What a day and finally my patience seemed to pay off. I have been stressing for a while that position traders should be out of the market at these levels and looking for the next setup with a better risk/reward. It took almost a week to get up to the 5000 level once we broke 4900, and yet in one day this is all wiped out. The irrationality of the crowd.
Today was a solid distribution day. The XJO put in a bearish engulfing candle right at the previous February highs. I am still looking for a deeper pullback into the Daily moving averages in the coming days to get long once more for a bigger swing up as per my post on the weekend: http://swingtradersedge.blogspot.com/2011_04_10_archive.html. I do not think this is a one day wonder.
SPI June 60mins:
4800 looks like an interesting area of support with a former gap up and the 38.2 retrace level. 4900/4902 is short term key support and look for breaks of this down to 4800.
For Day Traders, there certainly was some good money to be made today. Firstly we had a clear Ending Diagonal pattern or 3 wave push pattern coming into today. Note this nailed the 5000 psychological level. We gapped down, tried to take take out the intraday high but failed, and then broke the morning lows leading to a strong trend day down. My mistake today was covering in the 40s at support which is the wrong play on trend days- we have to be willing to hold to the close to gain maximum benefit. This happens time and time again.Continue to look for consolidation patterns to get back into the downtrend.
SPI 5mins Ending pattern:
SPI 5mins gap down setup:
Study these gap plays. These need to become a staple if you want to successfully exploit the Asian intraday moves. Wait for the first 10mins to trade, define the range, and then trade the breaks of the levels for increased momentum. A failed rally this morning out of the gap down was a key lead indicator.
If you are interested in receiving more of these setups and charts as they happen- LET ME KNOW. I am happy to send these via email etc. I am trying to call out levels etc on twitter and I hope this has been of value.
Today's sell off across Asia has opened up a number of retracement trades I have been waiting for:
MSCI Singapore Continuous Daily:
Has now entered into the key pivot and the Daily moving averages. We made a new momentum high and have now traded from high to low on 2 consecutive days. Looking to get long here on a lower timeframe reversal bar.
Hang Seng Daily Cash:
Has now traded right back to the breakout level. This is a great low risk/high reward entry with stops below the gap at 23,600 to 24,000.
Hang Seng Cash 60mins:
We are retracing into an open gap and the moving averages after a momentum high. Look to buy this pullback.
I certainly took a hit on my China position. However, price is now retesting the breakout level and the bullish scenario remains as long as the recent gap up and breakout area holds:
FTSE Xinhua China A50 60mins:
In sum, I believe this is the beginning of a deeper retracement in the SPI/XJO. 4900 is short term key support and my buy zone is down at 4800. I will keep trading the short term day setups until I see a clear longer term postion trade. Singapore, Hong Kong and China are all testing key breakout levels and I think they offer low risk buy entries with confirmation. The Nikkei held the 9550 key support level today and the range remains 9550 to 9800. I have moved my stop right up on my open short.
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