Climatic buying?

I just wanted to put out a quick post given the late surge we saw in Asian markets today. As I stressed this morning in my ASX200 post, we should not fight uptrends until we see a clear distribution process. This is either:
i) A strong reversal candle out of a Fibonacci level/clear resistance level
ii) A double top pattern
iii) A breakdown of a clear range

This is not in place yet. However, just as we saw climatic selling some week backs, I am beginning to see some signs of climatic exhaustion buying. This does not mean a top is in and it does not mean we should be shorting. However, it is a word of caution to tighten up open positions, look for bull flags and other setups back into the trend rather than blindly piling into the market. Always think about risk/reward.

Charts of interest
ASX 200 Daily:
Has rallied right back into the previous trendline. There is a long wick left on today's candle but this is not a bearish reversal candle in itself.

ASX 15mins:
Price has rallied right into an upward sloping resistance line

MSCI Singapore March 60mins:
Has rallied right into the previous breakdown level and my target zone. Small divergences appearing

Nikkei 225 June 60mins:
I posted earlier today about a potential breakout play and a confluence of resistance at 9750 area. This is potentially playing out. Needs a reversal candle as we are in the midst of a strong breakout in the short term

AUDUSD 15mins:
Despite the bullish equities move, AUD is failing to break the 1.03 level for now. This actually looks like a possible rejection in the short term.

I do think the Eminis are in a strong uptrend and the targets are higher for now in that market. However, I wanted to show these setups here in Asia. It could all mean nothing and we blow these levels out of the water- so be it. However, as ever we have to be prepared to sell it when everyone wants it, much the same way we have to be prepared to buy it when no one wants it.

Wait for confirmation.
Best of Luck
Austin

Asia Top Setups

I thought I would give a quick run down of the top setups I am following in Asia.

i) Nifty Index Breakout (SGX futures)
The Nifty has formed a great base pattern under the 5600 level throughout February and March. Note that despite many global markets selling off strongly on the back of the Japanese earthquake and concerns in the Middle East, this market consolidated. This is a bullish lead indicator. We have seen a strong closing candle out of this base pattern and follow through on the Daily. Position traders should be long and riding this new trend up. There is short term resistance at 5800 but I feel this will be broken in the ensuing days.


Nifty Daily Continous Futures:

Nifty March 60mins:
 The 60mins chart shows the recent breakout from the range (ignore the spike candle as this is a data error). There are 2 possible trading setups here:
i) Buy as the market breaks 5800 and join the trend and momentum higher. This needs a wider stop
ii) Look for a bull flag back to 5600/5650 and the moving averages to get long, stops back in the basing region

ii) Nikkei Breakout and Reversal Trade
I posted an interesting setup I was witnessing in the Nikkei a few weeks back: http://swingtradersedge.blogspot.com/2011/03/nikkei-vs-s-flash-crash.html

This scenario is still very much in play. In the short term, the Nikkei has been trading in a tight range between 9300/9350 and 9500/9550. I don't know in which direction this market will breakout and we have to just wait for a clear signal. In the bigger picture, if a breakout to the upside ensues, I have targets to 9700/9750 which is the 61.8 fib retrace, an open gap, and a potential A=C thus a strong confluence. Up here I will be looking for strong bearish reversal candles to get short with tight stops. This is a great risk/reward trade.

Nikkei June 15mins (Day Session):

Nikkei June 60mins (Day Session):

iii)Shanghai Triangle Breakout
The Shanghai Daily has been trading in a broad range for over a year. I believe we have put in an "E" leg of a triangle pattern and thus we are on the cusp of a MAJOR breakout. The signal for longer term position traders is a strong close above the downward trendline around 3100. I think short term traders should be getting long above 3000 and then adding above the Daily downtrend line.

For a related scenario and pattern, see the Hang Seng setup in 2010 posted here: http://swingtradersedge.blogspot.com/2011/03/weekend-observations-china-breakout.html

Shanghai Composite Daily:

Shanghai Composite 60mins:
As can be seen, the market has broken out from a strong basing pattern under 2950. There was an initial false breakout that has completely recovered. A break of the recent highs at 3000 is needed for confirmation.

Thus, in sum these are the top swing trades I am monitoring currently- 2 bullish setups and 1 bearish setup. Obviously, it is unlikely that the bearish Nikkei scenario will play out if a strong breakout does ensue across Asia. However, the key is to be prepared for anything and anticipate. We do not know what the future holds and thus have a gameplan and wait for price to confirm.

Thanks

Austin

ASX200/SPI Morning thoughts

I must stress from the outset that the SPI remains in a strong uptrend since breaking the 4600 level last week. We should not fight this until we see a clear distribution process. This is either:
i) A strong reversal candle out of a fibonacci level/clear resistance level
ii) A double top pattern
iii) A breakoutdown of a clear range

None of these scenarios have occured or been in place thus those looking to short need to wait for these signs.

US Market Summary

The S&P 500 had a very positive session, opening on the lows and closing on the highs. The June Eminis bottomed right into the support area I posted yesterday hitting a low of 1300. Have a look at the 15min chart and the clear bullish reversal candle out of this support level- these are the kind of candles that should trigger our entry. I anticipate a lot more momentum to the upside in the coming days  if we can hold above this 1315 level.

SPI 5mins breakout- Follow up

Today's plan in the SPI futures worked well and shows the importance of having various scenarios in play when trading the markets:  http://swingtradersedge.blogspot.com/2011/03/asian-monring-setups.html

There are some key takeaways and lessons from today's session:

i) 4740/4745 held in the first hour of trading. Get long at supports with tight stops. This was the low end of the recent 3 day range
ii) When we broke the intraday highs and opening levels above 4755, add to the position
iii) Breakout of triangle pattern- add another contract if possible and look to target the previous highs at 4790. The market closed at 4783 short of my target and sell half the position, carrying the rest into the next session with a nice open profit, move stops to breakeven.

Note that when the moving averages crossed to the upside, a clear trend day ensued with price retesting and holding throughout the day. Following the moving averages alone would have kept you on the right side of the market.

The purpose of going over this is to improve our trading. I tweeted these developments throughout the day and I hope you managed to profit. Learn these setups and make them your own

SPI 5mins Outcome:

US Market Breadth

I often talk about Market breadth and internals which I believe are important tools at certain market junctures. For a good account of recent divergences and how we can use these to trade, please read this:  http://blog.afraidtotrade.com/checking-on-sp500-diverging-breadth-and-current-structure-march-28/

SPI 5mins- breakout in play?

This morning's support levels at 4740 held. I am now seeing a breakout of a potential Triangle pattern on the 5min chart and adding to longs. Target for this play is the previous highs at 4790 in the ensuing days. Short term traders have to be able to hold to the close to capitalise correctly.

SPI 5mins:

Asian Morning Setups

Quick run down of the setups in Asia I am watching today.

The SPI is indicated at 4758. The key support levels to watch are 4740/4745 and look for resistance at 4765/4770. I am following a possible triangle pattern here targeting the previous highs at 4790/4800 but yesterdays lows must hold at 4740 to keep this intact.

US market summary

Morning All,

A late day sell off in the US markets has created a great opportunity to look for buy setups. I highlighted 1295 to 1305 as my key support zone in the June Eminis and we are here right now -please see chart below. I said on the weekend that "breadth was once again rather weak and there was no volume supporting the move which makes me think that we are not on the cusp of a major breakout until some more consolidation ensues". Here is our consolidation. I am looking for a clear reversal candle to get long out of this zone as my entry trigger.

AUDUSD- short term reversal

We have seen a great double top trade in AUD with a clear rejection of the 1.03 level. The chart below shows the bearish reversal candle and "test" of Fridays high. If you are going to pick tops, these are the kinds of setups you need to focus on. It is only after a failed test of a previous high that a new trend down can ensue.

Look for short term targets of 1.023/1.02. The trend is still up on the longer term timeframes and thus this is a short term fade trade only for now.


AUDUSD 15mins:

Weekend Observations- China breakout coming?

Happy Weekend All,

One of the best lessons we can learn as a trader is to heed price action. I showed a number of resistance levels across multiple markets on Friday right at the 61.8 fib retrace levels. This was a great area for the market to sell and to consider short setups but it just did not play out. There was no confirmation and US markets seemed to brush these levels aside with ease. We must be flexible enough to respect this. One of my favourite quotes is from Paul Tudor Jones, where in response to why he was no longer bearish on the market he stated, "the market didn't go down. The first thing I always do is put my ear to the railroad tracks." No doubt one session does not make a trend but it certainly didn't seem that the market wanted to go down on Friday night despite the plethora of resistance levels. Thus, we now must continue to focus on this trend up once more. I managed to successfully identify some great basing patterns off the lows, http://swingtradersedge.blogspot.com/2011/03/s-bullish-patterns-developing.html, and now it seems we must identify methods to enter into this newly established trend. If this turns out to be a more complex correction (such as an ABC X ) then so be it but we cant forecast that.

Breadth was once again rather weak and there was no volume supporting the move which makes me think that we are not on the cusp of a major breakout until some more consolidation ensues. However, breadth studies should always be a secondary consideration after price. The trend is up on the S&P 500 Weekly, Daily, 60mins, 15mins and 5min charts- this is no doubt a powerful scenario and which should respect this.

S&P Cash 60mins:
The S&P 500 60mins closed right at the open gap making a new momentum high. The ideal trade now is to buy a pullback into the moving averages with a stop below the recent breakout levels i.e. below 1305/1300. There is a possible wedge pattern and if this triggers we could get that sell off back down to a great buy zone

Nasdaq 100 60mins:
The Nasdaq has rallied right into a downward sloping trendline on strong momentum. Day traders could potentially fade this in the very short term but the better trade is to buy any swings back into the moving averages with stops below the horizontal line shown here. Note that the daily has triggered a bullish "failed head and shoulders pattern" which is one of my favourite plays.

The ASX200 closed just shy of the 61.8 retracement level and has rallied almost 300pts in 7/8 trading sessions. I missed a couple of key long entries into this trend above 4700 and now I am on the sidelines and waiting. I do think we need to see some consolidation/ a deeper pullback first before getting long once more as the risk/reward just does not favour it up here for swing traders.



ASX200 Daily:

I have been monitoring this market for a while and now I think it is suitable to show what I deem to be a very bullish pattern emerging in the Shanghai Composite. This market has been in a clear sideways pattern for a year and it now seems to me we have put in the E leg of a triangle. Despite the panic throughout Asia on the earthquake news, this index put in a very constructive hammer right on the moving averages and has begun to rally once more. I feel this will be a major position trade as we breakout of this pattern. Monitor this! As an example, see the pattern on the Hang Seng Daily that emerged in 2010 and the ensuing breakout. This is almost an identical scenario.

Shanghai Composite Daily:
There have been some great trades in this market despite the bigger picture sideways action. Study the inverse Head and Shoulders pattern as well as the wedge breakout. I think a strong breakout of this triangle pattern is now in play. Get long prior to the downward trendline and add on confirmed breakouts above.

Hang Seng Daily 2010- Triangle Breakout Comparison

Hang Seng Daily Current:
The Hang Seng is clearly building another consolidation pattern ABOVE a previous breakout/res level. This is bullish. We have either already completed an ABC Flat down or a triangle is still basing out. Nonetheless, focus on the bigger picture bullish patterns.

I got short EUR  just below 1.42 in line with my trading plan: http://swingtradersedge.blogspot.com/2011/03/usd-big-picture-double-bottom-trade.html. This has worked well initially and we saw quite a sharp fall on Friday night. As per the chart below, we need to break 1.40/1.4050 to see increased momentum to the downside. I know that a strong USD and Equity market do not go hand in hand but I have always found it more profitable to trade the setup first and then react according to the underlying price action rather than trying to over think. EUR has topped nicely and trended down in line with my double top pattern despite equities continuing their strong run. Anything can happen. Something will give at some point but keep following the price.

EUR 60mins:

DXY Spot Daily:

In conclusion, the Shanghai composite and the Hang Seng appear to be breaking out of big consolidation patterns. These are longer term bullish plays and anticipate strong trending moves out of these patterns. I am sure this will have a positive read across for the rest of the region in the coming months. US markets continue to grind higher and our strongest trade is to buy a retracement back into the breakout levels. Despite this, I am short EUR and am looking for breaks of 1.40 to add.

Thanks
Austin

EUROSTOXX Short

I got short the Eurostoxx June at 2846.50 average. I don't normally fade the opening price but it looked like a clear setup to me at a good resistance level with a great risk/reward. See chart below. We have to break 2840 and lower to get momentum increasing to the downside. Just thought I would share some of my setups.

EUROSTOXX June 60mins:

61.8 Fib Retrace everywhere

Morning All,

The S&P 500 broke out from the small flag pattern I showed a few days ago and has now hit the 1310 open gap and 61.8 retrace- my target levels. I see price testing the 61.8 retrace across several markets and please see the charts below as a reference. From my experience, this is a formidable resistance level and I feel it is now time to be looking for low risk short setups with tight stops. Volume was once again unconvincing with total volume under 1bln on the NYSE and NYSE Advancing issues posted another lower high.

S&P 500 Cash 60mins:
Price has hit the open gap and 61.8 retrace. However, momentum has made a new high and thus it is important to see some bearish confirmation before shorting.

Nasdaq 100 Cash:

Emini June 5mins:
A bearish reversal candle has just formed after hours. The contract spiked to 1314 and has now reversed back to 1308. I believe this due to after hours reporting but this is a strong rejection no doubt

Eurostoxx June 60mins:
Has rallied right into the 61.8 retrace and previous breakdown level

SPI Continuous Day 60mins:
The SPI is indicated at 4750. This is right into the 61.8 retrace level and previous breakdown level. My plan yesterday was to look to get long on a strong breakout above 4700/4720. However, given where the market is indicated, I cant justify a breakout trade up here and I have missed the move. I am actually looking for potential fade trades up here in the first 30mins and then I will see how price trades. I am looking for res in the SPI at 4760/4765 and will short a strong rejection for a short term trade only until I see more confirmation. 

ASX200 60mins:

MSCI Singapore looks set to continue its advance into the target zone highlighted yesterday. I will be covering my Taiwan short this am and reassessing.

EUR had a very strong bounce right off the support zone I showed last night. I am now shorting around here at 1.42 with a stop above 1.4250. We may see a retest of this 1.4250 level first but I am happy to short here for now as I believe the 1.42 level was well offered yesterday and we saw a strong rejection of this level on the lower time frames. Potential A=C bounce off the lows yesterday right into the 78.6 Fib.

EUR 15mins:

AUDUSD has rallied right into its previous Daily highs.

Good Luck
Austin

EUR- top is in?

I put out a post recently suggesting a great double bottom setup in the USD Index and double top in the EUR: http://swingtradersedge.blogspot.com/2011/03/usd-big-picture-double-bottom-trade.html. This is now playing out.

The DXY spot chart gave me a confirmed Daily long signal last night. Tonight when the ICE futures open, I will looking to get long. Unfortunately, EUR sold off just short of my ideal level and has fallen almost 200pips. There is some potential support coming in here as per the chart below. The trend is now down on the 60mins EUR chart and momentum is making new lows. There is a confirmed bearish candle reversal pattern on the Daily. Thus, I think the best setup in EUR is to look to short the first rally into the moving averages/resistance on the 60mins.


DXY Daily:

EURUSD 60mins:

EURUSD Daily:

Good Luck
Austin

Asian End of Day Summay

Sorry for no post this morning- I was off the desk for work and play reasons :) There has been a great swell in Sydney for the past few days so I had to finally get some waves. Funnily enough, Kelly Slater surfed my local break on the one day I decided to get out of town: http://www.aquabumps.com/. Shame I missed it.

To the markets, the ASX200/SPI hit the open gap today at 4720 and closed positively. I posted a short term possible support play yesterday at 4655 and a triangle breakout trade late in the day which both played out well. Unfortunately, I didn't carry this position overnight as it had not moved strongly my way. C'est la vie.

The Daily chart has bounced strongly from the 61.8 fib fan and retracement level that I showed a week back. Note how those hammers were a lead indicator for this recent move.

ASX200 Daily:

The 15min chart closed the open gap today


ASX 15mins:

I am following 2 scenarios here currently. The recent action has formed a big basing pattern (possible cup or inverse Head and Shoulders). Thus if we see more consolidation around this level in the next day or so, I will be buying above 4700/20 for a possible breakout trade. We may need more time before a strong breakout can ensue given how far we have rallied already. However, I don't want to over think myself too much as this is a strong trend. Secondly, should this 4700/4720 prove a more formidable resistance level, or if we get some real overnight weakness, I will be looking to buy a deeper retrace again at 4655 and then 4600. I actually think this is a more likely scenario given some of the setups I am seeing overseas but until we see weakness, no need to second guess.


MSCI Singapore continues to trend higher after a clear failed breakdown and double bottom pattern. I thought we would struggle at the open gap but the price action was strong once again today. The targets are higher still for this index and I will continue to focus on buy setups.

MSCI Singapore March 60mins:

I was somewhat early with my Taiwan short but am happy to hold here for now. Today we hit the 3050 breakdown level on the MSCI Taiwan Futures level which is also a perfect A=C. The price action has been lethargic to me of late and I am seeing clear bearish divergences. This is a great risk/reward short and I would be happy to throw it away tomorrow if there is no weakness.

Taiwan Daily has hit a downward sloping trendline and has rallied right back into the moving averages:

Taiwan Cash Daily:

MSCI Taiwan March 15mins:

I showed an interesting setup yesterday in the Nikkei. I don't actually trade this but I am sure it will have ramifications for other Asian indices if this scenario plays out. For now, we still possibly have higher targets and a clear short level below the recent open gap.

Nikkei June 60mins:

In conclusion, the ASX has rallied strongly right into the first formidable resistance area. We may need more time before a strong breakout can ensue. Look to buy a deeper retrace and scalp short if possible to these levels. Hang Seng continues to rally above the support level mentioned. Taiwan looks to be the best short setup at this level. I have some interesting comments on currencies and the S&P 500, and will be posting this later. Stay tuned.


If you are enjoying some of this commentary, I would really value all comments and questions. I really want this to be an open site and I encourage all feedback and opinions.
Thanks
Austin

Nikkei vs S&P500 Flash Crash

I have been noticing that this Nikkei rally is slowly running out of steam. It has struck me that the pattern that is emerging is very similar to that of the S&P 500 back in May 2010.

Asian Markets

A run down of the other markets I trade in Asia and some potential setups:

The Hang Seng has recovered back above the key support line with a strong closing candle and follow through. There is still a lot of work to be done before position traders can buy this market for a breakout. However, shorter term traders should be looking to get long round these levels with stops below this key support. A failed breakdown is bullish

Asian Morning Thoughts

Problems with my Data provider again this morning so this will have to be a quick post.

US markets were pretty lacklustre overnight and appear to be in a clear flag in the very short term. Despite my caution yesterday, we could be looking at a great base pattern forming under 1300. Be prepared to buy a short term breakout targeting 1310 and possibly higher. Equally, the open gap at 1285 needs to hold to keep the bullish scenario intact so shorts should be triggered at this level for a move back down to the 60s.

Double Bottom/Top patterns- Recent Examples

I wanted to follow up on the USD Double bottom post with some very simple Daily examples. All of these examples were setups that I followed or traded over the past year or so. I am showing these not to pat myself on the back, but to illustrate how effective these patterns are as a risk/reward entry. Study some of these and learn the best way to enter these trades. I enter on a Daily close back below the double top/double bottom level or after a clear Daily reversal candle. Confirmation is key. Learn to sell into an emotional extreme and you place the odds in your favour. 

S&P 500 Daily: November 2010
This trade lead to a 50 point fall into the moving averages

USD- big picture Double Bottom Trade?

I wanted to share some interesting setups I am looking at in the DXY Daily Index. This is a classic "test" trade or double bottom pattern and represents a great low risk/high reward long trade. Often price needs to retest a climatic low point before a new trend can begin- this is what we are trying to exploit here.

The charts below show the DXY spot index and the DXY continuous futures. The spot index is testing its previous low with bullish momentum divergences in place. This is a buy IF we see a strong Daily closing candle back above 75.60/76 spot level. Note the ending wedge type pattern on the continuous chart. I am sure there are many traders who will be shorting or have shorted this for a perceived breakdown. This is exactly what we are trying to exploit because if there is no follow through to the downside, a powerful bear squeeze is likely to ensue. I know sentiment is at extreme bearish levels towards the USD currently but I don't have the open interest data.

Asian Morning thoughts- Short term caution

Morning All,

Last night saw a positive session in US markets with a strong gap up and the S&P testing the key 1300 level. I have been focusing on bullish base patterns and these have played out well thus far: http://swingtradersedge.blogspot.com/2011/03/s-bullish-patterns-developing.html. I now feel is the time to urge some short term caution for a few reasons:
i) We have had 3 consecutive gap ups with little intraday follow through. This is not indicative of a strong underlying trend
ii) Volume was less than 1bln on the NYSE. Again this is not indicative of a new kick off move
iii) Price is coming into key overhead resistance from 1305 to 1310.
iv) High beta indices such as the Nasdaq 100 are not following through

I do believe the bigger picture is bullish but here is the chance to lock in some of the recent gains. I stressed last week that successful traders need to be able to buy near the emotional extreme of a decline- this has played out well and now is the time to be cautious I feel.

S&P 500 5mins:

Nasdaq 100 5mins

The SPI broke out of a clear consolidation pattern yesterday afternoon which I posted. I thought we would get more weakness down to 4600 but this never materialised. We are indicated to open at 4694 and this is right into a big resistance zone. Similar with US markets, I feel short term caution is now warranted here. These resistance levels are:
4697/4713- an open gap
4720- 50% fib retrace

SPI 5mins:

ASX 60mins:

The bigger picture is bullish and fade trades should only be considered I believe for the most nimble of traders.

AUD is coming into some strong overhead resistance. There was no signal from yesterdays short setup late in the afternoon. I don't have a trade here and am still hoping for a pullback into the 60min moving averages to get long

AUDUSD 60mins:

 

In sum, I am turning cautious here. The intial move is coming into some strong resistance in the US and in Australia, and I am happy to get flat here and wait. I would be very careful getting short as there is no signal. I will post more charts of Asian indicies shortly. 

(UPDATE) AUDUSD 5min ending wedge

(UPDATE) 22/3/ 9am AEST: There was no reversal at all from this pattern and thus no trade. This is why I always try to wait for confirmation before trading. See chart below. Move on and focus on the next setup.

SPI 5mins- consolidation before a breakout?

Tried shorting SPI twice today and it is just not breaking down. Are we looking at a triangle consolidation pattern?

Asian Morning Thoughts

A quick run down of the setups I am following in Asia this morning. Note that Emini Futures are 6 points higher since Fridays close so it would seem that the recent military intervention is having little impact on the market in early trade. The Middle East had a positive session.

SPI Day June 5mins:

How will the market react to Libya?

Happy Weekend All,

The title of this post is somewhat misleading. My experience in the market has taught me that ultimately the market is going to do whatever it wants to do. Trying to predict the future course of events is often futile. The best we can do as traders is have a setup, wait for price action to confirm the technical picture, and then execute always keeping the risk/reward in our favour. This sounds simplistic but it is some of the best trading advice I can give.

The market is at a juncture here I believe where it could breakout from a base building process and go on to retest its previous highs. I have been showing how breadth figures have not been supporting the move lower thus setting up a classic divergence. Price has hit some great supports and bounced quite positively across several markets. Equally however, if last weeks supports break, a whole new range of possibilities presents themselves and we have to be flexible enough trade the new setups.

I don't know how markets will take the weekend intervention in Libya. On the one hand it could be perceived as a positive by the market as this will possibly lead to an end of Qaddafi and close the door on recent uncertainty. However, heightened tension and bombs dropping from the sky is hardly the ideal backdrop for a sustained rally. The options are numerous here. Thus I just don't know how the market will take this information and I don't pretend to. Price action as ever will be key. We have some great supports in the S&P500, ASX200 and AUD as shown below. If this is a new leg up, these levels will hold. An ideal bullish scenario would be a gap down with no follow through.

(UPDATE) AUDUSD- breakout trade

I am long AUD and I thought I would quickly post the reasons for the trade.

AUDUSD 15mins:
Price completely recovered after breaking the 98c level setting up a possible bear trap/double bottom. This mornings price action and intervention has confirmed the bear trap and a breakout from a clear Flag. Target up at 9950/1.000

S&P500/NDX/DOW- bullish patterns developing

Morning All,

I put out a special post in the ASX200 yesterday and I urge you to read this. Yesterday was a great trading day across a number of markets and a number of double bottom setups I highlighted here were triggered and profitable. I believe we are now forming a strong base in US markets and we should be focusing on buy setups with tight risk.

I wanted to begin by talking about the recent breadth figures. I do believe looking at some breadth figures is a very important exercise and offers clues as to the underlying trend. I stated a few days ago that despite price making lower lows, the number of NYSE decliners was not following through showing important divergences. For instance:

ASX200- Swing low is in

Today's action in the SPI futures and the ASX200 was very positive indeed, completely shrugging off the overnight weakness. I have seen this kind of action a few times in my career and I believe it is a lead indicator for the future direction of this market and indeed global risk markets. Note that the ASX200 bottomed prior to the S&P500 low in July and September 2010. I have been stressing that a climatic low has been forming and having seen the strong double bottom pattern today, I believe this low is in. I am looking for a new trend up and this will be confirmed on breaks of 4600.

ASX200 Daily has shown back to back long wicks at the 61.8 retrace level and Fibonacci fan. Today's close was a solid bullish hammer showing underlying demand. This does need follow through to confirm but no doubt this 4480 level has been strongly defended.

EUROSTOXX- look to get long above 2750

Eurostoxx (March) 5min Double bottom pattern:

Double Bottom Trades- Follow Up

I posted this am about some potential Double Bottom trades lining up. I also highlighted looking for the same setup in the SPI. These have worked very well thus far with the SPI rallying almost 100 pts. AUD is late to the party but I still think this setup is also valid.

Learn these setups and how best to enter as they are great risk/reward trades that will have you taking money away from bears not using their head.

Double Bottom Trades

I cannot post in length this am. However, I do see a number of potential double bottom plays. On Tuesday we saw climatic lows form in a number of markets. Last night we saw a retest of these lows in Eminis/S&P500 , EUROSTOXX, AUD. This is a great area for a possible trend reversal now back up. Wait for a bit more strength and buy. Good risk/reward trades. Look for similar setups in the SPI at 4760/70. See charts below

New Twitter Function

Morning All

I just wanted to bring attention to the new Twitter function that has been installed at the top of the blog. I think this is a great tool as I can call out ideas, level and trades in real time as they develop. I put on 2 trades last night in AUD and FESX Futures (Eurostoxx) that were both documented and profitable. If you like my work and this commentary, I urge you to sign up and follow. A big reason why I decided to start this blog was to communicate with other Asian Traders and share ideas- please get involved.

Here is the AUD 5min trade I took last night. I noticed that AUD was struggling at 9950/9960 in European Trade with bearish divergences forming. The previous day AUD had made a new momentum low (60mins timeframe) thus our trade is to sell the first rally. It became clear that AUD was in a rising wedge and breaks of this pattern would lead to a retest of 98c. I got short on the break of the pattern at 9910 and I put this all on the twitter feed. I covered the position somewhat prematurely at 9830.

AUDUSD 5mins:

I use all timeframes in my trading and I believe this is important for profitability.  The key is understanding the setup and how best to trade the pattern in front of you. Sometimes there will be opportunities for establishing longer term positions at key turning points- e.g. if AUD closes below this 98c level on the 60mins/Daily. However, these trades come along rarely and until they do, I like to trade 5min charts to pay rent and exploit the smaller moves.

As it stands, I think we may actually be in a great Double bottom area. The 98c support level dropped but there has been a sharp recovery. If we can regain 9860 I think this is a possible swing buy up to 9960 minimum. Note the bigger picture is bearish thus if this bounce fails and we see a 60min close below 98c, get short and join the momentum down for a bigger swing

AUDUSD 5mins: