ES stalled on 1125 as expected to find support to find support a little lower than anticipated. Profit taking was however steady and orderly, to end in a soft landing scenario on Friday. Selling pressure is still present and should weigh further to find a congestion point in the low to mid 1060s (4H+). Longer time frames still follow the pattern we anticipated i.e. fairly directionless ripples after the fall experienced in 2Q10. While we can lose some ground in (4H+) time frames, ES should remain congested with a limited upward bias on D/W time frames. If 1062 however breaks, congestion will eventually use a broader range with a probable higher low (above 1020).
TF definitely looked ready to retrace when we last checked the market (mid week report), and still appears a little more bearish today. (4H+) time frames now point toward a lower support level around July lows (above 580). Despite the increasing volatility, this remains range trading on D/W time frames, with the previously bullish congestion now turning to directionless. In case July lows would break, very strong support would be found on low 560s. We do anticipate the same broad range congestion to continue on D/W time frames.
EURUSD retraced as expected, but quicker than anticipated. We indeed thought the 1.264 – 1.269 target area would take a week to be hit, but it is already now just around the corner. This is a stronger support area which would normally constitute a good base to form a new pattern after the ‘false recovery’ already commented a number of times in previous reports. Increased volatility may now push the Euro down a little further but let’s check its behaviour on support area first.
( Posted Sat PM )
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