Tuesday, 20 March 2012

Tuesday Plan

Morning All

I am not going to be presumptuous and head the post "Tuesday Reversal"- last week I did that with rather disastrous consequences. Another good move off the lows in the US overnight sees a small positive gain for the Australian market today. As we saw yesterday, we are grinding up against some serious overhead resistance here in the short term after an extended move off the low. There will be many false breakouts as we grind into this zone. They say that bull markets climb a wall of worry. Nowhere does this seem more apparent than in the Australian equity market (although I would not call this a bull market down here, but certainly overseas).

The below chart shows a number of obstacles our market has to overcome which should be formidable. At any of these junctures, we could certainly stall and reverse this uptrend. That is why it is just so difficult here right now to make any kind of forecasts and it is best not to. I continue to keep my trading in Australia tight and intraday. The US market goes from strength to strength but we are just not following through for now.

XJO 60mins:
Multiple overhead resistance points namely 4315/4320; 4335 and then 4363 as shown on the chart. No doubt the short term trend is up but its a very difficult area to get too bulled up

XJO 60mins ii
We fell short of my first target area yesterday. Rather lacklustre follow through despite positive leads from overseas. Another positive overnight lead should see us attempt to retest that 4315/4320 level at a minimum. Keep following that uptrend for now.

An interesting thing to note which should have a direct bearing on Australia is the AUD. This currency remains one of the key risk assets and a good lead indicator for global markets. It continues to languish in the short term vs overseas equities. I have managed to successfully navigate this one of late and now we are clearly bumping up against some major resistance. Be on the lookout for a potential reversal into here.

AUD March 60mins (this was my count before the contract expired)
Coming into overhead Resistance which is the previous Wave 4 pattern and a potential A=C off the low. I had this as a 5 wave move down off the top and there are a number of wave and momentum relationships that came in at the low.

AUD June 60mins Updated:
Res zone is 1.05 to 1.0550 in the June futures.

My SPI range today: 4305 to 4335. Outlier levels 4290 and 4350.

My SPI day trading plan: Yesterday attempted breakout above 4315 was slapped right back down and we grinded lower for most of the day. It is very difficult in this zone after such an extended run up. We are indicated at 4315 first thing and I do think that we have to give this short term uptrend the benefit of the doubt and thus look for more retests of the highs. I also have a potential short term breakout pattern on the 5min chart as shown below.

From the open, I will be looking to BUY any retest of yesterdays lows at 4305 with stops under 4300. Any break of 4300 opens up a potential move to fill the gap into 4285/4290 so I will be prepared to buy once more down there. On the upside, 4328/4330 was quite significant resistance yesterday so I will look to short fade this level once more for a scalp only as the trend is up. If it fails to sell there, this opens up a cut and reverse trade for a move higher. I do believe it is key to keep an eye on that cash chart at all times as 4315/4320 is my primary target for now until we see any meaningful bearish reversal.

SPI June 5mins:
Potential base pattern here under 4315. Price is forming a flag type pattern right on the neckline which could be the prelude to a breakout of some 40 to 50pts.