08/02/2008

Futures analysis

Today's session posted an inside doji bar with a higher than previous low for the day. It is also second in a row downside spike near the crucial support level, which is 2860. Theoretically such price pattern should indicate a reversal of current decline, but in the wake of declining american indexes, it will probably be rejected on monday. WIG20 futures had volatile end of the week, but still managed to remain inside current price range between 2860 and 3125. Volatility entered again, as in the morning, european stocks advanced on gains in commodity producers, but in the second half of the trading session, markets declined, as american stock market fell on credit losses concern. Nonetheless, technically the main downtrend will continue when futures break down through 2860 support, at least until 2680, which is the most recent daily low.

Friday started off with posting a short rally, which quickly ended up as a bull trap by returning back below the moving averages. The first half of today's session was basically an ABC correction of previous day's upswing and after finally establishing a low at 2875, the futures went back and posted almost exactly mirrored pattern to the upside. Three-leg rally shifted intraday trend again, forming somewhat an inverted head and shoulders with a rising neckline. I outlined only the nearest support and resistance levels, as they appear to be the most crucial for possible short term price action. 2955 is prior swing high and will probably be tested on monday, even having the States 1% below yesterday's close. 2902 is today's swing low of the last rally before the close. Moreover, it corresponds with all of the moving averages as a turning point, that shifted the trend today, so anticipate further declines below that.