$ES_F (S&P500) / $6E_F (EURUSD) May-5th-2013

ES broke my trend line on short term timeframe on decent relative upside volume leaving a large gap to 1593 (on RTH chart). It had sold to 1577 after an ambiguous FOMC. I found it interesting that they talked about adding more QE (this is some new rhetoric).

es_composite_candles

I really thought the ES was going to drop from 1593. People who are a lot more experienced than me do not think it is wise to be buying here e.g. profileintrade, John Maudlin etc. Others are talking about low volume, stop hunting bots, awful fundamentals, the end of QE etc etc.

The trend is up but it did look shaky on re-tests of 1593. It just goes to show that when one side is too heavy a move away from that starts a panic.

It completed the maximum range I had been looking at for April. This was based on adding the prior M-Range to MCurLo. See this post from 04/02 which I wrote on April 2nd mentioning the expected monthly range:

If the pattern continues that ES makes it’s monthly low in the first week of the month, then its +45/60 from there – all things remaining constant that is a potential 1596/1615 for April.

In the 2nd Week of April it was showing a max of 1614.42 (amazingly Fridays high was 1614.25). After the 4th week of April and the spike down the target on my chart dropped by a few pts to 1590/1606.

It has now broken outside of the upper side of the trend line below (this is the upper range of the parallel trend lines for the last 15 months). This is on following chart. Note also that the weekly low was at last weeks close.

es_weekly_range_plain

There are some large gaps below it but 1593 is the key one for now (it left large gaps when it went through 1400 also that have yet to be filled). Shorts taken by surprise or anyone hedging before ECB/NFP will cover when it comes close – buyers will probably step there also and off we go again trying to pick the next top.

On the Euro – the old ranges are still useful guides.

euro_composite_trend

I have added red ranges which are the same size boxes as the range EURUSD is trying to break out from.

Also:

I am watching that series of really thin volume trend down and up days. – look further back on Euro to see what I mean. Also see jigsaw trading for more background on why I look at that.

They are of interest from the way the euro leapt through these areas before so trading in there is like a ping pong ball, may explain recent price action as the Euro moves around looking for a new home.

The large blue developing VPOC also appears to be rounding.

In the same April 2nd post I mentioned above – I commented on one chart that the Euro volume has not really moved much from from 1.31/32.

This week there were 100 pip whipsaws in minutes. In the ECB/FOMC/NFP news driven market you have no idea which way it should go. Interest rate cuts should in my mind make the currency less attractive for any carry trade but the markets have been taking rate cuts as a sign that the ECB are doing something … Nowotny came out and said the markets over-reacted to comments on negative interest rates.

forexlive.com writes:

Astonished by market reaction to his earlier comments on deposit interest rates
There has been discussion about going into negative territory, ECB is open minded about it, do not expect short term result
Feels over-interpreted by the market
EUR/USD falling below 1.31 on the back tracking clown
EUR/GBP falls 20 pips to 0.8420 with EUR/JPY down to 128.35 from 128.67
USD/JPY taking a duck under 98 to 97.95
I never ceases to amaze me that these jokers have no regard for what they say and how they say it.

It was nice to see the Euro halt at the 1.3192 level I talked about with Benko. EURUSD did not look safe to trade after the spike up on Wednesday.

Euro_short_term

Benko check this out this cool HD recording of Aces High Live with amazing Egyptian stage!

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