Market Update - Nov 24th '09

Short report from London while connecting...

ES broke out as we suspected, even if we again didn't quite catch the volatility spike. Not too important for swing trading though. ES should try and test the same 1093 level today, and remain somewhat messy on the daily chart. This pivot announced on the weekly chart is certainly still hesitant.

TF: same situation... Are we now going to see the much expected pullback...? Like ES, i don't think it will happen overnight.

EURUSD: largely oversold on intrady time frames. It could test 1.49 (MM) again or 1.487 (Fib), but a bounce (spike) is likely. Again, the probability of a sizeable retracement is fading, and we could see more of this congestion for at least a few weeks.

( posted late 8:05 AM UK )

Weekly Report - Nov 23rd to 27th '09

The weekend is always a good time to reflect and gauge how previous reports anticipated forthcoming market action. It's not an exact science, and again, it is impossible to estimate whether this chart reading technique provides some insight 1, 2, 3 or sometimes more bars ahead. Overall, it's not doing a bad job.

ES has lost a bit of ground last week to the high 1080s and despite some buying late in the day on Friday, should try and find support a little lower, more likely around 1078 (Fib/MM). In any case, 1093 is a test level for this last retracement, which could trigger the last bit of selling to 1078 or send prices back to 1102. Should the market opt for the down scenario, we would still be in our same channel (daily chart) but we can't say yet whether ES has engaged into the retracement we've been announcing on the weekly chart. In addition, this weekly chart is still not showing a pivot, and indications of a retracement are starting to fade. This probably means that only a clear channel breakout on the daily chart can confirm the retracement scenario or not going forward.

TF has landed inches away from support (578) which remains a major test level. The short term outlook is hesitant with conflicting pictures across time frames, but the down side is more pronounced than on ES. Here again a breakout of the 578 level would certainly clarify our patterns and confirm a return to the low 500s.

EURUSD has test levels ahead (1.4873 and possibly 1.492) to try and stop the current erosion. There is no indication of a sizeable retracement, and on the contrary looks fairly congested with a support level just below 1.48 hit last Friday. On the upside, we'll keep an eye on test levels above and a possible channel breakout. We'll have to update this rather fuzzy picture as we go along.

( posted Sunday 6:20 AM UK )

PS: Note that on account of traveling, there might be no market update on Tuesday morning.

Market Update - Nov 20th '09

ES broke out on the down side. It was a typical breakout situation but i admittedly advised to cover both sides on a OCA basis. ES wiped the MM level to fall to the Fib level visible on the daily chart. Here again no surprise, and an easy trade overall. Today 1093 will act as a pivot levelto dtermine whether the index resumes south or not. Indicators will point timidly up to 1097 or even to 1102 but the job hasn't been done i.e. there are still a few sellers out there who will try and keep ES below 1093.
TF fell to stall level and should also try and complete the down pattern before moving on to a new formation. So, the strong support on 578 might be hit to make shorters happy, even if TF should try with much difficulty to move slightly higher (Fib Expansion). The 30 mins chart is easier to read and confirms the scenario. Basically, we're looking at a mild retracement up on the 60mins chart, some upward congestion on the daily chart, with the same weekly chart ready to swing down.

EURUSD looks congested with an upward bias. We have an unambitious short term target at 1.494 for now.

( posted 6 AM UK with an awful headache )

Market Update - Nov 19th '09

ES once again behaved as expected and stayed range bound between 1101 and 1110. In such a situation, a shorter time is always recommended to pick reversal points, the context being provided by the weekly chart. The residual bullishness there is still suprisingly resilient. Again, it is difficult to predict whether ES will hit 1125 before the substantial retracement we've announced for quite some time, but this is in any case a good breakout environment where we can place stop orders outside our 60mins chart's range.
If we take cues from TF, the upside shows good potential after bouncing on MM/Fib levels on 594. Should that scenario materialize, we should see 610 to 612 being hit over the next few days. So, we'll have to be a little bit more patient for our reversal short...
EURUSD follows the same clear patterns. After hitting a high on 1.4990 it retraced to first Fib target and should head further down. This remains a relatively messy situation, congested at daily level, and not quite ready for profit taking. Shorter time frames (30mins) are easier to read with the same support level on 1.4891 for now. A second Fib level is around 1.486 but we again can't guarantee EURUSD is ready to retrace to the 1.46 levels.

( posted 4:45 AM UK )

Market Update - Nov 18th '09

The report yesterday indicated ES would try and aim higher, testing 1110 again, even if we are clearly in a 'confusion area' as this is also a reversal zone.
The current Fib expansion pattern had a first target on 1111, i.e. in the same target zone. It could break out to the next one up (1118) or more likely test retracement levels just above 1100 or even lower. In other words, the 60mins chart will probably look congested again, which means that a shorter time frame may be recommended, taking in consideration the context provided by the daily/weekly charts.
TF is hovering high near stall level, looking unconvincingly at creeping higher to around 610. A Fib target has been reached on 602. So, will buyers try and give it one last shot ? We hope to see time frames aligning for a clearer picture soon, and this probably on the way down.

EURUSD: The signs of exhaustion mentioned yesterday actually turned into a sizable retracement to bounce to Fib (~1.489). This pivot level will determine whether selling now resumes or not. Our indicators would rather point down, but rather to congest in this new trading range (yesterday's lows to pivot level) than fall a lot further.

( posted 5:30 AM UK )

Market Update - Nov 17th '09

So far, so good... ES climbed as expected to hit resistance level around 1110 where it started retracing. Erosion to ~1100 would be normal (Fib/MM), and although improbably to the next Fib levels. The daily chart still looks very bullish but may be losing steam and even stall ahead of the 1125 target. ES will at least try and give it a go in the next couple of days. The weekly chart is looking at peaking soon, so the context is known and understood. Providing this is in line with your trading style, lower time frames (15mins and 30mins) will be easier to trade.

TF reached the 2nd Fib expansion target (602), i.e. a little higher than expected. It is now more hesitant ahead of stall level (605) and strong resistance (609). If TF carries on leading, it should try and take both indices a tad higher, but certainly with increasing difficulty.

EURUSD was a little spiky yesterday, with larger players out there to clean out the book. €/$ briefly hit the resistance level on 1.501 again to then lose a bit of ground. Hesitation can help keep prices in current high range nicely delimited by both high and low spikes yesterday, but there are more and more signs of exhaustion going forward.

( posted 5:50 AM UK )

Weekly Report - Nov 16th to 20th '09

We've seen ES testing October highs to probably aim at channel highs, at the strong 1125 resistance. Nothing new here...
Bullishness is still indicated there on both the 60mins and daily charts. Our target this week is probably more the 60mins strong resistance level near 1110. It isn't quite clear yet whether ES will push to 1125 as we know a pullback is already announced on the weekly chart.
TF is leading ES and while it is aiming at the 60mins Fib target near 592 or MM resistance on 594, that area is also a strong 61.8% resistance on the daily chart (~597). Since we have here as well the retracement announcement on the weekly chart, we look at the resistance area as a potential reversal point we will monitor closely. We do not change our longer term scenario for the time being.

EURUSD is short term bullish trying to break out the 61.8% fib retracement to aim to stall level (1.4894) and probably higher to resistance level (1.501). That target will however lead to some congestion. I mentioned last week a scenario given by our weekly chart whereby EURUSD would stay high (retracement potential is fading by the day...) probably until year's end or more likely early Jan. That outlook is still valid.

( posted 5:50 AM UK )

Market Update - Nov 13th '09

Confusion area, didn't i say... A spike up early in the day followed by the same pace of selling like if nothing happened. Prices reached a Fib level where they could pause for a short while, or aim a little lower later on to stall (1082) or even to strong Fib/MM support around 1078. More economic news to be expected today, and maybe a "Friday 13th" effect, who knows... :) Still no change however on the daily and weekly charts, so it is too early to say that this is the retracement we've been waiting for...
TF coincidently is also on a Fib/MM support level and is in bounce territory. However the profit taking is market more clearly and the buying pressure should be faster exhausted here. We're not yet in a clear down trend even if the market will try current support.

EURUSD broke on the down side and could still go lower after a pause (early MTFS crossover). The daily chart shows buying pressure fading, and the current channel can only be sustained if we have a series of higher highs, which looks unlikely now. Again risk-adverse longer term players should not rush into selling, but trading a 30mins chart or lower is certainly a lot more fun.

( posted 4:30 AM UK )

Market Update - Nov 12th '09

I called it a "confusion area" yesterday with a breakout attempt which failed to reach the 1113 target. More of the same today with a possible further erosion to 1085 then 1079. Again, we have conflicting forces with some congestion in intraday time frames, a residual buying pressure on the daily chart and some indication of a forthcoming pivot on the weekly chart ! Overall, we anticipate a reversal even if the exact timing is difficult to predict.

TF also hit the resistance in the low 590s as expected and should also retrace later on... Patience is a virtue, so let's not read too much between the bars. Although a pivot is expected on the weekly chart, one must always go with the flow and refrain from being contrarian and press the button too early. The technique is certainly more than dynamic enough to prevent acting too late in any case.

EURUSD: Again a 30mins time frame gives better reversal points here. The €/$ hit support level to then test the pivot again, behaving almost like clockwork. We should see the same kind of congestion as with indices, with a likely return to support around 1.495. Unlike indices though, retracement potential is limited. Breaking current support could trigger some selling, but congestion is the same range is my favourite scenario for now.

( posted 6:45 AM UK )

Market Update - Nov 11th '09

ES behaved as expected, and will now need a extra push to break out again and reach 1113 to 1125. It isn't clear whether this will happen though.
We are really entering a "confusion" area, but having said that, one should always refrain from adopting a contrarian view and go short too early.
Shorter time frames are recommended.

The situation is similar on TF with a strong resistance on low 590s. There is still some residual buying pressure for now, and we may see highs being tested once again, but a reversal point is in the cards within a day or two.

EURUSD: "high and hesitant" i said yesterday. We have clear support and resistance levels provided by yesterday's high and low. A breakout (probably on the low side, but who knows...) is possible, but congestion is more likely. A lower time frame (30mins or less) will provide clearer pivot points.

( posted 6:55 AM UK )

Market Update - Nov 10th '09

ES did not hesitate long on 1071 to break out straight to resistance level in the low 1090s where buying pressure is now easing a bit. We could see at best a modest retracement later in the day, but the daily chart is still quite bullish so we could aim to the top of the channel equating with strong resistance level around 1125. The weekly chart is again pointing for retracement but there is no confirmed pivot just yet, so a last bout of buying could indeed be the trigger we're waiting for. Note that dominant time frames are short intraday and weekly, which is unusual, and could indicate more volatility ahead.
TF also followed suit and while it seems to be pausing ahead of its target, it should later on hit mid-590s. We'll try and make some sense out of levels as we get near those levels to gauge whether it could indicate a good reversal point for both our indices. TF is certainly more "ripe" for a reversal even though there is an obvious congestion on the weekly chart now.

EURUSD: hit its target area around 1.499 to 1.502, so some profit taking is good measure now. EURUSD should stay relatively high but hesitant and probably range bound also. It is indeed an important target point on ALL time frames including Monthly.

( posted 6:50 AM UK )

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 )