25/02/2008

Futures analysis

The pennant pattern continues to contract under 3195 long term resistance. In relation to friday's close, the futures showed little 0.1% change to the upside, though they were declining throughout most of the trading session. Also, today there was not any significant news, that could change the bigger picture here in daily timeframe. We still have to wait for a confirmation - either upside violation of 3195 or breaking through lower band of the pennant formation. The volume has been constantly diminishing while development of this symmetrical trianle took place, which is a typical correction-before-next-swing pattern as the market gains strength.

Intraday chart shows, that previously mentioned 3045 support was touched and defended today. In my last analysis I stated, that if this point is retested, then it will be the first sign of the symmetrical triangle pattern violation. The close proved, that violation of the lower triangle band was just a bear trap, which eventually widened this whole price pattern. American index futures are little changed at the time of writing, but they have erased all of the morning gains as selling pressure returns. Tommorrow's news includes PPI and consumer confidence index, usually causing intraday volatility. Be careful when entering the market even in the short term, as we are close to important psychological level here in WIG20 futures, making it hard to place a reasonable stop-loss.