19/02/2008

Futures analysis

The futures remain in short term uptrend, but in the last two days, there has not been much of an extension of ongoing pullback. Price stopped at previous support level (established in the beginning of 2007), which has become resistance - 3165. The 50-day moving average has passed through the August low level and will be acting as somewhat 'dynamic' trendline resistance in the upcoming days. Nonetheless, with such significantly lower volatility than before, the futures might stay inside resistance zone between 3165 and 3265 for a longer period of time (becoming range-bound). Though, the first most important point will be mentioned 50-day MA, so we will have to wait until its tested, to form possible scenarios.

The market did not manage to break through the main resistance, which is 3170 despite today's double test. The close ended up at 3130, finding support at previous resistance, but price action, that took place late in the day suggests another possibility of current short term uptrend reversal. As american indexes erased whole gains from the morning (Dow Jones formed a grave stone doji in the daily timeframe), forecast for tommorrow's open would be neutral/bearish. In case of more action to the downside, the nearest support level appears to be the last swing low near 3095. If that is broken, then I expect the futures to fall to 3060 or 3025 (low from where the last upside gap occurred), depending on the momentum. Tommorrow, there will also be announcements, which cover CPI and housing market data, which may cause sharp spikes or mentioned momentum (depends on market's opinion on this news).