Saturday, November 20, 2010

Weekly Forecast - Nov. 21st

Since I now have a Weekly Digest I can jump right into my forecast for the week.  Check out the Digest if you want to know how last week went.
The futures market put in a nice double top creating a new resistance and quickly sold off.  After a major sell off it found support at the April breakout level which is also the October consolidation level.  We now have the futures trading in a range of 1169 - 1125.  Currently we have a weak trendline supporting our movement but it will remain week until it gets a couple more touch points.
The S&P500 bounce back from a big sell off but quickly met with a new resistance at 1200.  We saw the market hold the 1200 line solid and then go through some slight sell offs.  Again, we see a new weak upward trendline that needs more touch points.  We are also seeing the 50 day moving average finally catch up to prices, so a pull back here could gain support.  We are also in an area on consolidation so there are many buyers between 1170 - 1190.  Breaking below the October consolidation would be a bad sign for the bulls.
Now the EUR/USD pair poses an interesting chart.  Beautiful topping pattern created which broke support and fell down to a fibonacci retracement line, and now we have seen a retest at the breakout level.  The 50 day moving average has also moved into resistance.  We could see more downside coming out of the EUR/USD pair.
The GBP/USD is starting to get choppy as it moves along bouncing off of support.  During the week it did find support on the lower trendline and 50 day moving average and it has helped keep it a float.  Dropping below this trendline and taking out the 50 day moving average would be a bearish sign.
The USD/JPY had a nice breakout from its downward channel and quickly moved upward.  It gained resistance at the 23.6% ($83.67) fibonacci support and looks like it could be in the process of rolling over.  A rollover and a retest to the breakout support is possible but a retest to 50 day moving average is more likely.
Here is the weekly $NYSI with slow stochastics overlayed.  This has been a great call for current trends and reversals.  We can see that right now we are still headed in a downtrend and need to wait before we hit the extremes before going long.
This upcoming week will be a short week with Thanksgiving on Thursday and a half day on Black Friday.  We have a few economic reports coming out this week with the main ones being GDP and home sales on Tuesday and durable goods on Wednesday.  The charts are telling me that we are going to see another sell off before we push higher.  We may not get the sell off this week since it is a short week but I do feel it will happen this week or next.  The currency pairs have been the keep to the rise and fall of the market for several months and I don't see a reason to doubt them now.  Keep your stop-loses tight entering the market this week.
To predict the not so distant future, it looks like the markets could be setting up for a chop fest till the end of the year.  A lot of things that are being watched have been bouncing between support and resistance and could continue into the new year.
My trading will be light this week not only because of the holiday but because I should be switching brokers Tuesday or Wednesday.  Even though I will be out of the market I will continue to provide morning updates and watchlist items.

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