Despite a short excursion in the morning above the key level on low 1060s (MM/Fib), ES returned to erosion mode, i.e. some bearish congestion. The current level of volatility and noise can cause another test of the key level (and a repeat of yesterday’s scenario), but the overall trend will otherwise remain down. We won’t give a definite target today, but we’ll keep an eye on range lows (half a ‘quantum’, i.e. to the mid 1040s), and probably to the low 1030s (full quantum) within a week or so.
TF provided us with a much clearer picture. The bounce stopped exactly on the 594 pivot level to resume south. While the mid to high 580s are support levels on the daily chart, the selling pressure is still strong enough to now aim toward the low 560s, and probably to the low 530s in a few weeks.
EURUSD: the fall of the Euro has been synonymous to profit taking on our indices, and yet, we may see our support levels ([1.367-1375]) holding. EURUSD is indeed trying to bounce softly and may reach 1.39 again at some point. There is way too little energy to confirm that scenario though.
We’ll therefore very cautiously follow shorter time frames for now, with 1.371 being our first hurdle today. Correlations with indices will have to be monitored closely also. The Euro could indeed take the indices up with it.
( Posted 5:40 AM UK )
