13/11/2007

Futures analysis

Finally we have reaction in this market. Today's session was definitely influenced by american indexes, which rallied on better-than-estimated earnings report of Wal-Mart. Yesterday's inverted hammer proved to be a reversal candle and the price retraced back even above friday's close, so after a sharp decline, we have got a sharp pullback, which will probably extend at least in tommorrow morning, because part of american rally has not been priced yet. The market retested from the downside the latest significant level of support in daily timeframe, which is 3645 obviously. This is definitely a turning point as for the short term and tommorrow's action will show, whether it is going to remain as resistance or not.

Intraday triple bottom was confirmed today, so 76,4% Fibonacci retracement remained as this significant level of short term support. The futures retraced back part of the last two-day 'exhaustion decline' as I call it, but found resistance at 61,8% retracement with flattened open interest (indicating rather indecision than actual return of the buying force). Now, the question remains: is this market strong enough to pull back to at least 3700, because such action could trigger mid term bottom to form itself and increase the odds for reversal. Remember, that the moving averages and Fibonacci levels are potential levels of support, which means that it is not yet safe to buy there. So do not try to pick a bottom in such sharp declining market, wait for the evidence of buying, by checking lower timeframes.