16/11/2007

Futures analysis

Today's session posted a doji bar in daily timeframe, suggesting short term bottom may be forming. The price reached 3453, which is actually prior support level from may and september, as you can see on the chart. We are currently entering another support zone that is theoretically supposed to slow this market. Though I expect a slowdown in the short term only, because of ultimate price target for the futures, that is - august lows (forecast from measured move, check out yesterday analysis). Unless something 'better-than-expected' happens, the global markets are rather meant to decline on weak macroeconomical data coming from the United States. Rising commodity prices spur inflation, which will cause consumers to reduce spending for consumption and eventually drive the economy into recession.

The bad thing about today's session is that selling occurred late in the day, not initially. That puts more pressure to the downside obviously, but nonetheless, increased volatility, causing fast and sharp moves may imply forming of a short term bottom. At least, in relation to previous two-day action, that took place on 9th and 12th of november, this is similar pattern. The open interest flattened for a short period, indicating indecision, which is also parallel to previous case. As for now, there is little evidence of actual buying and situation will remain this way, as long as the market stays below its nearest short term resistance - 3543, plotted on the 5-minute chart. Don't try to pick a bottom here. Wait for some confirmation, such as higher lows, or retests of 3543 level. That will indicate upside potential.