Sunday, 10 April 2011

Weekend Observations

Happy Weekend All,

I will be dealing with the Eminis and the USD in another post. Here I wanted to update the swing setups and scenarios I am following in Asia. The weekend is such a great time to get prepared for the upcoming week as well as analyzing previous trades and areas for improvement. I recommend it to anyone who is serious about stepping up their game.

The SPI closed at 4965 on Friday, above it's previous February highs. As I have been stressing for the past week, this is the area for position traders to be getting out of the market and looking for better risk/reward setups or focusing on the shorter term timeframes thus keeping risk minimal. No doubt the trend remains up and it is futile to fight this until we see a clear distribution pattern. However, this is a solid resistance area and we have to be prepared to get out and look for a clearer pattern whilst those around us panic into entering the market.

SPI Continuous Daily:
Momentum has made a new high and price has certainly been impulsive off the low. A pullback to the moving averages and support around 4800 would be a great area to get long once more for a bigger position trade. Short term SPI resistance levels are 4960 and then 5000.

SPI 15mins:
The market has been grinding higher in this megaphone like pattern for the past week. Look for breaks of this lower trendline and then 4900 to confirm a more meaningful top is in place.

The SPI night session closed at 4933 on Friday night thus there could be a 30 point gap down tomorrow right into that short term trendline shown. Day trading scenarios I am following on Monday:
i) Wait for the first 10mins of trading. Buy a 5min closing candle above the high of this opening range or short a 5min closing candle below the low of this opening range. Look to add to shorts if 4918/20 breaks.
ii) Look for a support play at 4900/4905 with tight stops. If this level breaks, expect a deeper pullback in the coming days.

The Nikkei had a strong rally on Friday retesting the 9800 resistance level. Certainly the price action did feel impulsive and the market put in a strong hammer low overnight on the 60mins timeframe. However, I am still short as my stop at 9855 was not lifted. If I see a gap down on Monday which holds, I will look to get out and reassess.

Nikkei June 60mins (night session included):

MSCI Singapore continues to grind higher with strong momentum. I still don't have a clear position trade here and am looking for a pullback to the moving averages to get long. There is a short term channel in place and if this breaks I would expect the deeper pullback to materialise.

MSCI Singapore Continuous Daily:

MSCI Taiwan showed an interesting bearish reversal candle on Friday right at previous resistance on the Daily and at the trendline resistance on the lower timeframe. Breaks of 3140 are short term bearish. There is an open gap at 3090/3100 and I will be looking for buy setups in this area to join the trend.

MSCI Taiwan Continous Daily:

MSCI Taiwan 15mins:

The strongest pattern in the region is Shanghai: I am looking to play this via the FTSE Xinhua China 50 futures. I see price beginning to breakout of a clear base pattern. 2 possible entry signals:
i) If price makes a new opening high on Monday, get long as price is making higher highs joining the momentum. This needs a wider stop but don't be afraid to buy a market as it is making new highs. This is a Jessie Livermore tried and tested technique (as well as most trend follower or momentum traders).
ii) Look for a flag or pullback to the 9900/9950 and get long on the lower timeframes on a strong bullish reversal.

FTSE Xinhua China A 50 Continuous Daily:

The Nifty has corrected in a clear ABC type pattern since hitting the 61.8 retrace level and downward trendline. The breakout from the base pattern has been strong with momentum making a new high. I think this is a clear flag pattern and will be buying if price can recapture 5900, adding above 5950.

Nifty Continuous Daily: 

Nifty Continuous 15mins: 

In sum, the best buy setups I have in the region are in Shanghai Composite and the Nifty. Australia has rallied right into its February highs and I believe it is best to focus on the shorter term timeframes up here and tighten up open exposure significantly.