A continued rally in Europe and the US overnight sees the SPI indicated right in the middle of the recent range at 4100. My 60min ASX200/SPI futures chart has guided us very well thus far with the SPI making a short term low in the low 4000s, right in the target range. Volume has been horrible of late which makes me cautious that we have seen a genuine turning point. Nonetheless, yesterday I said:
"Price is now testing previous lows and support levels. I believe we could be entering a period of transition from downtrend into sideways consolidation/base building. Thus, in the coming days I will be looking for support plays and possible breakouts to the upside if a good base builds. It takes time for a market to
transition and I would not expect a dramatic low straight away."
I believe this is playing out and we just have to be patient for this base and sideways pattern to develop. Please see the updated charts below.
SPI Continuous 60mins:
Price made a low at 4018 right in the cited target range. We have now transitioned from downtrend to sideways. A break above 4150 would confirm a new uptrend and breakout trades for Swing traders.
We are indicated at 4105 this am which is right in the middle of the recent range. Key levels to the upside are 4140/4150 and support is 4050 and 4020.
money- we are looking for support plays and possibly breakouts of the recent base.
My Range Today: 4080 to 4120. Outlier levels 4055 and 4145.
My Plan Today: I will be looking to short this move early out of the 4100s. This is a short term short scalp only. I find that the round numbers often prove to be very good short term trading levels as a day trader. I will look to cover any shorts at 4080. If there is no sell off in the first 10 to 15 minutes, then focus on a potential move up to the top end of the range at 4140. Once again to reiterate, swing traders should be looking for confirmation above 4150 that a new uptrend is underway to get long.
I am not one for long term predictions. I believe that the ability to forecast a market drops off dramatically after 2 to 3 weeks even. I have learnt this the hard way. Sure I can see Daily setups which imply a strong move in a certain direction, but I know there can be many twists and turns along the way. I cant stand those Broker reports that hit the presses come January of the new year with projections a year out. So utterly useless and untradeable. Watch them be re-written and revised in a matter of weeks. If the last 4-5 years has taught us anything, it is to expect the unexpected.
Here are a few Daily charts that I am looking at. These always form the backbone of what I do. They are setups and a means for characterising the market- not long term predictions. I posted some of these in a recent post so pls re-read for more detail: http://swingtradersedge.blogspot.com/2011_12_28_archive.html
Australia Daily:
We are at the low end of the recent range. Down here I would be looking for short term support plays and a possible breakout trades to the upside. In the bigger picture, I really do not know which way this market is headed but clearly we are very offered at 4350/4400.
Hong Kong:
SP500:
This remains the key chart to me. I wrote this on 28 Dec and this remains my view: "Certainly price is now testing a number of overhead res points and thus setting up for some good short fade trades. However, price has hit that 200ma 4 times and keeps popping up for more. If this was a weak market, we should have left this long behind but we haven't. It is resilient. Thus ultimately, we could be looking at an ascending triangle of some sort with a breakout to the upside further down the line." We are now testing the upper end of these levels and as a short term trader, I will be shorting 1295 to 1300, stops above 1310.
