11/02/2008

Futures analysis

An upside spike at declining short term moving averages was posted today by WIG20 futures in the daily timeframe. Today's bar is not actually a hammer, but its form indicates more selling force coming into this market. Price action however is still taking place above major 50% Fibonacci retracement of current rally, meaning that eventual retest of January low (2680) will occur much slower, that I initially expected. This week is going to bring important data, covering retail sales and industrial production in the United States, on which traders will gauge condition of american economy. Nonetheless, in the short term these announcements act as psychological catalysts, that always influence the stock markets, often rejecting technical price patterns.

5-minute chart shows, that friday's decline of american indexes did not significantly influence today's open in WIG20 futures, as the market opened with only 30-point downside gap and remained in an uptrend for the most part of the session. The futures exceeded the last swing high near 38,2% Fibonacci retracement of the previous decline (plotted on the chart) and continued to rally above 2980 until 50% retracement, which corresponded with 3005 (prior level of support and resistance). Price action just minutes before the close shows that, the short term uptrend began to shift, as the futures posted a double rising top with no corresponding higher lows. However, market closed near 38,2% Fibonacci retracement, leaving room for any upside action, that may take place tommorrow in the morning, as american indexes closed slightly positive today. Upside target remains at 3005, as the intraday high and downside targets are: 2900 (previous swing low; outlined in previous analysis) and then 2860 (local minimum).