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
