Friday, 4 May 2012

Non-Farms Setups

Pls find my origianl post here:

Morning All

Yesterday I advised short term caution for traders in Australia: The market was indeed lethargic with price opening on its highs and drifting lower/sideways for the rest of the day in a small range. Weakness in overseas markets overnight will see Asia open weaker again this morning and thus my caution was warranted. Now we are in a very interesting zone indeed across markets.


SPI futures 60mins:
I have shown this chart a few times of late with that upward sloping trendling capping the "breakout". Now we are indicated early at 4415/4410 which is right into the low end of the channel and previous breakout zone.

SPI futures 15mins:
I have zoomed in here to make the levels more apparent. We have minor support at 4415, then a stronger confluence coming in a 4405/4407.

Thus we are retesting the previous breakout zone and upward trend. This is a low risk buy for the intraday trader as long as price holds 4400/4398. We have the RBA monetary policy coming out at 11.30am. Obviously note it is non-farm payrolls tonight and thus I would be keeping positions very tight ahead of this, especially with French and Greek elections next week.

My SPI range: 4405 to 4430. Outlier levels 4398/4400 and 4440.

AUD 240mins:
The A=C short trade in AUD played out to a tee at the 1.04 level. However, now is the time to be unwinding shorts into this zone. I would really be surprised if this just kept breaking lower and lower without a pause at a minimum. This adds weight to the bullish scenario.

Japan remains closed today. Turning to other Asian markets.

Hang Seng 60mins:
I still remain bullish this market and I am still looking for the target zone to be hit in coming days. Obviously we will be looking at some small weakness early so look for potential buy spots into this upward trend. A risk to my view would be a meaningful break below 21k.

A Shares 60mins:
This is one market that I got wrong. After the return from holidays, the A-Shares broke meaningfully above my low risk short zone. Thus, we look to follow the uptrend once more. Only a close back below 2500 would make me bearish.

One of the best setups I see in the Equities land is the DAX. Price has sold off right into my ideal spot and I would be looking for low risk LONG trades with stops below 6000. See my original bigger picture post on this market here:

DAX 60mins:
5 wave move off the low and a corrective move lower back into support and the 61.8 retrace level. This support zone should be formidable. Note the outlier level at 6600 which is an A=C target off the recent high and open gap target.

S&P500 60mins:
The S&P500 is also retesting the previous breakout zone and thus a low risk buy area ahead of the non-farm numbers. I don't position ahead of these numbers BUT I think an ideal setup would be a relatively weak number and a quick break lower into 1385/1380. I would then look for bullish hammers/reversal candles out of there to get LONG.

Emini S&P500 60mins:
Last night the 1390 support zone dropped. To me, this could be setting up a bear trap. I have seen people touting this as a "Head and Shoulders" top which are my favourite patterns to fade. However, only a bullish move back above 1390 would trigger this. Tonight, as per the cash chart above, I will be looking for a flush down to 1380s to get long with tight stops.

In sum, we have seen good pullbacks into the trend in a number of equity markets. I think this is setting up for a potential low risk/buy area. Of course I am nervous given that we made a high right on the first day of the month, and a seasonally weak time of year. However, I still think this market has higher to go first.