26/02/2008

Futures analysis

The pennant pattern was violated to the downside, as price got past its lower band. Volume has reached the highest value since the last eight trading sessions, so we might have a confirmation here already. The declining 50-day moving average is now below 3200 and that may indicate further weakening of the futures market. If the actual daily support is broken (3030), then the nearest downside price target appears to be 2860, which is the last swing low. The pennant pattern no longer works as a symmetrical triangle, in the wake of its lower band violation, but on the other hand, if 3030 level is defended and the market decides to extend current uptrend, then we will probably see a descending triangle pattern, which in that case would be the best bet. To summarize, we have downtrend in the short term and long term direction of the futures is still under a question mark.

The american indexes managed to recover yesterday, which resulted in an upside gap today in WIG20 futures. As you can see, the whole morning action ended up finding short term resistance near 3130 and trend shifted from there posting a wide ranging 115-point candle. Today's macroeconomical news in the U.S. showed rising inflation and dropping consumer confidence, but at the time of writing, the american stock market reacted contrary to that, posting already a half percent gain. In the wake of such bullish price action and WIG20 futures becoming very oversold in the short term, tommorrow session will probably decide, whether prior support levels are going to become resistance (3045 and 3070).