Looking Ahead — $ES_F $SPY $SPX $EURUSD $6E_F $MARKET $$

Spy

The market reacted positively to an upbeat jobs report rallying 20+ pts. from Thursday close. Friday action showed acceptance of higher value areas, as I pointed of one of several possibilities on Thursday´s post. It spent the rest of day in -tight- of range of 4 pts.

 

ES has opened the session with a 2 pts. gap to the downside and is currently trading @1334.75 at the time of writing (9:24PM, ET) .  The gap is marked in pink. Greece is currently negotiating alternatives on the Rescue Deal which has also brought weakness to the EURO, as shown below, opening Sunday´s session with a mere 5 pip gap., as shown below. EURO is currently selling into a thin area, nearing short term support 1.3080-1.3060.
2012-02-05_23582012-02-06_0022
Well see how it develops during the the rest of Asia and London sessions.

It was interesting to note that regardless of the up move, the level of short inventory dating back from Dec.4@1265 was never breached nor tested. This shows the importance of this level, marked with in pink.

The reason for pointing this out, is that I particularly worked with the idea of a strong move breaking both levels of short. I wrote:
Important to note is that both have been holding their short positions in front of a almost 70 pts. rally. I´m leaning towards the idea that if one of them closes, it is very likely that the other will follow, thus igniting a rally. 
It did not happen. Which brings me to that particular attention needs to put into this level. This doesn´t mean that it might be breached later, with more buyers coming in. However, I’m leaning into the possibility of this level being an inflection point in the market. Again, just a scenario to keep in mind while keeping my options open.

2012-02-05_23422012-02-05_2341

Ill find in the morning to see how it develops. So far, the first meaningful level to be tested are those long from last week, entered  1320 &1305 – further below, are the longs of late Jan.@1295. is those levels hold, the pullback might be buyable -too early to tell, at the moment. Alternatively, if lost, those form the 1280-1294 will be in play, threatening the possibility of a test of the open gap of the first week of the year

Level wise, Es is currently trading in the the area of demand that followed the NFP report @ 1333-1336.25. The area below that (133.25-1324.50 is what I called a thin area, in which price basically moved too far, too quick. My experience has showed me that those areas tend to be retested (although sometimes not instantly), so Ill be looking for the ES to retrace into it. Chinese CPI (on Wed. Feb.8) and Australia Interest Rate decision (Monday night, ET) are events I will be paying particular attention, too.
2012-02-05_2358

1322-1316 is acting as a previous demand area. Below that , Ill be looking at 1302-1306.

I have downloaded the data form July 2011. If the gap gets filled during the next few hours, Ill be looking at 1340.25-1342 as the nearest area of demand, followed by 1343.75-1346.50. July highs stand @1348.

2012-02-05_2358_0012012-02-05_2358
Much of ES weakness has been provided by the uncertainty of the Greek bailout dealings. Both ES and 6E have been moving in tandem since the open -both have experienced opening gaps, as noted below.

2012-02-06_0022
So far, the EURO has been rejected @1.3225 area dating from the last 10 days. Immediate support@1.3040-1.3017 is weak, being 1.2850-1.2940 the are where I would be looking buyers to step in, at least short term. The first meaningful level of longs are resting in the above referenced area. Below that, the ones established @ 1.2800 need to maintain their positions to keep it supported.

2012-02-06_00052012-02-06_0035
Above current levels, theres plenty of short inventory currently, I would expect more short covering in the event those get to be tested during the next few ideas (hypothesis).
I would like to see a meaningful brake of the 1.3228-1.3026 before defining a position, otherwise Ill be scalping 6E. Interest Rate decision for the EURO this next Thursday will be in the cards and most likely the combination of both issues will define EUR/USD next direction.

2012-02-06_0031

Have a good week.

 

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