Tuesday, 21 February 2012

Bullish Reversal?

Morning All,

Well yesterday the SPI futures exploded out of the blocks and blew away all resistance points cited here. All this within 5minutes and before the cash market had even opened!  Its not often you see that. Obviously there were many traders out there, like me, who were looking to to short the 4200 level and quickly got swept. As ever, keeping your risk and your stops tight is paramount.

Yesterdays rally certainly refutes much of what I said yesterday in the XJO. I talked about that 4250 level in XJO being a key marker and it seems we will pop through this today. Its been a choppy, volatile ride of late and following the intraday trend really has been the only thing that has paid.

So where does that leave us? I will just show you a few charts I am looking at rather than try and make any forecasts at this point. We have a Eurozone meeting going on and really any headlines can pop out of that (although no doubt they will ensure any headlines have a very positive spin to them).

XJO Daily:
The high of my bearish reversal candle is about to be taken out. We are still trading at the top end of the range however. Looks like that upward sloping trendline held in.

XJO Cash 60mins:
Looks like a clear failed breakdown through that support zone. Time to cut and reverse? The overlapping nature of the move lower implies that we could very well have an ABC move off the top and thus this is a new impulse or trend higher with the first target right back at the previous highs.

SPI March 15mins:
A very strong opening candle yesterday and it always pays to follow this momentum. We are now approaching a solid res zone at 4255/4260 which could act as a first stopping point. However, the trend has certainly flipped to up once more and it looks like a clear impulse off the recent low after yesterday. Thus, looking for buy setups/pullbacks into the trend is the play I believe.

As you can see, it all looks quite positive here but certainly we have no new highs in place and are nearing the top end of the range. Furthermore, the S&P500 Eminis are nearly right at their May highs and the Hang Seng had a major reversal yesterday right at my sell zone. Thus this could/should keep a lid on our market in the bigger picture. Not sure. Just have to follow what is at the moment.

Hang Seng Daily:
I showed this chart several times. Yesterday we saw a perfect reversal right out of the res zone. Finally nailed one of these bearish setups! This is the 61.8 Fibonacci retrace off the top and A=C projection off the low.

Hang Seng 15mins:

My SPI range today: 4220 to 4260. Outlier levels 4200 and 4280.

My SPI day trading plan: Given the US public holiday, we have no clear overnight lead. European markets merely played catch up with the dramatic opening yesterday. Im sure everyone will be transfixed on headlines coming out of Europe and that will be the catalyst either way.

The short term trend has certainly flipped back to up. Thus I will be looking for levels and buy setups to get into this trend. The first obvious area of support comes in at 4235/4240 and then down at 4218/4220. I will look for long trades in these zones. Any selling should be capped at the 4200 level given yesterdays momentum. A move below there would be very bearish indeed. On the upside, I will look to short fade that 4255/4260 res zone but only for a scalp trade. If we fail to sell there, look for consolidation patterns/breakout setups to join a push to the previous highs at 4280.