Thursday, 22 March 2012

Thursday Plan

Morning All,

The key event today will be the China PMI at 1.30pm Sydney time. China has managed to get itself in the front news again given recent comments from BHP and no doubt there will be a lot of attention on today's data. As I have shown recently, Asian markets are on the cusp of some very meaningful levels, so any adverse number or reaction could see quite a sharp breakdown. It is make or break time.

The S&P500 continues to hold support but no doubt in the short term each bounce appears to be getting weaker and weaker. The inverse head and shoulders target was met, and no price is consolidating in a range. There looks to be a trade building here as the charts below illustrate.

S&P500 15mins:
The 100% projection from the inverse Head and Shoulder pattern was met at 1410. Price is now building a short term range but is looking increasingly vulnerable. It we see a break of that 1398/1400 support level, this opens up a sharp move down to 1380/1385. I would look to BUY a move into the latter zone.

Emini S&P500 15mins:
As you can see, we have had 3 tests of a clear support line. Price needs to bounce and NOW otherwise a break lower is the likely play. I will look to short if this plays out, targeting 1380s for a quick trade only. For now, price is still in a range but each bounce is getting weaker.

AUD 60mins:
The AUD continues to grind lower and is now testing the last of my support zones. I showed a count a few days ago calling for a possible 3rd Wave or C wave move lower: This continues to play out. The EUR looks very toppy to me here as well on the 60mins. If this is the real deal, then price will just keep going lower and lower. Support will fail. However, as a short term trader, I believe the BEST trade here is to BUY support first, and only short if it drops.

To Australia. 3 days in a row we have sold off despite rather positive overnight leads. My 38.2 Fib retrace was clipped to a tee yesterday and a strong rally ensued only for it to be beaten back down late in the day. Bottom line, after a 3 day sell off into supports, we may see a bounce but the short term trend is down. I intend to play the levels until a clearer picture emerges.

XJO 15mins:
Yesterdays support zone held but the rally did not hold.

SPI June 5mins:
There are the clear levels and boundaries to trade

My SPI range today: 4250 to 4280. Outlier levels 4238/4240 and 4290.

My SPI day trading plan: Rather than give a narrative here, I thought I would just highlight some of my key day trading ideas. I have been writing these down everyday in my journal and it has worked great for me as an action plan. I think it would be interesting to share these with you. We are indicated at 4265 early.

1) BUY 4258/4260 with stops at 4254. This is right into yesterdays lows and the support shelf. Price has to bounce early so keep it tight. Look for 7 to 10pts out of this.

2) SHORT a bearish 5min closing candle below 4260. Very simply, if we fail to hold early, look for this downtrend to continue into 4250 and possibly as low as 4240. Use the appropriate risk management. You just have to follow the trend lower and price action if we fail to bounce out 60. The key for me is waiting for a strong 5min closing candle below yesterdays lows as confirm. The old cut and reverse.

3) SHORT a bounce into 4272/4275. This is the overnight SYCOMM highs and an inflection point in yesterdays trade. Late in the day there was quite an aggressive seller who was hitting 74/75. If price doesn't sell here, look for a grind back up to 4290.

Hope this helps.