Tuesday, 14 February 2012

Reversal Tuesday? Ha I Wish

Morning All,

Firstly its great to see so many comments on the blog and some good discussion is developing. Paul, Ollie, Senate, Ronald and everyone else- good work and pls keep it up. Senate just calm it down on the bull chat :)

Well yesterday I was looking for a potential low to form in Australia but the market has a lovely way of making it difficult to actually participate. We opened a lot higher than my ideal buy zone, sold off and then ripped in the afternoon from nowhere. This now leaves us bang slap in the middle of the range once more in Australia.

SPI March 15mins:
As you can see, price has now rallied right into the middle of the range. There is minor resistance coming in at the dashed line of 4255 and then major resistance at 4275/4280 at the previous highs. No doubt this is looking something of a triangle or consolidation pattern which implies higher highs in coming days. I'm not sure just yet so just trade the charts!

There were no new highs overnight in the US but certainly the market seemed to shrug off Fridays weakness. Volume was one of the lowest I have seen in a long while in the NYSE. Resistance in the S&P500 Eminis remains 1350/1352 and breakouts above this would likely trigger a move to 1365/1370. For now, focus on that 1350 resistance level. If this is a genuine topping process, that level will hold. I am still short for now, but will be willing to cut and reverse if I see some solid 60min green candles.

S&P500 March Eminis 60mins:
Fridays sell off did not even reach the first target zone which shows that bulls are still firmly in control. We still have solid resistance at 1350/1352 and breakouts would open up 1365/1370.

I did find the move in Currencies overnight very interesting. Note that EUR actually sold off all session despite US equities pushing higher, and AUD also failed to challenge its previous highs. This shows interestesting divergences. FX is the biggest market in the world and they aint stoopid like us Equity folk :)

EUR March futures 60mins:
There was a strong breakout above 1.32/1.3220 but price failed to push on. Now price is actually trading back into the previous zone which implies a fake breakout and bull trap. EUR sold off all night as soon as the Europeans came in. A vote of confidence?

AUD March futures 60mins:
Yesterday I stated that AUD had hit the first target zone and a bounce should be expected. Interestingly, AUD topped out at the 61.8 retrace last night and failed to challenge its previous highs. I showed an interesting topping pattern on the Daily and now we are seeing a clear failed rally on the lower time frames. Potential Head and Shoulders forming here??

To Australia today. We are indicated unch vs yesterdays close. Certainly yesterdays afternoon breakout appeared strong and the key pivot was 4230/4235 in the SPI futures. As stated above, price is now right in the middle of the range thus its difficult to make any strong forecasts here. The likely scenario is a retest of those highs given the overlapping and corrective look of this whole pattern.

SPI March 60mins:
Consolidation above previous resistance which is actually quite bullish. Only a move back below 4180 would decisively turn this trend down.

My SPI range today: 4230 to 4265. Outlier levels 4210 and 4275/80.

My SPI day trading plan today: As shown in the 15min chart, we have first Minor resistance coming in at 4255 first thing. I will look to short fade this straight up with stops at 4260. Breakouts above this open up a move 4275/4280 so be prepared to join the uptrend up to there which would then be an aggressive short. Any move down to yesterdays pivot of 4230/4235 should present a good buy spot and a great opportunity to join the short term uptrend. Note it is Tuesdays and these are often my strong trending days. There has been so much see-sawing around in this market that it has actually been quite difficult. Could we be looking at a fake move yesterday and a complete reversal of those gains?? Or is the day that we trend higher and make new highs? I am really not sure, just have to be flexible and follow the price action.