27/11/2007

Futures analysis

As I was expecting yesterday, the price retested its nearest short term support, which is 3450 obviously and is now entering a key psychological support area in the daily timeframe. As recent pullback appeared to be very weak, the overall measured move got extended and shows a new longer term downside target for the futures. The previous measured move indicated a retest of the august lows (taken from 3960 to 3550 and subtracted from this 3-day mid November pullback, that had occurred before the latest correction). Now, if I take the whole move from 3960 to 3450 and subtract it from 3615, it will give us price target of 3105 (assuming, that this market will not form a double bottom right here at 3450 and reverse, which is still possible).

In the 5-minute timeframe, today's price action was just a continuation of previous movement, that took place on monday. The upper trendline, that I plotted on intraday chart will now act as a resistance, while the futures are declining in this pattern of lower highs. As for tommorrow's open, there could be some euphoric buying, caused by today's unexpected announcement of Abu Dhabi Investments 'injecting' money into Citigroup. This event was a catalyst for a rally in american stocks and may drive up the WIG20 futures also, as it usually happens after such increases. The investors did not even care about weak macroeconomical data about falling housing prices and - most importantly - consumer confidence. Tommorrow is the Beige Book report coming out, so definitely there is going to be a lot of volatility in the markets until the week ends.