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 )

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 )