chart is still valid, so we could see prices close to 1.5 and maybe higher this week. The retracement potential is being exhausted in the short term on the weekly chart, so we might then enter a congestion period in this price range (above 1.465) instead of a US$ recovery. The correlation with indices (and commodities like Gold) is very strong, and profit taking is very much in the cards there...

( posted Monday 6:40 AM UK )

Market Update - Nov 6th '09

ES took us by surprise to get straight back to range highs (top of our price segment at 1062), making chart reading a little more confusing. In the short term, we may see prices staying pretty high, and can't even exclude a possibility of a breakout to 1071 here. However, if we put information from all our time frames in context, and while the weekly pivot is not confirmed yet, we should take this period as normal hesitation around a reversal point, and switch to a lower time frame, take a step back until the fog clears up, or take a shot at it and now wait to go short again.
TF is also on a strong resistance right now with both a clear upward bias in the short term AND a clearer pivot situation on the weekly chart !!
We'll check Fib levels on the daily chart and keep in mind that both indices are highly correlated to take cues from TF and possibly apply them to ES.

EURUSD: The 1.489 resistance level should be tested again from breakout. As said before, the retracement potential on the weekly chart is weakening, and we may have to see the end of the current pattern through the passage of time (up to 2 months) or a sudden breakout to the 1.56 area...

( posted 6:45 AM UK )

Market Update - Nov 5th '09

ES found it difficult to pass the mid 1050s as mentioned yesterday to then fall back to a regular Fib level in the low 1040s. Nothing exceptional here. While erosion should continue, we are now entering a phase of uncertainty until lows inthe 1030s are tested and fought again. A new set of time frames will be helpful here. Volume based charts are quite appropriate for instance.
TF is also both bearish and hesitant near support levels. The low 560s must be broken more decisively to open up to new support levels in the mid 540s. There is however some bounce potential along the way at least at daily level for now.

EURUSD: Now that it has retraced to MM/Fib around 1.489, a pause is nothing but normal. We may now enter a period of hesitation with a support level on 1.48 (check Fib levels on 60mins chart). As time goes by, the retracement potential on the weekly chart will keep on fading, and while there could be volatility or congestion, we may have to wait for a MTFS crossover in a couple of months to start seeing a change of regime.

( posted 5:45 AM UK )

How far ahead ... ?

Not an update... just a reminder on the topic: How far can we "predict" the market behaviour ?

Indeed, i have said repeatedly that the tool set as it is does not capture volatility very well "mea culpa" but at the same time, if we use it for its intended purpose i.e. swing trading, turning points, targets, energy levels and support/resistance do provide collectively a more than adequate picture.

On average however, the market outlook is valid for 3 to 5 bars, sometimes brought down to 1 bar in case of a high volatility environment. Since the daily chart outlook often does not change enough to justify a regular update, the report tends to focus on the 60mins chart which obviously could warrant 2 reports a day... which i don't necessarily have the time for... A bit of a catch-22 ... So if any one wants to give it a go and post a mid-day update...

Market Update - Nov 4th '09

ES behaved pretty well and stayed above 1032 as expected. It may even try and creep higher as short sellers take their profits. There is no indication that this recovery will last, so we'll just check MM/Fib levels on the daily chart (1052?).
TF follows the exact same path, and again shorter time frames are recommended for those looking for entry points in short term retracement trades. The mid term trend is still down even if the markets are obviously hesitant on a strong support level (562 for TF, 1032 for ES). The longer term support will probably be found within the next price segment down.

EURUSD also behaved nicely and bounced on our support around 1.464 to now aim at the 1.477 area. We're obviously in a channel and the longer term retracement potential is limited, but may see 1.464 tested again in the next few days. If broken, EURUSD could retrace to 1.44 within a few weeks. We'll come back to this scenario in the coming week.

( posted 5:30 AM UK )

Market Update - Nov 3rd '09

ES fell back to its support level where it bounced unsurprisingly. We do notice that lower time frames are more than recommended. ES should aim lower this week anyway, but we'll again check the strong 1032 level for support. Prices should stay low, but above that level today.
TF was decidedly below the 562 key level yesterday, which could indicate some further erosion. We are however approaching bounce territory near September lows. Like ES the retracement is now engaged though and prices could shed another 10% in the next few weeks.

EURUSD is hesitant on pivot level (1.477), but despite the short term volatility, the US$ should later on strengthen to around 1.464

( posted 7:15 AM UK )

Weekly Report - Nov 2nd to 6th '09

ES not only turned south again on Friday as expected, but it went straight back to previous lows and further down to strong support level. End of month window dressing probably also caused additional volatility to the market.
The market is obviously bearish and the next breakout (a short term bounce is possible on Monday though) will take prices to the next price segment, with a target area around October lows (next stall level also).
Note that picking the right time frame is not as easy as it looks, and a 30mins time frame can help determine turning points.
TF is also on a strong support on 562. In fact the current configuration is very very similar to ES. A bounce is also possible here but TF is likely to test high 540s and could even reach low 530s later on. It should however not aim back straight at low 510s (weekly) without testing 560 as a resistance, but we'l review this scenario in due course.

EURUSD: We've seen clear swings with a drop on strong resistance down to strong support. Does that mean that the US$ will fall again? Probably not. The MTFS crossover is not indicative of a sustainable turnaround. We'll therefore check for the next Fib level for resistance.
On the Daily chart, selling pressure is still there, so the current support on the 60mins chart will be tested again, and probably lower to around 1.464 .
No change in our longer term outlook.

( posted 6:15 AM UK )

Market Update - Oct 30th '09

Yestersday's bounce was a little stronger than anticipated, but took ES to Fib/MM level so we got the signal and target, even though we did not capture the effect of volatility. It has been said many times on this blog and elsewhere, that volatility is essentially a time compression variable which is not easy to capture in TradeStation.
ES is now back to the top of the price segment which is a strong resistance level. We've seen EntBin moving from extreme low (-5) to extreme high (+5), indicating volatility and hesitation for this last day of the month. We'll check a lower time frame and Fib levels from yesterday's swing.
The same applies to TF where a lower time frame is here more than recommended. Yesterday's bounce should fade pretty fast, and lows will be tested again some time next week.

EURUSD: airhole effect could take prices back to 1.479 then 1.477 within a couple of days. However a "airhole" does not mean in any way a sudden drop. It is rather a congestion period leading often to a breakout situation.

More on the next weekly report.

( posted 6:45 AM UK )

Market Update - Oct 29th '09

Market reading has been quite easy lately, and many traders must be smiling ear to ear... ES is now on the 60mins stall level and still looking a little bearish.
The early MTFS crossover is a classic example of a stall which may translate in a soft landing in the low to mid 1030s.
We shall notice again and again our 32 points segments. If this one breaks, we might head onto 1000 again.
The Entropy is very low (EntBin=-5) so a bounce is more than likely, however selling pressure is still too strong in the first hours of the day.
On the daily chart, we notice the channel boundary, the Fib level and a lot of bearishness, so we'll certainly have to check for a breakout.
TF is also coincidentally on a strong support level on both 60mins and daily charts. It is therefore in bounce territory when the selling pressure fades a bit.

EURUSD: on stall level as well (60mins), on the channel low boundary (daily), so a lot in common with our indices. At this point in time while the € could drift a little further, we know that the retracement is bound to be limited (weekly chart) hence we first have to analyse the price behaviour on this stall level (1.471) and on or near strong support level (1.464)

( posted 5AM UK )

Market Update - Oct 28th '09

ES is really struggling with the current support level, and should sink further today. We have a MTFS early crossover forming which could mean an unconvincing attempt to hold or even bounce a tiny bit, but we should rather look at channel bottom on the daily chart, in accordance to Fib retracement levels.

If we look for some confirmation from TF, it is clear that it is aiming for range lows and stall level in the mid to high 570s.
The pullback could later on take prices further down.

EURUSD: very modest bounce on support level, which is also a channel boundary on the daily chart. Traders will try and keep it above the 1.477 support level, but negative pressure is certainly there still and profit taking could continue to the 1.464 area (to be confirmed).

( posted 6:30 AM UK )

Market Update - Oct 27th '09

ES fell to the support level after breaking out. We had anticipated it as prices stayed below the key pivot level and selling pressure accelerated. ES should remain fairly bearish, yet 1062 should hold and a minor bounce is even possible at first.
As mentioned on the weekly report, the current support level will determine whether prices will fall to the next price segment or not. It is unclear whether this will happen today or not... but it could in the next few days.

TF is also sitting on its strong support level, and since it is a also strong Fib level, a bounce is likely. However, like for ES, we should start preparing for a pullback to the low 500s.

EURUSD: we'll check for a channel bottom as we still don't see any major retracement coming. Short term bearish for now.

( posted late 10h30 AM UK )

Weekly Report - Oct 26h to 30th '09

ES has taken a bit of a knock on Friday, but one should not jump into conclusions of the "big one" just yet. It is only normal profit taking at this stage. Indicators on the 60mins chart do show a bounce potential, but 1078 will be key level. If prices stay below it, we can safely assume ES has moved to the lower price segment and will aim at 1062. That level if/when hit will be a lot more crucial going forward.

TF is also in soft landing mode on stall level just below 600, and could later drift to the strong support level (~594). Longer time frames also show that retracement target as key support which could trigger substantial selling pressure. Although a major retracement is due, we cannot say with any sort of accuracy whether the timing is right. We have all noticed a sort of double top and a return to the [500-513] range is in the cards, but we'll need to update our scenario as we go along (triple top ??)

EURUSD: we notice some exhaustion of the Euro, and a narrowing of the range which could lead to a breakout situation this week. The US$ should remain weak in the short term, and a lower time frame is recommended. We'll check 1.502 for support.

( posted hastily 6:10 AM UK ... will try and give an update around noon)