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.

Weekly Report - Nov 30th to Dec 4th '09

On Friday, ES bounced to 1095 (cf report) responding again pretty well to MM/Fib levels. The Dubai pseudo-bankrupcy was obviously a non-event to manipulate markets on a light volume day. Some traders have made a LOT of money on that kind of hoax.

Anyway, looking at the forthcoming week, we are still in the same daily channel even though the "confusion factor"is increasing. This 1095 area is again a test level to try and test highs again around 1110 or follow the down Fib expansion pattern visible on the 60mins chart. In any case, we have only 2 scenarios either the channel on the daily chart hits 1125, or the pullback starts on current levels (with a high of 1112). In this uncertain environment, an upper bias is likely at first.

TF tested its MM/Fib target around 562, then bounced to 579 which a test level (also Fib/MM). It is following the same dynamics as ES and despite the same upward bias in the short term, lows should be tested again by mid week.

To be quite honest though, I would wait for the market to settle a bit after the long weekend, so a mid day update would be justified.


EURUSD: hit stall level on 1.507 with some residual buying pressure. A lower time frame would be recommended to pick a reversal short signal which could take prices back to 1.496 later on. We will monitor MM/Fib levels when the MTFS is completed and sellers take control. Profit taking should remain limited.

( posted late 8:20 AM UK )

Market Update - Nov 27th '09

ES took a bit of a knock on Thanksgiving, only exacerbated by lighter volumes. It has now hit stall level on 1070 where selling should slow down and maybe even bounce. Reaching strong support level in the low/mid 1060s is however likely. On daily/weekly time frames, even though selling was abrupt we will only validate the "big slide" on a channel breakout.

TF is already on strong support level, and on Fib/MM target on the daily chart. Current levels should hold for a short while, but it looks like the substantial retracement announcement a while ago is under way. If current levels are broken, the next target is in the low 530s.

EURUSD has reversed quite abruptly to also reach a Fib target on current levels (~1.482). Selling pressure is still prevalent in the short run even if lows should hold for now. In case of a bounce, 1.489 (and then maybe 1.495 later on) will be test pivot levels which could send prices further down or not. Mid to long term look a little messy, so shorter time frames are again recommended.

( posted late 8:40 AM UK )

Mid-day update

What a beautiful slide...
Selling pressure is still strong but target area is now in sight.

Market Update - Nov 26th '09

Same confusion for longer term players, and same fun for intraday traders. The trading range is known, so is our preferred time frame (30mins to 60mins). Levels are nicely demarcated with MM and Fib levels... so much so that the overall chart reading technique is just a little "add-on" to public domain stuff.

So, ES bumped onto the strong resistance level to retrace abruptly. Test level will be the range lows now. Buyers may give up the fight and let the big slide begin. We'll first check 1095 (stall) and 1093 (strong support) for a possible breakout. Note that the daily chart is not indicating anything particular, hence despite this volatility spike, this is just the same congestion on that time frame.

TF is also aiming at range lows around 580. We've been repeating that TF seems to be leading and while there is still a bit of fighting around the current range, a breakout to 560 (and possibly lower) is in the cards.

EURUSD did hit our target on 1.513 to trigger some normal profit taking, probably to 1.5045 now. The low 1.50 have to be tested for support to validate the new range after yesterday's breakout. We have no indication of a major pullback just yet, so intraday time frames are again recommented even if not quite adequate for this daily report...

( posted very late 8:45 AM UK )

Market Update - Nov 25th '09

ES hit 1095 briefly, which served as a test for the 1093 level mentioned recently. ES is now clearly testing the top of the range, therefore aiming at 1109. As we generally go with the flow, we have to assume it will try and breakout to go and touch the 1125 level, which would also be a channel high on the daily chart. We'll update the scenario later on. We first have to break current highs, which is in no way obvious.

TF is maybe providing more clues, with a test level around 593 which could send prices back down to recent lows. We do notice that TF is following Fib patterns very precisely on the 60mins chart. If broken, TF may test 598 or even aim for the 606 area. We however believe it will stay congested for now until it is ready for descent (daily/weekly)

EURUSD: on the rise again, and aiming for the strong resistance level (1.5015). Yet, it should lose steam and only a breakout situation to 1.513 could affect the scenario. We are still in the same "hesitation territory" visible in longer time frames, which should translate into congestion for at least a few more weeks until the weekly pattern is completed.

( posted late 8 AM UK )



PS: It must be noted once again that this method is adequate for swing trading as it captures energy level in a quantum way. It does not always capture volatility as the outlook is generally 3 bars ahead, sometimes down to 1, sometimes as long as 5. It is therefore impossible to cover a full day using a 60mins chart, and mid-day updates are too time consuming at the moment. Thanks for your understanding.

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 )