Monday, 5 December 2011

SPI/ASX200 Morning Thoughts

Morning All,

Last night I put up my thoughts on where this current market stands: I encourage you to pls read.

Going forth, I will write a morning Trading plan and outlook for the Australian market pre-open. This is more of a short term perspective for shorter term traders. This will come alongside my usual posts and updates. I value any feedback as ever.

This mornings open has a positive tone vs Fridays close. AUD is up some 60pips from the open (+0.5%) and EUR is up 35pips. The SPI is indicated in the region of 4300/4310.

The current rally in the ASX200 off the 3975 low is slowly running out of steam and tiring. You can see the bearish divergences on the 15minute chart below despite price making new highs. This is not indicative of a strong breakout. In the bigger picture, we are also now approaching the top end of the recent range namely 4300 to 4400. Friday nights trading left a bearish reversal candle with a high forming at 4350. Thus all in all, I am looking for potential fade trades (going short) in the next 24/48hrs. This is fighting the short term trend and is a short term trade only. I usually look for reversals on Tuesdays so today's bearish outlook may be premature.  However, the risk/reward and technical outlook favours this setup.

My range today: 4290 to 4325. Outlier levels are 4265 and 4350.

My plan today: The open will be very important today with 4300 a key area. I will be looking to short should the market fail to hold above 4300 early and will use a break of 4290 as my trigger to short. Breaks above 4300 will open up moves to 4325 and potentially even as high as 4350. The latter level at 4350 offers a great low risk fade level. There is a lack of data today so I am not expecting big moves today.

SPI Futures December 15mins
SPI Futures Dec 30mins
Coming into top end of range. 4350/60 and 4400 were the previous highs. I expect the market to struggle up here if it hasnt already found a high.
Big Week for Australian Data- Interest rate decision on Tuesday, GDP on Wednesday, and Employement data on Thursday.