03/01/2008

Futures analysis

Today's session opened with a 14-point downside gap and closed just 0,35% above yesterday's gravestone doji's low, showing signs of weak recovery after three consecutive days of declining. The price still remains below 23,6% Fibonacci retracement of the whole 3-month downtrend and has entered a short term resistance area, which will prove to be crucial probably tommorrow already. Confirming this area will mean faster retest of the December lows, but staying above it may produce a short term reversal pattern. Such action will definitely slow the upcoming retest, but I do not think, that it would be capable of ending the whole downtrend, in the wake of recent macroeconomical concerns. My focus is on whether December lows are going to hold as a support or not. If that happens, the double top pattern (July and October) will be confirmed.

5-minute timeframe shows, that today's action was mostly sideways, with no spectacular reactions even on the news. The nearest resistance lies probably near the declining trendline, but this will depend on the overnight action, that could drive the price more to the upside, eventually finding resistance near 3490 (plotted on the chart). But as you can see, this is still a projection of potential price action. A 5-wave decline found its end today at 3420 support and the market has still a chance for reaching more to the upside. As I am writing this, the Dow futures climbed only 0,26%, so the odds, that there will be an upside gap on tommorrow's open are reduced. Couple of news coming up also, including the most volatility-causing Nonfarm Payrolls and the rest from the labour market.