Monday, November 23, 2009

Looks like we know where it will turn

Unless this gap will be reversed within the first 30 minutes of cash hours we can assume it will stick for more then a few days. We had been waiting for the market to make a decision and it seems EURUSD has broken out of the triangle and is ready to march for new highs. Same with SPX as current futures indicate a 1% GAP - we all know that up GAPs like to give us stepping days with low of the day being set within a few points in the first 15 minutes.

Looking at ES we still have some resistance levels to overcome at the 1102 (where we are currently and we may see a GAP above this resistance) and of course 1109-1112 levels. However, it will be quite difficult to overcome those levels as EURUSD will not have much more room on the upside for the day.

On the lower end of course 2 important price levels at the 1094-1095 and the 1090-1091. If we are to see a break here on the downside (which is very unlikly for today) we are back to 1084 which again will provide support. Quite difficult today.

The other thing I wanted to mention is breakouts when looking at equity markets and when looking at FX. We have seen many fakeouts on the SPX in the past, for both bears and bulls alike, however a breakout on FX has a much higher probability of sticking so the action we have seen with EURUSD during this overnight session makes me a believer of higher prices to come this week. Top this off with turkey week and we have lighter volume and statistically bullish price patterns in a holiday week.

For today - it will be wise to not enter any new trades. If the GAP will stick we should not have much more upside, at most 10 points so taking a long even for a scalp will be difficult to justify into short term overbought conditions. Taking a short at the same time carries the same amount of risk as retracements should be limited to the open price at best. Of course if we do not end up resolving into a stepping day its anyones game but even then we may get some strong upside moves.

12 comments:

  1. wow just wow ... who else feels the same way? lol

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  2. be careful here shorting at 1109 (yeah even with 20 pts up)

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  3. too bad i settled for 5 point gain on long on friday

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  4. yeah same here. But who could have known? ... in the end we did the right thing by closing that long. Especially for me being more short term focused again now.

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  5. any calls here? if you follow FLASH ON TWITTER: HE IS CALLING FOR A TEAT OF 10200 dji BY FRIDAY 11/27

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  6. Do not think we see prices this low during this week. We had a breakout type price play today. I think we have a higher chance at 1120 SPX then we have at a break of last weeks low.

    However, we need to wait till tomorrow mid day before we can figure out if higher prices will stick. When looking at EURUSD it indicates we are moving higher before breaking the 1084 range.

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  7. I am actually partially on vacation this week, hence why I am 100% hedged since Thursday last week.

    Would have been a nice short this morning though of 1109 - I was a bit hesitant to take this one before the 10:00 news release.

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  8. nice move =) take small gains and cut small looses.

    Also, today is a perfect example of what a corrective move looks like compared to an impulsive move. You can see we have reached a key resistance level and required the entire day to sell off 10 points of the peak. And lets be honest - after having hit the highs of the day - did that look like a sell off to you? Not so much. Since we did not reverse below the gap (we did try to give it a small fill attempt that failed pretty quickly) we can assume higher prices (technically lol - we all know what that means)

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  9. FWIW, EWI Prechter went 200% short--all in. he thinks it is a blowoff. I think we see 1092 and then 1190 by mid december. that will be true blowoff. Low target is 920-950 after the blowoff,

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  10. yeah I heard this too - sounds like he is doing what the old Chris used to do. He has been bearish for a long time though he made a nice call in feb this year (well we all did so it does not count).

    Blow off top? we have not made a new high yet. The only positive thing we have here is that we did not exceed last weeks high on this up run today - so we have some things for the bears going still.

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