Friday, 8 April 2011

Asian Morning Thoughts

Morning All,

The US markets closed relatively flat but with some wild intraday swings testing the recent range. The market remains in a clear short term range right at decent resistance levels. However, unless the low end of this range breaks in the next 2 sessions, I believe we may see a strong breakout to the upside. I have seen these kind of setups time and time again over the last 2 years and more often than not, it has paid to follow the higher degree bullish Daily trend. Often I have been on the sidelines waiting for a bearish break that doesn't materialise. Breadth and momentum have clearly been waning but this market is consolidating in time rather than price. As ever, wait for confirmation from price and trade accordingly.

Emini June 15mins:
Key supports are 1323/1324 and then a major pivot at 1320. Resistance remains 1334/1335

The SPI is indicated at 4933. Yesterday we saw an interesting gap up and failure right at the previous Feb highs. Similar to US markets, we remain in a clear short term range right at significant resistance levels (i.e. the February highs). I have been advising caution for position traders at these levels and I don't see any evidence to change this stance yet. The Materials Sector made a new high but there has been no follow through yet, setting up a possible bull trap. The Financials sector closed with a Doji star yesterday at the top end of the range. These are warning signals and not short signals. I do believe the strongest play is to wait for a deeper pullback to the Daily moving averages for buy setups.

Day trading scenarios I am following today:
i) Look for a retest of 4945 to 4950. Short if there is a clear reversal candle out of these levels, stops above 4952.
ii) Buy support at 4902 with very tight stops. If this level breaks, short for a longer term swing lower

Materials Sector Daily:

Financials Sector Daily:

I remain short the Nikkei for the reasons posted here several days ago: Given last nights earthquake, there were some wild swings in the futures down to 9405 but price has recovered to 9550. We will see how today plays out when the cash market opens. Resistance levels remain 9680/9700 with support at 9400/9350.

Ill have more later in the day


EURUSD sold off right into my target box last night at 1.4250 and held. This was a great support play and shows the importance of following new momentum highs. This level now must hold to keep the bullish scenario intact. In the short term I am looking for a retest of the previous highs at 1.435

EURUSD 60mins: