Tuesday, 13 December 2011

Tuesday Double Bottom?

Morning All,

Firstly, I have added an Email sign up function to the site. Glenn (Kooke boy) made the suggestion and I value this input. Thank you. Pls sign up so you can get my posts delivered straight to your email.

Well yesterdays trade idea was spot on but unfortunately the intraday action made it difficult to exploit. Once again, we saw the real move happen in the SYCOMM session, with the SPI breaking down through support in the 40s around 6pm Sydney time. As I stressed, if you are going to Swing trade these markets at the moment, you just have to be at your screens for the first 2 to 3 hrs of European trade.

In Yesterdays post I said: "I am looking to short with a potential move back down into the 40s at a minimum and lower for a gap fill. As per the charts below, the SPI has rallied right back into the previous breakdown zone which represents a great short term sell level with tight stops. Thus, I will be looking to fade early at 4260 with tight stops and will short more aggressively at my outlier levels of 4287/4290".  

I showed this chart/setup yesterday and this is how it played out: 

As you can see, my levels were certainly off yesterday as the market opened at 56 and quickly surged to a high of 78. Thus my initial 60s level was overthrown.I didn't get the chance to short in the 80s and from then on we drifted and chopped for the rest of the session. We also saw a false breakdown late in the day which would have trapped some short term day traders (myself included). I love looking through these examples however. Markets very rarely play out exactly according to plan and thus going through setups and examples is a great way to train ones mind. 

SPI 5min gap
My gap entry to get short was a 5min close below the established low of the day. As you can see, there was no follow through and I was stopped out at the end of day only for price to breakdown later overnight. The key here was being flexible enough to re-enter the short when the next signal was given

SPI 5min ii
You can see the real breakdown came in the after hrs. Now price is right into the support zone. 4188/4190 was Fridays day session lows. 4170 is the Sycomm lows. 

Thus today, we are indicated at 4196 and thus right back into Fridays lows. This sets up for a great double bottom trade, one of my favourite low risk/high reward LONG plays. This is how new trends begin. Furthermore, Tuesdays are my reversal days so if ever we are going to put in a genuine low or turning point, today is the day. I think we may see a bit of weakness to begin with, but will be looking for buy setups into my cited levels below. 

My initial range today: 4170 to 4210. Outlier levels 4150 and 4125.  

My plan today: I will use 4200/4205 as an initial level to get short for scalp trades only. I think we will see initial weakness and thus this is a great level for day trading shorts. If we break above 4210, then I will have to join the long side adn the breakout. I will be looking for long trades at the Double bottom support areas. This is 4188/4190 (fri day session low) and 4170 (sycomm low). I think the 4170 Sycomm level has a better chance of proving to be a genuine low and thus I will be aggressive here. When playing these double bottom trades, remember to be nimble and keep risk tight. You can always keep trying but do not risk too much