05/05/2008

Futures analysis

Longer weekend in Poland is over, so we are back on track with new analysis of the stock market futures. Due to holidays there was no trading on Thursday and Friday, so naturally, the nearest session from today appears to be previous week's Wednesday. On that day, the futures posted a doji candle after another sharp seloff and today confirmed a higher low, relative to double bottom pattern at 2820. Now, the market stopped at 2970-90 resistance, which is the area, that I have been outlining since the last three or four weeks. This is the key pivotal level for the daily and intraday timeframes now. Breaking above it will confirm a short term reversal and also set a new upside price target - upper band of the symmetrical triangle pattern. 100-day declining moving average is still far enough from this band to say, that current sideway consolidation will take more time to develop.

Wednesday's session, as seen in 5-minute timeframe, found a bottom near 2850 and then posted an almost flat-sloped uptrend, as traders were probably uncertain of putting larger bets before the long weekend. That day, the Fed reduced benchmark rate again, so taking position before two days of volatility is just too much of risk. The States rose on Thursday and Friday, which was discounted today by WIG20 futures. To make some predictions for tomorrow, there are couple of points to note: American stock indexes declined for the most part of the day, but managed to post a double bottom pattern and changed intraday trend late in the session If this is to be continued tomorrow (meaning that currencies will also change trend against the Dollar overnight), then I expect, that WIG20 futures should not break down through 2940 tomorrow Break above 2990 will set a new upside price targets of 3015 and then 3040