Wednesday, 20 April 2011

Asian End of Day Summary

Today was a great trading day for the bulls in Asia. I thought I would keep tonight's post very simple and show a number of Daily setups after the close that clearly illustrate the bullish scenario across the region. I believe we are going a lot higher in the next few sessions/weeks thus we must be prepared. As I write, the Eminis are also charging, breaking my 1320 key marker (note that Asia led this move).

ASX200 Daily:
I talked about the 4800 level some weeks back and reiterated it yesterday: Today we gapped up out of 4800 and rallied all day to close on the highs. This is a very strong closing engulfing candle right out of the moving averages. Look for retests of 5000 and beyond.

SPI June 5mins:
Clear trend day for Day traders. The gap strategy I have been talking about worked wonders today. Very simply, wait for the first 10 to 15mins to trade, buy a 5min closing candle above the high of this morning range and/or short a 5min closing candle below this range. Hold to the close!

MSCI Singapore Continuous Daily:
Price pulled back to the key pivot level and moving averages, put in a hammer and was followed by today's strong closing candle. We are breaking out of a clear flag pattern and I believe a move towards the previous highs is now in play.

MSCI Taiwan Continuous Daily:
Similar to Singapore, price retested key support, held, and today's follow through was very strong. Don't be afraid to join as this market is set to go higher. A inverse Head and Shoulders pattern has now formed.

Hang Seng Continuous Daily:
A strong gap up and follow through day should be the confirmation for a strong move higher in Hong Kong out of the recent range.

Simple charts which all imply strong moves ahead of us. It is time to switch to breakout mode and don't be afraid to join this move paying higher prices- its going higher. 

Currency Update

Good Morning All, 

Sorry for the late post today. I was busy running around pre the Asian open and had no time to post. I thought now would be an opportune time to update on a number of currency setups I am looking at. In my last currency post, I warned of a strong resistance zone in EURUSD at the 1.45 level and advised caution for traders:

I was cautious not just because of the level, but because I couldn't identify a low risk/high reward pattern to trade. This played out very well given the events on Monday with EUR trading all the way down to 1.42 and lower. Once again, the key takeaway from this is being able to think correctly as a trader and respecting the risk/reward in each setup. Don't let your emotions and the prevailing sentiment effect you, but instead stick to a rigid trading plan based around your best trading setups.

A number of opportunities are now lining up. My favourite plays are long EURJPY and long AUDUSD. 

The pair has almost retested the 116 breakout level. The move out of this breakout zone was impulsive with a new momentum high. Thus, we should be looking to buy the first pullback into the trend and here it is. This offers a great long entry with stops back below the breakout level

EURJPY 60mins:
The 60mins has pulled back in an ABC type pattern. Last night we saw a strong bullish reversal out of the low that I believe confirms a bottom. Note the fib relationship between the waves down where C=1.618A down. I look for these kind of relationships in corrective moves and they are very relevant. Monday's weakness has been recovered.

My entry is either:

i) Buy stop above 119.50 spot. This was the previous breakdown level and buying above here should confirm a new uptrend.
ii) Look for a "test" of Monday's lows that holds. A tighter stop can be used for this entry

The Daily is forming a clear consolidation pattern. The trend is up, momentum is breaking out after months of consolidation, and there are no clear res levels above here. As I said previously- DON'T FADE THIS. Ranges beget price expansions and this is merely the beginning for the price expansion after a 6month range. 

AUDUSD 60mins:
The 60mins is forming a potential triangle under 1.058/1.06. This is a consolidation pattern and we should be looking to exploit this for a subsequent breakout trade

 My entry is either:

i) Buy above 1.060 joining the momentum higher
ii) If price fails in the short term at the resistance level, I am looking to buy a small pullback for the "e" leg of a triangle. 
The target for this move is 1.08/1.0850 and then 1.10.

AUDJPY 60mins is another great short term setup. The 60mins has been correcting lower in an ABC move lower. I am looking for a breakout here and a retest of the highs. 

And Finally to EURUSD. To me, the Daily chart is just not clear and thus I am happy to focus on the better setups. Momentum has been consistently weak since breaking the previous 1.42 highs, and this is shown by the divergences on the momentum indicators. Furthermore, there is a potential ending wedge pattern in place. The key short term levels are 1.44 on the upside and 1.42 should be good support. Trade the ranges. 

Hope these setups prove helpful. Best of luck and contact at anytime. Should be an interesting run into Easter