Morning Update - Dec 11th 2009

ES hit 1105 as planned.
EURUSD broke out as anticipated.

Look for support on EURUSD though: 1.464 while penetrated can't really break today. Traders are just aiming at Fib on 1.4611 where it will bounce and maybe stabilize.

3:25 PM UK

Market Update - Dec 11th '09

24 hours ago, i gave a scenario which would have been valid if prices had stayed below pivot level (1093), and i unfortunately didn't find the time to provide a midday report.

The 1093 breakout, which in fact could have been suspected from opposite forces in TF, allowed traders to score a few points on the way up, to reach the 50% Fib level. Shorter time frames (which are basically useless to readers after a few hours) point for some further test of 1100 and even possibly 1105, but energy is minimal right now.
The situation is still pretty messy on longer time frames, and buyers should eventually let go even if the current situation can last until ... early Jan!

TF bounced for a second time on Fib level (588), but shows signs of a continued congestion with mild conflicting forces: 60mins, slightly down, daily slightly up, and weekly still in preparation for a retracement. Note that entropy is losing stamina there. As a reminder, entropy is "dual mode": it works in momentum mode around the average, and as a tensor (e.g. an elastic) near extremes.

EURUSD is looking for support on 1.471 or in the 1.468 area where it could bounce briskly. There are however signs of an imminent breakout either way (at this very time).

( posted 7:10 AM UK )

Market Update - Dec 10th '09

ES tested 1085 on the down side, then back to the 1093 pivotlevel yesterday. Overall it behaved as expected and should drift lower again today. The retracement scenario requires ES to stay consistently below pivot level (1093), and probably more or less like yesterday until 1086 then 1078. The daily time frame should then join the party.

TF looks a little more resilient at first while being channel bound (30 and 60mins). 588 is a bounce level (Fib) for now which should keep prices in the same range. Shorter term shows a slight upper bias while longer term point towards some erosion, and despite these conflicting forces, the weekly chart still only shows a modest Fib support level (23.6%) hit a month ago which is not significant enough. In the short term, we will watch that prices remain below the 594 pivot level, to then possibly aim again at 588 (Fib test level) then 580.

EURUSD should keep on drifting lower. There are support levels like 1.468 (stall), then probably 1.464 which is pretty strong. There isn't that much selling pressure though after the big drop seen these last few days. We would need another breakout situation to clean the books and speed up selling again.

( posted 6:35 AM UK )

Market Update - Dec 9th '09

ES broke on the down side as we suspected yesterday, to hit and penetrate the 1093 level. The bounce on 1088 now needs to test that same level, then possibly 1100.
The longer term retracement seems engaged now, however prices must first break 1088 more decisively to change price segment to [1078-1093]. Since the daily chart is probably too confusing for most to swing-trade, it is easier shorter time frames, maybe down to 15mins or lower.

TF didn't hit 610 but stalled just above 605, which was more visible on shorter time frames as well. We still have very conflicting patterns across time frames at the moment, so we'll just focus on the short term trend which is down to the low to mid 590s and overall range bound.

EURUSD did more than just drift... 1.482 indeed broke, opening the way to substantial selling. 1.472 is bounce territory (stall level) but 1.465 (or just above) is our target now. That level is however a lot stronger than 1.482 used to be.

( posted 7 AM UK )

Market Update - Dec 8th '09

When it comes to chart reading, some days are easier than others, and it is often pointless trying to pick a direction. ES is going nowhere at the moment, range bound and slowing down, in hangover mode after Friday's volatility spike and waiting for triple witching next week. We can also expect end of year portfolio adjustments which can always create some surprise if volumes turn lighter.

There is little to say about ES except that the range will breakout eventually, probably on the down side even if the exact timing of the anticipated retracement on higher time frames is difficult to pinpoint on our 30 and 60mins charts.

TF is still trying to creep higher and this broader based index seems less correlated to ES, causing the current confusion. 610 would be our target here (MM/Fib).

EURUSD should keep on drifting a bit but we do recognize that 1.482 is a strong support for now. Yesterday's lows could be tested again, but like with indices, there is no precise driving force at this point.

( posted 7:15 AM UK )

Quick Update EURUSD 10h45 AM UK

Just a quick update on EURUSD:

"A bounce is possible to now test 1.489, but EURUSD should fall further to 1.477, then even possibly to 1.472. However this 1.482 support level is quite strong, so we can't discard the eventualiy of it holding for a while even though momentarily penetrated."

EURUSD indeed bounced to test level to resume south to 1.477, and is now back to 1.482

Weekly Report - Dec 7th to Sep 11th '09

What a day! Friday was the expression of the confusion i have indicated for some time. Swing trading as possible albeith difficult on shorter time frames and we should hope for volatility easing a bit on the way to the festive season. We'll still have to watch our for triple witching, but we'll have time to come back to this later on.

ES ended close to MM/Fib pivot level (1109) where it could either return to some erosion mode or aim back at Fib expansion targets (1115, 1121). Should drifting resume, support on stall (1098) then strong support (1094) won't necessarily break that easily. We can indeed still see a channel on the daily chart, but difficult to say whether ES won't try and hit the MM strong resistance at one point (see screenshot). We will check for a breakout situation on the shorter time frames first.

TF has also gone through some roller-coaster ride to end up near highs where it should aim towards 611 and probably higher close to the string resistance level on 625.
Our longer term scenario of a substantial retracement (weekly chart) is still there but is admittedly slowly fading (EntBin down to 3).

EURUSD reversed on the target provided last week, tested 1.507 for a while then dropped in a freefall. A bounce is possible to now test 1.489, but EURUSD should fall further to 1.477, then even possibly to 1.472. However this 1.482 support level is quite strong, so we can't discard the eventualiy of it holding for a while even though momentarily penetrated. We shall update this outlook during the course of the week.

( Posted Sunday 7:40 PM UK )

Market Update - Dec 4th '09

The confusion area clearly visible on daily time frame and hesitation on stall level made me pick the wrong direction (nobody's perfect), even though i was not even convinced myself. ES did not manage to push close to the (too) much anticipated resistance level on 1125. Again, i've indicated that in such case, shorter time frames are recommended.

ES broke pivot level on the downside to aim straight at stall level (also Fib level) where a bounce is likely to 1105. Longer term players are however probably slowly gearing up for the sizeable retracement mentioned before, and options traders who've place the Dec call spreads above 1125 for a while are pretty safe. Breaking 1095 would mean changing price segment to then test lows again on the mid 1060s.

TF stalled on 600 (see previous reports) to retrace to Fib and very likely lower today. 580 is our target even is a short term bounce is possible. The daily chart is just as confusing as ES, but we all know that the longer term retracement is probably under way already. It is interesting to see the conflicting Fib patterns on the daily chart, probably confirming the change of regime.

EURUSD: hit our long target yesterday to start retracing. It is now short term bearish with a pivot point on 1.5075, then maybe 1.5104
EURUSD is relatively easy to follow on shorter time frames. It should remain range bound overall, so probably a good day for easy going swing trading.

( posted 7:40 AM UK )

Market Update - Dec 3rd '09

I have mentioned on several occasions that this report is sometimes just not adjusted to the right market frequencies. In this case, the fog cleared up overnight to see ES resuming its rise, extracting itself from stall level and now aiming at 1125. This level being so much anticipated, it is not rare to see a reversal on stall level.
Renewed bullishness now guarantees a fairly easy target.
We shall review the longer term scenario this weekend, with with the channel upper line meeting resistance level.

TF is as usual in a similar situation although it has already hit it target zone (MM/Fib Exp). Short term energy is there to possibly take it to 620.

625 on TF is the alter ego of 1125 for ES, but this would mean more ground to cover for the wider index. This should translate into quite a bit of fighting while arbitragers try and balance their exposures on pseudo-equilibrium points.

EURUSD: correlation seems to be coming back, and €/$ is now aiming at 1.5135
Current level (1.512) is a Fib target on the 30mins chart so we may get there with waves.

In conclusion, volatility makes it often difficult to grasp a picture for the whole day (unless i maybe use a 120mins chart). I would therefore welcome users of the toolset to contribute to this blog.

( posted 8 AM UK )

Market Update - Dec 2nd '09

I admittedly didn't give a clear picture yesterday and maybe should have resorted to the prevailing principle "go with the flow" when the trading environment is a little confusing. There are conflicting forces across time frames, and this daily report focuses on the 60mins chart with an outlook over around 3 bars, with support from the daily chart to help cover the entire day. I sometimes find the time for a midday update, but this report is free, so only limited time can be dedicated to it for now.

ES went north to the [1103-1105] area until midday then went on to test highs again to 1110. It is now on a strong MM resistance level with some residual bullishness. On the daily chart the confusion mentioned yesterday is quite visible with a prompt reaction near the support/pivot level a couple of daya ago, thus shattering the nice and easy picture of a well defined cyclical channel. Agitation is a clear sign of a decision point coming up. We're now inches away from strong resistance level crossing the upper channel line, so we may have a last bout of selling to that 1125 level or at the very least preparation for the "battle". December is a good time for end of the year window dressing and who knows what fund managers will do to present good figures after XMas. Bonuses are major drivers in this business...

TF bounced on stall level (565) on Monday to reach the other one (589) yesterday. As mentioned in previous reports, despite the obvious correlations, TF is ahead of ES and even if it could hit resistance level on 593, the drifting engaged on longer time frames should continue overall.

EURUSD: highs on 1.511 (stall level) constitute a strong resistance where profit taking is nothing but normal. We again see no sizeable retracement, but having said that shorter time frames like 30mins provide a clearer pictures ans easier swing trading, which unfortunately cannot be commented on a daily report (at least 3 or 4 intraday updates would be needed).

( posted 7:40 AM UK )

Market Update - Dec 1st '09

Yesterday showed how difficult it is to publish only one report per day, particularly in a "confusion area" and taking into account this method looks roughly 2 to 3 bars ahead. ES is a perfect example with a modest pullback on test level but not enough energy to pull prices decisively away from that level.
ES therefore returned to the [1093-1095] area after hitting Fib PR1 (38.2%).

What now ? ES is still under the influence of conflicting forces, creeping up on short time frames, and congested to drifting down on longer horizons. ES could therefore aim at 1100 to 1103 even though we are still in a down leg on the daily channel and still waiting on the "Big One" on the weekly channel. Admittedly, "Big One" is vastly exaggerated, but some of us are getting impatient.

TF drifted to stall level (566) yesterday to go back to MM pivot level, yet is likely to turn south again. If anything, we appreciate that TF is easier to read than ES even though they are by and large correlated.

EURUSD is also in a confusion area somehow drifting directionless. We have notices a fairly strong support area on Fib level (~1.4985). One can follow some obvious visible patterns like highest highs, lowest lows, or switch time frames. Lower time frames seem to show a retracement on the way down, but the the range is narrowing which will lead to a breakout situation. At this very moment, return to highs (30 and 60mins) is possible.

( posted 7:20 AM UK)

Market update - Midday 30/11/09

11:30 AM Eastern.

I assume you have now noticed the test level on ES mentioned earlier and took a short. Some would have even gone for a options butterfly or placed breakout orders.

EURUSD is also behaving as anticipated.