28/04/2008

Futures analysis

Monday was bullish and it also was the third consecutive upclose day. Although, declining 10-day moving average did not appear to be a tough resistance, the futures are still below 20- and 50-day averages, which are also declining. Naturally, these two closely aligned indicators will act as a potential resistance in the nearest term (next couple of days), if the market is due to go higher. Resistance confirmation at MAs will post another lower high inside the symmetrical triangle pattern, which will mean, that the bears are getting stronger. As for the downside, the middle line will act as a support, as it did a number of times before. It is the end of the month, so there will be numerous macroeconomical announcements, especially from the States, which define the global market sentiment. Tomorrow, we have consumer confidence and on Wednesday employment data, along with all important Fed policy statement. It is not advised to make trades before such events, as it is pure gambling, but these will hopefully act as longer term catalysts.

Two short trends developed today, as WIG20 futures somewhat tried to post a short term top, touching a significant multiple-timeframe resistance level (2940). As for now, I do not think, that tomorrow this market will be capable of getting back to 2980 area, unless there will be a morning upside gap. The reason for such (bearish/neutral) action is that the american indexes changed intraday trend to downside in the second half of the trading session. Price action, that takes place before the close is usually continued the next day. This late decline will in my opinion define tomorrow's session, here in WIG20 futures, preventing sustained upside action above 2940. The rest depends upon overnight movement in USD/JPY, as it is the main factor when it comes to determining future direction of global stock markets. 2980 area remains as a potential upside target in case of moving up and the nearest support level for tomorrow appears to be the last swing low of 2905. If the market breaks down through this area, then it is probably going to stall at 2880-90.