EUROSTOXX Short

I got short the Eurostoxx June at 2846.50 average. I don't normally fade the opening price but it looked like a clear setup to me at a good resistance level with a great risk/reward. See chart below. We have to break 2840 and lower to get momentum increasing to the downside. Just thought I would share some of my setups.

EUROSTOXX June 60mins:

61.8 Fib Retrace everywhere

Morning All,

The S&P 500 broke out from the small flag pattern I showed a few days ago and has now hit the 1310 open gap and 61.8 retrace- my target levels. I see price testing the 61.8 retrace across several markets and please see the charts below as a reference. From my experience, this is a formidable resistance level and I feel it is now time to be looking for low risk short setups with tight stops. Volume was once again unconvincing with total volume under 1bln on the NYSE and NYSE Advancing issues posted another lower high.

S&P 500 Cash 60mins:
Price has hit the open gap and 61.8 retrace. However, momentum has made a new high and thus it is important to see some bearish confirmation before shorting.

Nasdaq 100 Cash:

Emini June 5mins:
A bearish reversal candle has just formed after hours. The contract spiked to 1314 and has now reversed back to 1308. I believe this due to after hours reporting but this is a strong rejection no doubt

Eurostoxx June 60mins:
Has rallied right into the 61.8 retrace and previous breakdown level

SPI Continuous Day 60mins:
The SPI is indicated at 4750. This is right into the 61.8 retrace level and previous breakdown level. My plan yesterday was to look to get long on a strong breakout above 4700/4720. However, given where the market is indicated, I cant justify a breakout trade up here and I have missed the move. I am actually looking for potential fade trades up here in the first 30mins and then I will see how price trades. I am looking for res in the SPI at 4760/4765 and will short a strong rejection for a short term trade only until I see more confirmation. 

ASX200 60mins:

MSCI Singapore looks set to continue its advance into the target zone highlighted yesterday. I will be covering my Taiwan short this am and reassessing.

EUR had a very strong bounce right off the support zone I showed last night. I am now shorting around here at 1.42 with a stop above 1.4250. We may see a retest of this 1.4250 level first but I am happy to short here for now as I believe the 1.42 level was well offered yesterday and we saw a strong rejection of this level on the lower time frames. Potential A=C bounce off the lows yesterday right into the 78.6 Fib.

EUR 15mins:

AUDUSD has rallied right into its previous Daily highs.

Good Luck
Austin

EUR- top is in?

I put out a post recently suggesting a great double bottom setup in the USD Index and double top in the EUR: http://swingtradersedge.blogspot.com/2011/03/usd-big-picture-double-bottom-trade.html. This is now playing out.

The DXY spot chart gave me a confirmed Daily long signal last night. Tonight when the ICE futures open, I will looking to get long. Unfortunately, EUR sold off just short of my ideal level and has fallen almost 200pips. There is some potential support coming in here as per the chart below. The trend is now down on the 60mins EUR chart and momentum is making new lows. There is a confirmed bearish candle reversal pattern on the Daily. Thus, I think the best setup in EUR is to look to short the first rally into the moving averages/resistance on the 60mins.


DXY Daily:

EURUSD 60mins:

EURUSD Daily:

Good Luck
Austin

Asian End of Day Summay

Sorry for no post this morning- I was off the desk for work and play reasons :) There has been a great swell in Sydney for the past few days so I had to finally get some waves. Funnily enough, Kelly Slater surfed my local break on the one day I decided to get out of town: http://www.aquabumps.com/. Shame I missed it.

To the markets, the ASX200/SPI hit the open gap today at 4720 and closed positively. I posted a short term possible support play yesterday at 4655 and a triangle breakout trade late in the day which both played out well. Unfortunately, I didn't carry this position overnight as it had not moved strongly my way. C'est la vie.

The Daily chart has bounced strongly from the 61.8 fib fan and retracement level that I showed a week back. Note how those hammers were a lead indicator for this recent move.

ASX200 Daily:

The 15min chart closed the open gap today


ASX 15mins:

I am following 2 scenarios here currently. The recent action has formed a big basing pattern (possible cup or inverse Head and Shoulders). Thus if we see more consolidation around this level in the next day or so, I will be buying above 4700/20 for a possible breakout trade. We may need more time before a strong breakout can ensue given how far we have rallied already. However, I don't want to over think myself too much as this is a strong trend. Secondly, should this 4700/4720 prove a more formidable resistance level, or if we get some real overnight weakness, I will be looking to buy a deeper retrace again at 4655 and then 4600. I actually think this is a more likely scenario given some of the setups I am seeing overseas but until we see weakness, no need to second guess.


MSCI Singapore continues to trend higher after a clear failed breakdown and double bottom pattern. I thought we would struggle at the open gap but the price action was strong once again today. The targets are higher still for this index and I will continue to focus on buy setups.

MSCI Singapore March 60mins:

I was somewhat early with my Taiwan short but am happy to hold here for now. Today we hit the 3050 breakdown level on the MSCI Taiwan Futures level which is also a perfect A=C. The price action has been lethargic to me of late and I am seeing clear bearish divergences. This is a great risk/reward short and I would be happy to throw it away tomorrow if there is no weakness.

Taiwan Daily has hit a downward sloping trendline and has rallied right back into the moving averages:

Taiwan Cash Daily:

MSCI Taiwan March 15mins:

I showed an interesting setup yesterday in the Nikkei. I don't actually trade this but I am sure it will have ramifications for other Asian indices if this scenario plays out. For now, we still possibly have higher targets and a clear short level below the recent open gap.

Nikkei June 60mins:

In conclusion, the ASX has rallied strongly right into the first formidable resistance area. We may need more time before a strong breakout can ensue. Look to buy a deeper retrace and scalp short if possible to these levels. Hang Seng continues to rally above the support level mentioned. Taiwan looks to be the best short setup at this level. I have some interesting comments on currencies and the S&P 500, and will be posting this later. Stay tuned.


If you are enjoying some of this commentary, I would really value all comments and questions. I really want this to be an open site and I encourage all feedback and opinions.
Thanks
Austin

Nikkei vs S&P500 Flash Crash

I have been noticing that this Nikkei rally is slowly running out of steam. It has struck me that the pattern that is emerging is very similar to that of the S&P 500 back in May 2010.

Asian Markets

A run down of the other markets I trade in Asia and some potential setups:

The Hang Seng has recovered back above the key support line with a strong closing candle and follow through. There is still a lot of work to be done before position traders can buy this market for a breakout. However, shorter term traders should be looking to get long round these levels with stops below this key support. A failed breakdown is bullish

Asian Morning Thoughts

Problems with my Data provider again this morning so this will have to be a quick post.

US markets were pretty lacklustre overnight and appear to be in a clear flag in the very short term. Despite my caution yesterday, we could be looking at a great base pattern forming under 1300. Be prepared to buy a short term breakout targeting 1310 and possibly higher. Equally, the open gap at 1285 needs to hold to keep the bullish scenario intact so shorts should be triggered at this level for a move back down to the 60s.

Double Bottom/Top patterns- Recent Examples

I wanted to follow up on the USD Double bottom post with some very simple Daily examples. All of these examples were setups that I followed or traded over the past year or so. I am showing these not to pat myself on the back, but to illustrate how effective these patterns are as a risk/reward entry. Study some of these and learn the best way to enter these trades. I enter on a Daily close back below the double top/double bottom level or after a clear Daily reversal candle. Confirmation is key. Learn to sell into an emotional extreme and you place the odds in your favour. 

S&P 500 Daily: November 2010
This trade lead to a 50 point fall into the moving averages

USD- big picture Double Bottom Trade?

I wanted to share some interesting setups I am looking at in the DXY Daily Index. This is a classic "test" trade or double bottom pattern and represents a great low risk/high reward long trade. Often price needs to retest a climatic low point before a new trend can begin- this is what we are trying to exploit here.

The charts below show the DXY spot index and the DXY continuous futures. The spot index is testing its previous low with bullish momentum divergences in place. This is a buy IF we see a strong Daily closing candle back above 75.60/76 spot level. Note the ending wedge type pattern on the continuous chart. I am sure there are many traders who will be shorting or have shorted this for a perceived breakdown. This is exactly what we are trying to exploit because if there is no follow through to the downside, a powerful bear squeeze is likely to ensue. I know sentiment is at extreme bearish levels towards the USD currently but I don't have the open interest data.

Asian Morning thoughts- Short term caution

Morning All,

Last night saw a positive session in US markets with a strong gap up and the S&P testing the key 1300 level. I have been focusing on bullish base patterns and these have played out well thus far: http://swingtradersedge.blogspot.com/2011/03/s-bullish-patterns-developing.html. I now feel is the time to urge some short term caution for a few reasons:
i) We have had 3 consecutive gap ups with little intraday follow through. This is not indicative of a strong underlying trend
ii) Volume was less than 1bln on the NYSE. Again this is not indicative of a new kick off move
iii) Price is coming into key overhead resistance from 1305 to 1310.
iv) High beta indices such as the Nasdaq 100 are not following through

I do believe the bigger picture is bullish but here is the chance to lock in some of the recent gains. I stressed last week that successful traders need to be able to buy near the emotional extreme of a decline- this has played out well and now is the time to be cautious I feel.

S&P 500 5mins:

Nasdaq 100 5mins

The SPI broke out of a clear consolidation pattern yesterday afternoon which I posted. I thought we would get more weakness down to 4600 but this never materialised. We are indicated to open at 4694 and this is right into a big resistance zone. Similar with US markets, I feel short term caution is now warranted here. These resistance levels are:
4697/4713- an open gap
4720- 50% fib retrace

SPI 5mins:

ASX 60mins:

The bigger picture is bullish and fade trades should only be considered I believe for the most nimble of traders.

AUD is coming into some strong overhead resistance. There was no signal from yesterdays short setup late in the afternoon. I don't have a trade here and am still hoping for a pullback into the 60min moving averages to get long

AUDUSD 60mins:

 

In sum, I am turning cautious here. The intial move is coming into some strong resistance in the US and in Australia, and I am happy to get flat here and wait. I would be very careful getting short as there is no signal. I will post more charts of Asian indicies shortly. 

(UPDATE) AUDUSD 5min ending wedge

(UPDATE) 22/3/ 9am AEST: There was no reversal at all from this pattern and thus no trade. This is why I always try to wait for confirmation before trading. See chart below. Move on and focus on the next setup.

SPI 5mins- consolidation before a breakout?

Tried shorting SPI twice today and it is just not breaking down. Are we looking at a triangle consolidation pattern?

Asian Morning Thoughts

A quick run down of the setups I am following in Asia this morning. Note that Emini Futures are 6 points higher since Fridays close so it would seem that the recent military intervention is having little impact on the market in early trade. The Middle East had a positive session.

SPI Day June 5mins:

How will the market react to Libya?

Happy Weekend All,

The title of this post is somewhat misleading. My experience in the market has taught me that ultimately the market is going to do whatever it wants to do. Trying to predict the future course of events is often futile. The best we can do as traders is have a setup, wait for price action to confirm the technical picture, and then execute always keeping the risk/reward in our favour. This sounds simplistic but it is some of the best trading advice I can give.

The market is at a juncture here I believe where it could breakout from a base building process and go on to retest its previous highs. I have been showing how breadth figures have not been supporting the move lower thus setting up a classic divergence. Price has hit some great supports and bounced quite positively across several markets. Equally however, if last weeks supports break, a whole new range of possibilities presents themselves and we have to be flexible enough trade the new setups.

I don't know how markets will take the weekend intervention in Libya. On the one hand it could be perceived as a positive by the market as this will possibly lead to an end of Qaddafi and close the door on recent uncertainty. However, heightened tension and bombs dropping from the sky is hardly the ideal backdrop for a sustained rally. The options are numerous here. Thus I just don't know how the market will take this information and I don't pretend to. Price action as ever will be key. We have some great supports in the S&P500, ASX200 and AUD as shown below. If this is a new leg up, these levels will hold. An ideal bullish scenario would be a gap down with no follow through.

(UPDATE) AUDUSD- breakout trade

I am long AUD and I thought I would quickly post the reasons for the trade.

AUDUSD 15mins:
Price completely recovered after breaking the 98c level setting up a possible bear trap/double bottom. This mornings price action and intervention has confirmed the bear trap and a breakout from a clear Flag. Target up at 9950/1.000

S&P500/NDX/DOW- bullish patterns developing

Morning All,

I put out a special post in the ASX200 yesterday and I urge you to read this. Yesterday was a great trading day across a number of markets and a number of double bottom setups I highlighted here were triggered and profitable. I believe we are now forming a strong base in US markets and we should be focusing on buy setups with tight risk.

I wanted to begin by talking about the recent breadth figures. I do believe looking at some breadth figures is a very important exercise and offers clues as to the underlying trend. I stated a few days ago that despite price making lower lows, the number of NYSE decliners was not following through showing important divergences. For instance:

ASX200- Swing low is in

Today's action in the SPI futures and the ASX200 was very positive indeed, completely shrugging off the overnight weakness. I have seen this kind of action a few times in my career and I believe it is a lead indicator for the future direction of this market and indeed global risk markets. Note that the ASX200 bottomed prior to the S&P500 low in July and September 2010. I have been stressing that a climatic low has been forming and having seen the strong double bottom pattern today, I believe this low is in. I am looking for a new trend up and this will be confirmed on breaks of 4600.

ASX200 Daily has shown back to back long wicks at the 61.8 retrace level and Fibonacci fan. Today's close was a solid bullish hammer showing underlying demand. This does need follow through to confirm but no doubt this 4480 level has been strongly defended.

EUROSTOXX- look to get long above 2750

Eurostoxx (March) 5min Double bottom pattern:

Double Bottom Trades- Follow Up

I posted this am about some potential Double Bottom trades lining up. I also highlighted looking for the same setup in the SPI. These have worked very well thus far with the SPI rallying almost 100 pts. AUD is late to the party but I still think this setup is also valid.

Learn these setups and how best to enter as they are great risk/reward trades that will have you taking money away from bears not using their head.

Double Bottom Trades

I cannot post in length this am. However, I do see a number of potential double bottom plays. On Tuesday we saw climatic lows form in a number of markets. Last night we saw a retest of these lows in Eminis/S&P500 , EUROSTOXX, AUD. This is a great area for a possible trend reversal now back up. Wait for a bit more strength and buy. Good risk/reward trades. Look for similar setups in the SPI at 4760/70. See charts below