23/04/2008

Futures analysis

Three declining moving averages (10-, 20- and 50-day) provided a solid resistance area, so the futures have formed a continuation pattern so far (which I described as one of possible short term scenarios). My downside target for the daily timeframe was the middle line inside symmetrical triangle, but as you can see, the market has recently gained enough momentum to surpass this level and reach lower, short term support area (explained in intraday section of this post). If this level is broken (which actually spreads to 2800 area), then I will expect the futures to retest lower triangle band. It is the most important support zone for the nearest term (not counting previous years' levels), which will be acting as ultimate confirmation not only for the pennant itself, but for long term downtrend as well.

Since the double bull trap, which I mentioned in my previous analysis there has been another decline, but not as sharp as this from 11th of April. The market gained momentum yesterday, but exhausted itself today just minutes before the close, retesting 2820 - previous intraday low from the last week. American indexes posted a 1-2-3 reversal in the middle of today's session, but managed to maintain intraday uptrend late in the day. Although, the market closed rather far from the peak, my stance for tomorrow is bullish/neutral, meaning that I do not expect the most recent support to be immediately broken. As for potential upside targets, the nearest intraday area appears to be near 2850, which is also today's last hour high. If that is broken, then the next target is 2880-90 area.