Thursday, 19 April 2012

Asia Setups

Morning All

Last night we saw consolidation and a clear short term range in the S&P500 after Tuesdays strong gains. I sold half my long position in the mid 80s and am looking for the 1395/1400 zone to get out of the rest as I said yesterday. Certainly there are a few things that are giving me concern. The DOW and the RUSSELL 60min charts both look like clear A=C patterns off the low. They sold off the heaviest last night after the targets were hit. However, to me there are some clear markers in the S&P500 and until these are broken, you just have to focus on this uptrend, especially after Tuesdays kick off. This level is 1370 in the cash index and price must hold above here. Below there I start getting bearish. Over the last few days, I have seen so many technicians who are looking for a top/Wave "2" high in the 1390/1395 region- when the crowd are all looking for the same thing, it v.v.rarely plays out.

To the Asian setups. I wanted to start with the Australian Dollar and this is one of the main reasons for my positive outlook currently. The 240min chart v.aptly highlights my thoughts:

AUD continuous futures 240mins:
We had a prolonged downtrend that ended with a base pattern/my 3 Indians ending pattern. Note the bullish divergences coming into the low and the heightened bearish sentiment given the interest rate cut cycle. Markets price that in! Now price is beginning a new short term uptrend. This is how markets transition. All the moving averages are up on this timeframe.

AUD June 60mins:
Zooming in more detail. As you can see here, price clearly continues to hold 1.0220/1.0240. I think we are now setup for a continued climb higher into 1.0450/1.05 and I would be long into that zone. There is a lot of disbelief and skepticism out there towards this currency right now and that will fuel an extended move higher.

To stocks:

XJO Daily:
Still stuck in a broad range but testing the top end of the range. Like you, I have no idea if this does breakout and thus I continue to focus on the short term and making money intraday.

One pattern that I was watching v.intensely and played out perfectly was BHP.

BHP Daily:
This was a classic bear trap as everyone was transfixed on $34/33.80. Sure enough we saw a false break and price immediately regathered the breakdown level. If the ASX200 is to breakout, it will be this stock that leads us. Lots of resistance points but we are not far off breaking a small downward trendline.

XJO 15mins:
These are the levels I am watching coming into today. Breaks of 4350 open up a retest of 4380 in coming days. Yesterday we saw v.little intraday movement but the fact we held onto gains was encouraging.

My SPI range today: 4345 to 4365. Outlier levels 4388/4390.

Core intraday ideas:
i) BUY dips to 4345/40 looking for a retest of the 60/65 level.
ii) SHORT scalp 4365. If price fails to sell here, you must get long and join the breakout targeting the high 80s/4390.

Hang Seng 60mins:
I still think this is a bullish setup in Hong Kong and self explanatory. Get into this short term uptrend targeting 21,000 firstly then as high as 21,600 if markets continue to climb this wall of worry which I think they will for now.

Whats my one concern? The Shanghai Composite which is coming into a great short zone as a Trader. Perhaps this is an ideal hedge for long positions.

A Shares 60mins:
Overhead resistance at 2500 which is a previous breakdown zone and the 61.8 Fibonacci level. We also have a small outlier level at 2520 which would possibly setup up a 3 peak/Indian pattern and subsequent bearish turn. I am seeing bearish momentum divergences on the lower time frames with each move higher which is an important backdrop for a bearish turn.