06/11/2007

Futures analysis

Low range trading occurred in the futures today - no significant news, no unexpected data. Basically we can judge this, as a correction of the short term decline, which begun in the end of october. Trading activity is low, but the open interest still rises, indicating new money coming into the market. Upcoming days will show, which side does this new money support - bulls or bears - depending on the situation in the global markets. Still, the daily timeframe shows that futures have made a higher low and that of course means bias on the long side in this market, so maybe the price has already confirmed bouncing off 3780 and indicated, that we are ready to retest all-time highs again. Surely this is hard to judge, if there is not any significant event, to drive the prices either way.

Judging by the intraday data, the futures made today somewhat of a flat correction of monday's rally. There was little more movement late in the day, due to american session open and price retraced 50% of the whole two-day move, but for the most of time, it was moving sideways with rising open interest. This more detailed view allows me to be more confident about this market's return to uptrend at least in the very short term. American indexes are in the positive territory so far, after volatile start of the trading day and as long as they remain in this position, it will be a good forecast for tommorrow. The nearest upside target is probably around 3860 - prior level of support and resistance - the middle of consolidation channel.