Friday, 18 March 2011

(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.