Yesterday marked a seasonal date for many of the "timing" experts and Gann followers out there, as we hit the Autumn equinox and the 161 week window for the entire market off the March 2009 low. More importantly for me is the price action into this window. Yesterday we saw a reversal right from the open in Australia and other Asian markets grinded lower for the session. AUD clipped my resistance zone and sold off all day and is languishing on its lows. Are we on the cusp of something more meaningful here? I wrote about interesting divergences going on under the hood in Asia in this post, http://swingtradersedge.blogspot.com.au/2012/03/asian-daily-setups.html, and now we are beginning to see small confirmation.
Lets have a look at some of the setups:
Hang Seng Daily:
We are now beginning to see more bearish reversal candles out of my resistance zone. I have labelled on the chart 3 noticeable bearish candles of late. Clearly this uptrend is tiring and this confluence of resistance has proved very meaningful thus far. Note that this is occurring while US markets have gone higher and higher.
On the lower time frame, there are a number of lower highs in place. Yes this could possibly be a triangle forming of somekind but I think the inability for this market to push higher is bearish. As labelled here, we could be on the cusp of somekind of bigger C wave down. If we open weak today, don't hang about. At a minimum, I think we will retest the previous lows at A.
A Shares 60mins:
This chart is self explanatory. A clear triple top with a very strong sell off. Price has tried to rally out of support but looks to be failing in a clear flag type pattern. If we see more weakness today, this should be a great short setup with stops above the high of the flag pattern. Given that this whole pattern off the low looks like an overlappig wedge, I would anticipate any move lower to be sharp and quick. That is the nature of wedges.
AUD June 60mins:
I put this up yesterday and it proved to be a great short setup. The A=C zone was clipped almost to a tee and a strong reversal ensued. We are now at the low end of the range and coming into supports so this should be the first area to cover. I think it is too early for the bears to get too excited but note this could possibly also be the onset of a Wave C or 3 type move. Perhaps the rally has not had enough "time". More importantly, just look to cover into those supports and re short if it drops.
And so to Australia today. Yesterday my range and outlook could not have been more wrong. However, I actually managed to make money by heeding that bearish open and by following my alternative "what if" scenario. I have no intention of gloating here but my point is to stress the importance of having action plans and alternative scenarios for when the market is doing something you don't expect. The best traders I have seen are the ones who can be truly flexible. I said yesterday:
"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".
I bought 4306 and was stopped out immediately. The opening bars on the 5min candles were solidly bearish and thus I flipped to short and covered into 4290. The rest of the day was about getting into that downtrend and good risk/reward spots.
My SPI range today: 4260 to 4305. Outlier levels 4240 and 4315
My SPI day trading plan: 2 days in a row Australia has bucked the overnight lead. I believe this is a sign that this uptrend is tiring. We did not hit my "ideal" target spot but I can't fight this price action for now. The key zone of support today is 4275/4280 and we are actaully indicated right on this at 4275. If there is no bounce immeadiately, look to short targeting 4265/4260. Down there I will look for buy setups once more. On the upside, I will look to short fade 4290 with tight stops. Breaks of this open up 4300 to 4305 and this should be well offered and thus I will short more aggresively up there. Much of my attention will be on the open of the Hang Seng and the A-Shares this afternoon given the key support levels those markets are testing.
SPI June 15mins:
The importance of 4278/4280 early. If this drops early, I am looking for a gap fill target at 4260/65.
Some key support zones coming into today shoudl we break yesterdays lows.