Tuesday, 10 January 2012

Turnaround Tuesday?

Morning All

Last nights action in the Eminis was rather subdued although we did see another recovery off the Asian session lows. A clear breakout pattern has formed and I expect a directional move out of this pattern in coming days. What better moment than a turnaround Tuesday and Full Moon :)

My central case has been for a breakout to 1293/1300: http://swingtradersedge.blogspot.com.au/2012_01_06_archive.html. Thus, I will be looking to buy any breakout above 1280 and looking for price failures in the 1290 region for confirmation of a top.

Emini March 15mins:
A clear cup pattern/consolidation pattern. Is this too obvious and is the whole trading community watching this setup? You just have to go with the breakout first and use triggers above 1280 as confirmation. If price trades below 1265, I would think this is a bull trap and marks a significant top (remember false patterns are the best as the crowd has been sucked in but there is little underlying momentum).

I put out a midday update on the ASX200 at 4100 yesterday looking for a potential short term low. This played out to a small degree but we need to see some follow through today. I still think we are oversold and I see continued bullish divergences which indicates that this move lower over the last 3/4 days is running out of momentum.

SPI 15mins Day Session:
A potential Ending wedge pattern. Price traded right into the open gap target and held. There was some good buying in the low 60s yesterday and the market just could not push any further lower. I have also marked here key short term support and res at 4060 and 4115 respectively.

My inital range today: 4080 to 4120

My plan today: Yesterday I was looking for buy setups and this did not work out until later in the day. However, I still remain in buy mode today given the previous 3 day sell off, the bullish divergences, and the support levels coming into play. We are indicated at 4099. If price quickly sells off down into the low 80s, I will look to position long with a 5 tick stop. Any retest of yesterdays 4062 low should also be bought with very tight stops as ideally we should not trade that low for the bull case to remain. Holding above 4100 would indicate a retest of 4115 at a minimum and possibly as high as 4130/4140.