Monday, 26 March 2012

Going back up to the highs?

Morning All,

Friday's trading plan in the Emini S&P500 worked nicely. I have been patiently waiting for a setup in that market and finally it appeared. I wrote on Friday's post:

"I will be looking to see how price reacts at the clear resistance and neckline at 1393/1395. I will short with very tight stops there and if it fails to sell, flip to long targeting right back up to the previous highs. I will have bids down in at 1380 as per the 60min chart."

During European trading, the Eminis made a high of 1395.50 and sold off quite aggressively all the way down to a low of 1380.50. Then the usual 1hr before the US cash market open ramp job began. Nice. I had bids in the mid 1380s but unfortunately was not filled for me full size at 1380 as the low was 1380.50.

Emini S&P500 15mins:
Bulls strongly defended the low 1380s. I think we now have completed an ABC pattern off the high and thus a breakout of 1395 opens up a move all the way back up to 1410 and possibly beyond.

Emini S&P500 60mins:
I am sure many will be looking at this pattern as a Head and Shoulders Top. Perhaps, but they are personally my worst trading patterns and I think they are very fadeable. Clearly we have back to back bullish reversal hammers out of the 1380s and I think this is indicative of a short term swing low. Look for breakouts above 1395/1400 for a move back up to the high and beyond. Only if price trades back down into the mid 80s would I be more cautious/nervous.

In sum, there is a clear range building from 1380 to 1395. We are testing the upper end of this range right now. Look for breakouts above this for a move back up to the highs and beyond. If we fail to move higher in the next 24hrs, we could be looking at a bigger picture topping pattern but this is the less likely scenario. Only breaks of 1380 would be bearish to me.

Another bullish pattern appearing is the AUD. I have been bearish this market for a while but finally price has failed to move lower.  As per the chart below, price failed to breakdown through that 1.03 level futuers. Furthermore, I can see bullish divergences forming and a potential "3 Indians" move into the low. Looking like a potential bear trap here as long as price holds above 1.03. Only a move back down below 1.03 would make me bearish here at this point.

AUD 60mins June futures:

AUD Continuous Futures Daily:
Low right on the 38.2 Fib retracement.

To Australia. Last week, we had two attempts to breakdown on Wednesday and Friday but price held in. A clear double bottom trade formed in the XJO. Thus, as we begin this week, I think we are also looking at a potential bullish breakout pattern targeting the previous highs and beyond.

SPI 15mins:
On Friday we gapped down, made a low in the first 15minutes, and then grinded higher all day. Clearly this 4250/55 level has been strongly defended. The top end of the range is 4295/4305 and I anticipate a potential breakout in coming days.

My SPI range today: 4270 to 4320. Outlier levels 4250/55 and 4330

My SPI day trading plan: The Emini S&P 500 has opened slightly stronger as has the AUDUSD. Thus I envision the SPI will open somewhere around 4280/4285 first thing. Some trade ideas I have for the day

i) BUY 4270/4275, stops 4265. As per the above, price action has been strong intraday over the last few sessions despite weak overnight leads and weak trading in Asia. I think any dip down to this 70 level should be bought early if we get it.

ii) SHORT FADE 4295/4300, stops 4305. This is a quick short fade and for the nimble only. We can never know if a market is actually going to breakout thus the best trade I have as a short term trader is to sell resistance first, flip to long is we fail to sell.

iii) BUY BREAKOUT above 4300. If I see a strong 5min closing candle above 4300, I will buy a breakout, targeting 4220/4230, stops under 4295. You have to follow this uptrend.