(UPDATE) Emini S&P 15min wedge

I see a clear consolidation building here in the S&P Eminis. We are possibly finishing off the "e" leg of a triangle which implies a breakout coming into the contract highs in the 40s. Wait for price to thrust out of this support level before getting long. However, like every pattern, we must be prepared for these classic setups to fail as these are often stronger signals. Breaks of 1324/1325 to the downside are bearish and get short. Note that yesterday was an Inside Day on the cash market. Expect a break either way tonight.


Emini S&P June 15mins:

(UPDATE) I thought I would follow up on the outcome of the Emini pattern shown last night. I think this is a great example of failed patterns and how a trader needs to be completely flexbile to be successful.

We saw a breakdown of the low end of the pattern during European trade. There was no follow through to the downside and thus immeadiatly we should be looking to get long if price regains support. Failed patterns are often very strong signals as the crowd has traded on the perceived breakdown, and are then forced to cover their postions adding fuel to the subsequent rally. Personally, I never trade the Eminis BEFORE the Cash market open. This pattern here is a clear illustration of why- there are many false breaks and moves prior to the US opening.

We did see a thrust out of the 1324/1325 support level when the US stepped in and this was the initial signal to get long. Look for a strong 5min or 15min candle. There was an opportunity to add another postion when price broke above the downward trendline. However, there was no strong follow through and price failed right at the previous highs at the 1333/1334 res level. Nimble traders could have made a small profit but all in all this was rather a volatile session.

Emini 15mins:

Emini 5mins:

Nikkei June Short

I thought I would show a  trade I just executed in the Nikkei June futures. This is not a reccomendation to trade but just an illustration of my thinking. 

I have been following a potential short setup for some while in the Nikkei: http://swingtradersedge.blogspot.com/2011/03/nikkei-vs-s-flash-crash.html. Price did rally into the 9750/9800 target level I cited some days ago i.e. the open gap and 61.8 retrace level. In the last 3 days, this market has traded in a clear distribution range and has failed to move higher. I got short on a breakdown of the recent range (see 5min chart). Inital targets are 9350 with stops above 9770.


Nikkei June 5mins:
Got short at 9640 on the retest of this mornings breakdown level.

Nikkei 15mins:
 

Nikkei 60mins:
Price has rallied right into the open gap. Momentum divergences are appearing. The moving averages are still positive on this timeframe and thus we must be wary if there is no follow through to the downside. Note that the Daily trend is down and we are shorting the market into the moving averages.

I will keep you posted on how this plays out.
Austin

Asian Morning Thoughts

Morning All,

The SPI futures have opened at 4918 just short of yesterdays highs at 4922. Once again, I must stress that I don't have a clear trade here. I believe we are at the top end of the range and I am happy to be out of the market at these levels. Certainly yesterday's price action did feel tired but there is no clear distribution pattern yet. Patience is a key quality of a successful trader I believe and until I see a solid risk/reward setup, I will not risk my capital. Loner term, I am looking for a deeper pullback into the Daily moving averages to get long once more but here I advise caution.

I think today could be a range type day. Scenarios I am following
i) Potentially fade at 4922/4925 targeting 4905. If this res level lifts, look for potential breakout trades targeting 4940+ (target the ASX200 February high)
ii) Buy support at 4902/4900. Look to play a potential range. This level is a key marker for the short term bullish scenario.

The Australian sector indices are trading right into meaningful resistance levels. I am not calling a top here as the underlying momentum is strong, but I do believe we are certainly at the top end of the range. Always think risk/reward. Ask yourself, does it make sense to be long the market coming into these levels as a trader?

Energy Sector Daily:
This is a potential Double Top pattern in the making. Needs a bearish reversal candle to confirm. Either way, we are at solid resistance and this is NOT a breakout trade given the lack of consolidation.

Financials Sector Daily:
The Financials are now retesting the top end of this broad range. The last breakout was strongly rejected.

Materials Sector 60mins:
The materials sector is now right back to its previous highs. This is resistance

Therefore, I advise caution here in Australia. We are trading at resistance levels and we must respect this as traders. Look for either short term topping patterns to get short or wait for longer term consolidation patterns to join this trend for a new swing up. Sentiment is once again getting very bullish and I can see a number of bullish recommendations flying around. Be careful in these situations.


The Nikkei is trading at the key 9700 support. Price has failed at 9800 right at the open gap. The Daily chart has left 2 consecutive indecision candles right at the downward moving averages. I am looking to get short on breaks of this range. I outlined this trade here several days ago:http://swingtradersedge.blogspot.com/2011/03/asia-top-setups.html AND http://swingtradersedge.blogspot.com/2011/03/nikkei-vs-s-flash-crash.html

Nikkei 15mins June:

The Nifty continues to move higher from the strong base pattern. Yesterday we saw a strong close above the 61.8 retrace level. A small downward trendline comes in at 6000 and this looks like a short term target. I believe traders should continue to look for setups to join this strong trend.

Nifty Continuous Daily:

 

The Hang Seng closed solidly above the downward trendline I have been monitoring. Note the strength we have seen since that failed breakdown of horizontal support. In the short term, the market seems a bit overextended and I would be wary of jumping in here despite yesterdays close.

Hang Seng Daily:

SPI Continous Daily

I highlighted the SPI Continuous previous high at 4922 in my morning post. Today we hit a high of 4924 and are finally selling off. Early days but this is the area for position traders to be getting out of the market/tightening up risk.

SPI Continous Daily:

ASX200/SPI Morning thoughts

The ASX has come along way since I called for a swing low on March the 18th: http://swingtradersedge.blogspot.com/2011/03/asx200-swing-low-is-in.html. No doubt I have missed chunks of this move higher as this has been a rapid recovery with only small pullbacks. Ultimately, this thrust has shown the importance of following the trend, of having a clearly defined method for trailing profit stops, and waiting for price to confirm resistance levels rather than pre-empting. Trends will often move higher and for longer than we can comprehend. Such events are important learning lessons and I believe we must go back and study the charts to gain insight as to how we can improve ourselves going forth.


I don't have a clear pattern/setup in early trade. The obvious targets for this move are the previous highs at 4958 on the June contract and 4922 on the continuous contract. For position traders who caught large chunks of this move, I would now recommend getting out of long positions or tightening up risk significantly. We have gone from one emotional extreme to the other and we must always think about the risk/reward. I do believe the bigger picture is bullish but holding onto our open profits is very important. I think now is the time to look for shorter term trades/intraday trades until we see more consolidation or a deeper pullback.


Scenarios I am following today:


i) Look for a retest of Fridays highs at 4902. If we see a clear rejection of 4900/4910, fade the move with very tight stops, look for a 15 point gain or 4875
ii) If there is no strong sell off in the first 30mins, look to buy breakouts from consolidation or buy above the intraday high, targeting the contract highs at 4922.


Res: 4900/4910, then 4922/30
Support: 4875/70, 4855


SPI 2mins:

Weekend Observations

Happy Weekend All,

The Eminis hit my 1330 target zone on Friday night post the jobs number and showed an interesting reversal late into the session. The cash market gapped up on the open but couldn't hold onto its gains, closing just off the lows for the day. I believe this is all evidence of a tiring trend at key resistance levels. Note that this reversal in price came about despite "good" fundamental news. I believe we will see a pullback next week into good supports offering a great longer term buying opportunity.

Emini 60mins:
Price continues to wedge into overhead resistance with momentum clearly waning.

S&P 500 Cash 5mins:
Price gapped up on the open, trended higher for the first few hours but was unable to hold onto gains.

Dow Jones Industrial Average 60mins:
The double top pattern is still in play. An aggressive entry for this pattern is on a break of the upward trendline or Thursdays lows.

The scenarios I am following next week:
i) Look for the June Eminis to retest 1330/1333. Get short on a bearish reversal candle out of these levels. This is an aggressive fade trade against the trend thus must use tight stops
ii) Buy support at 1319/1320. Use a 4 point stop and if price cannot hold, look to join momentum to the downside targeting 1305/1300
iii) Look to buy deeper pullbacks into key support area at 1300/1295.

Note that if there is no sell off or meaningful move lower, we must look for consolidation patterns to get into the trend.


Interestingly, Copper is once again testing key support. I believe these levels have to hold to keep the bullish scenario intact. If we see a strong bearish closing candle, this is a possible Head and Shoulders pattern and get short. This market has been well called by Jack at:  http://channelsandpatterns.blogspot.com/

Copper Daily Continuous:

In currencies, the USD futures rejected the 77 level. Only breaks above 77 trigger the double bottom pattern I have been following on the June contract. This was a bearish rejection candle and if we see momentum increasing to the downside next week, follow this trend lower. EUR hit the top end of the range I have been talking about, albeit in a very volatile fashion. Breaks of 1.4250 and 1.430 are bullish indeed but for now we are still at the top end of the recent range.

DXY June Daily:

AUD is one of the strongest patterns I have on my radar currently. Price has spent some 5/6 months consolidating at its previous highs. We have now seen a strong breakout with momentum increasing and a possible completed "flat" in Elliott speak. There are 2 possible trades here:
i) Look for short term consolidation patterns (15min or 60min) to join this breakout and follow the momentum higher. This market may not retrace for a long while thus we have to be prepared to follow the trend.
i) Buy a pullback to the 1.03/1.025 level. This is a key support level and a great buying level for those who missed the intial breakout.

AUDUSD Daily:
A strong breakout from overhead resistance. Ranges lead to price expansions. This has been a big range and thus anticipate an equally big range expansion.

AUDUSD Weekly:
Price has consolidated ABOVE previous resistance for many months now. This is a bullish pattern. We just had a weekly closing candle out of this consolidation pattern.

In sum, I believe the short term trend in US market is tiring and thus look for a possible retracement next week. Short term resistance is 1330/1335 in the June Eminis with support at 1320. The DXY futures failed at the 77 level and if momentum increases to the downside next week, join the downward trend. Equally, AUD is breaking out and look to either join with wide stops or look for a pullback to 1.03 spot

Thanks and I will have the Asian run down later
Austin

How to trade divergences

I often talk about momentum divergences and then waiting for price confirmation for entry. As ever, Corey Rosenbloom at Afraid to Trade summarises this very well in a recent post: http://blog.afraidtotrade.com/lesson-in-divergences-plus-trendline-breaks-in-dollar-march-31/

Please read

US Market Summary

Good Morning All,

US markets were relatively flat overnight and consolidated recent gains. It is non-farms tonight so it is really important to remain flexible and follow the price action. We are coming into some significant resistance areas after the Eminis nailed the 1300 support level cited here two days ago. I have a few interesting setups lining up which now need price action to confirm.

One of my concerns currently is the weakening breadth figures despite price making higher highs. This is a warning flag. Since the March lows, we have seen the following closing readings:

21/3/11: 2473 NYSE advancing issues
25/3/11: 2265 NYSE advancing issues
30/3/11: 2212 NYSE advancing issues
31/3/11: 1761 NYSE advancing issues

Thus despite the S&P trading from 1260 to 1330 during this time span, the number of closing advancing issues is declining and not following through. This is not a short signal, but certainly this is a warning flag.

S&P 500 June Eminis 60mins:
The June Eminis are trading into my 1328/1330 target. There is a potential 3 Indians ending pattern lining up here into this zone. This setup was made famous by Linda Bradford Raschke in her book Street Smarts. Bottom line, price has made 3 higher highs yet the momentum indicator has made 3 lower lows- a strong bearish divergence. The entry for this trade is a bearish 15min or 60min reversal candle out of the resistance zone.

Dow Jones Cash 60mins:
The Dow Industrial and Transports have rallied right into their previous highs. This setups up a potential double top trade. Price has come along way since I recommended the double bottom trades in the middle of March: http://swingtradersedge.blogspot.com/2011/03/double-bottom-trades.html and http://swingtradersedge.blogspot.com/2011/03/double-bottom-trades-follow-up.html. The key to understand as ever is Risk/Reward. As traders, we need to be selling/getting flat into these levels and then reassessing. If there is no reversal, than we move on and look for breakout trades in the coming days after consolidation.

Industrials:

Transports:

Eurostoxx June 60mins:
The Eurostoxx is also showing a possible 3 Indians ending pattern. Last night we filled an open gap and closed right on a minor trendline. Any further weakness below 2835 should trigger a potential short entry with tight stops.

EUR broke out of the Flag pattern I have been monitoring which now targets 1.4250. I still think we are in a broader range from 1.40 to 1.4250/1.43 and thus we need to trade the range until a clear breakout ensues. The DXY double bottom trade is still in play but we need to see a strong close above 77 on the June futures for a strong entry signal in that contract.

EURUSD 60mins:

DXY Futures June Daily:

In conclusion, the trend remains up but we are coming into clear resistance levels with underlying breadth weakening on a non-farms night. As traders, I think stepping to the sidelines makes sense and look for bearish reversal candles to potentially short with tight stops. The bigger picture trend remains up and we will continue to look for buy setups should price come off or if consolidation patterns ensue.
Thanks
Austin

SPI/ASX200 Morning thoughts

The SPI is indicated to open at 4867 this morning which is around yesterday's closing highs. I think today is likely to be a consolidation type day with the possibility of some weakness/"profit taking" should 4845 break to the downside. Note it is a non-farms Friday and thus activity may be subdued.

I must stress once again that the trend is up on all time frames and we must continue to buy breakouts above resistance. Thus if we break 4870/75 on good volume, look for a move up to 4900.


Scenarios I am following today:
i) Look to buy support at 4835. Use tight stops and if this level breaks, get short targeting 4800. This target may need a few days to play out
ii) If we continue to consolidate between 4840 to 4870, look to buy a breakout of this range later in the afternoon targeting 4900

I always keep the ASX200 cash chart on my screens. Key resistance levels today are 4847/4850 which is the 78.6 retrace level and a previous major high. 4864 was the high prior to the major sell off

Good luck. I will update throughout the day
Austin

Climatic buying?

I just wanted to put out a quick post given the late surge we saw in Asian markets today. As I stressed this morning in my ASX200 post, we should not fight uptrends until we see a clear distribution process. This is either:
i) A strong reversal candle out of a Fibonacci level/clear resistance level
ii) A double top pattern
iii) A breakdown of a clear range

This is not in place yet. However, just as we saw climatic selling some week backs, I am beginning to see some signs of climatic exhaustion buying. This does not mean a top is in and it does not mean we should be shorting. However, it is a word of caution to tighten up open positions, look for bull flags and other setups back into the trend rather than blindly piling into the market. Always think about risk/reward.

Charts of interest
ASX 200 Daily:
Has rallied right back into the previous trendline. There is a long wick left on today's candle but this is not a bearish reversal candle in itself.

ASX 15mins:
Price has rallied right into an upward sloping resistance line

MSCI Singapore March 60mins:
Has rallied right into the previous breakdown level and my target zone. Small divergences appearing

Nikkei 225 June 60mins:
I posted earlier today about a potential breakout play and a confluence of resistance at 9750 area. This is potentially playing out. Needs a reversal candle as we are in the midst of a strong breakout in the short term

AUDUSD 15mins:
Despite the bullish equities move, AUD is failing to break the 1.03 level for now. This actually looks like a possible rejection in the short term.

I do think the Eminis are in a strong uptrend and the targets are higher for now in that market. However, I wanted to show these setups here in Asia. It could all mean nothing and we blow these levels out of the water- so be it. However, as ever we have to be prepared to sell it when everyone wants it, much the same way we have to be prepared to buy it when no one wants it.

Wait for confirmation.
Best of Luck
Austin

Asia Top Setups

I thought I would give a quick run down of the top setups I am following in Asia.

i) Nifty Index Breakout (SGX futures)
The Nifty has formed a great base pattern under the 5600 level throughout February and March. Note that despite many global markets selling off strongly on the back of the Japanese earthquake and concerns in the Middle East, this market consolidated. This is a bullish lead indicator. We have seen a strong closing candle out of this base pattern and follow through on the Daily. Position traders should be long and riding this new trend up. There is short term resistance at 5800 but I feel this will be broken in the ensuing days.


Nifty Daily Continous Futures:

Nifty March 60mins:
 The 60mins chart shows the recent breakout from the range (ignore the spike candle as this is a data error). There are 2 possible trading setups here:
i) Buy as the market breaks 5800 and join the trend and momentum higher. This needs a wider stop
ii) Look for a bull flag back to 5600/5650 and the moving averages to get long, stops back in the basing region

ii) Nikkei Breakout and Reversal Trade
I posted an interesting setup I was witnessing in the Nikkei a few weeks back: http://swingtradersedge.blogspot.com/2011/03/nikkei-vs-s-flash-crash.html

This scenario is still very much in play. In the short term, the Nikkei has been trading in a tight range between 9300/9350 and 9500/9550. I don't know in which direction this market will breakout and we have to just wait for a clear signal. In the bigger picture, if a breakout to the upside ensues, I have targets to 9700/9750 which is the 61.8 fib retrace, an open gap, and a potential A=C thus a strong confluence. Up here I will be looking for strong bearish reversal candles to get short with tight stops. This is a great risk/reward trade.

Nikkei June 15mins (Day Session):

Nikkei June 60mins (Day Session):

iii)Shanghai Triangle Breakout
The Shanghai Daily has been trading in a broad range for over a year. I believe we have put in an "E" leg of a triangle pattern and thus we are on the cusp of a MAJOR breakout. The signal for longer term position traders is a strong close above the downward trendline around 3100. I think short term traders should be getting long above 3000 and then adding above the Daily downtrend line.

For a related scenario and pattern, see the Hang Seng setup in 2010 posted here: http://swingtradersedge.blogspot.com/2011/03/weekend-observations-china-breakout.html

Shanghai Composite Daily:

Shanghai Composite 60mins:
As can be seen, the market has broken out from a strong basing pattern under 2950. There was an initial false breakout that has completely recovered. A break of the recent highs at 3000 is needed for confirmation.

Thus, in sum these are the top swing trades I am monitoring currently- 2 bullish setups and 1 bearish setup. Obviously, it is unlikely that the bearish Nikkei scenario will play out if a strong breakout does ensue across Asia. However, the key is to be prepared for anything and anticipate. We do not know what the future holds and thus have a gameplan and wait for price to confirm.

Thanks

Austin

ASX200/SPI Morning thoughts

I must stress from the outset that the SPI remains in a strong uptrend since breaking the 4600 level last week. We should not fight this until we see a clear distribution process. This is either:
i) A strong reversal candle out of a fibonacci level/clear resistance level
ii) A double top pattern
iii) A breakoutdown of a clear range

None of these scenarios have occured or been in place thus those looking to short need to wait for these signs.

US Market Summary

The S&P 500 had a very positive session, opening on the lows and closing on the highs. The June Eminis bottomed right into the support area I posted yesterday hitting a low of 1300. Have a look at the 15min chart and the clear bullish reversal candle out of this support level- these are the kind of candles that should trigger our entry. I anticipate a lot more momentum to the upside in the coming days  if we can hold above this 1315 level.

SPI 5mins breakout- Follow up

Today's plan in the SPI futures worked well and shows the importance of having various scenarios in play when trading the markets:  http://swingtradersedge.blogspot.com/2011/03/asian-monring-setups.html

There are some key takeaways and lessons from today's session:

i) 4740/4745 held in the first hour of trading. Get long at supports with tight stops. This was the low end of the recent 3 day range
ii) When we broke the intraday highs and opening levels above 4755, add to the position
iii) Breakout of triangle pattern- add another contract if possible and look to target the previous highs at 4790. The market closed at 4783 short of my target and sell half the position, carrying the rest into the next session with a nice open profit, move stops to breakeven.

Note that when the moving averages crossed to the upside, a clear trend day ensued with price retesting and holding throughout the day. Following the moving averages alone would have kept you on the right side of the market.

The purpose of going over this is to improve our trading. I tweeted these developments throughout the day and I hope you managed to profit. Learn these setups and make them your own

SPI 5mins Outcome:

US Market Breadth

I often talk about Market breadth and internals which I believe are important tools at certain market junctures. For a good account of recent divergences and how we can use these to trade, please read this:  http://blog.afraidtotrade.com/checking-on-sp500-diverging-breadth-and-current-structure-march-28/

SPI 5mins- breakout in play?

This morning's support levels at 4740 held. I am now seeing a breakout of a potential Triangle pattern on the 5min chart and adding to longs. Target for this play is the previous highs at 4790 in the ensuing days. Short term traders have to be able to hold to the close to capitalise correctly.

SPI 5mins:

Asian Morning Setups

Quick run down of the setups in Asia I am watching today.

The SPI is indicated at 4758. The key support levels to watch are 4740/4745 and look for resistance at 4765/4770. I am following a possible triangle pattern here targeting the previous highs at 4790/4800 but yesterdays lows must hold at 4740 to keep this intact.

US market summary

Morning All,

A late day sell off in the US markets has created a great opportunity to look for buy setups. I highlighted 1295 to 1305 as my key support zone in the June Eminis and we are here right now -please see chart below. I said on the weekend that "breadth was once again rather weak and there was no volume supporting the move which makes me think that we are not on the cusp of a major breakout until some more consolidation ensues". Here is our consolidation. I am looking for a clear reversal candle to get long out of this zone as my entry trigger.

AUDUSD- short term reversal

We have seen a great double top trade in AUD with a clear rejection of the 1.03 level. The chart below shows the bearish reversal candle and "test" of Fridays high. If you are going to pick tops, these are the kinds of setups you need to focus on. It is only after a failed test of a previous high that a new trend down can ensue.

Look for short term targets of 1.023/1.02. The trend is still up on the longer term timeframes and thus this is a short term fade trade only for now.


AUDUSD 15mins:

Weekend Observations- China breakout coming?

Happy Weekend All,

One of the best lessons we can learn as a trader is to heed price action. I showed a number of resistance levels across multiple markets on Friday right at the 61.8 fib retrace levels. This was a great area for the market to sell and to consider short setups but it just did not play out. There was no confirmation and US markets seemed to brush these levels aside with ease. We must be flexible enough to respect this. One of my favourite quotes is from Paul Tudor Jones, where in response to why he was no longer bearish on the market he stated, "the market didn't go down. The first thing I always do is put my ear to the railroad tracks." No doubt one session does not make a trend but it certainly didn't seem that the market wanted to go down on Friday night despite the plethora of resistance levels. Thus, we now must continue to focus on this trend up once more. I managed to successfully identify some great basing patterns off the lows, http://swingtradersedge.blogspot.com/2011/03/s-bullish-patterns-developing.html, and now it seems we must identify methods to enter into this newly established trend. If this turns out to be a more complex correction (such as an ABC X ) then so be it but we cant forecast that.

Breadth was once again rather weak and there was no volume supporting the move which makes me think that we are not on the cusp of a major breakout until some more consolidation ensues. However, breadth studies should always be a secondary consideration after price. The trend is up on the S&P 500 Weekly, Daily, 60mins, 15mins and 5min charts- this is no doubt a powerful scenario and which should respect this.

S&P Cash 60mins:
The S&P 500 60mins closed right at the open gap making a new momentum high. The ideal trade now is to buy a pullback into the moving averages with a stop below the recent breakout levels i.e. below 1305/1300. There is a possible wedge pattern and if this triggers we could get that sell off back down to a great buy zone

Nasdaq 100 60mins:
The Nasdaq has rallied right into a downward sloping trendline on strong momentum. Day traders could potentially fade this in the very short term but the better trade is to buy any swings back into the moving averages with stops below the horizontal line shown here. Note that the daily has triggered a bullish "failed head and shoulders pattern" which is one of my favourite plays.

The ASX200 closed just shy of the 61.8 retracement level and has rallied almost 300pts in 7/8 trading sessions. I missed a couple of key long entries into this trend above 4700 and now I am on the sidelines and waiting. I do think we need to see some consolidation/ a deeper pullback first before getting long once more as the risk/reward just does not favour it up here for swing traders.



ASX200 Daily:

I have been monitoring this market for a while and now I think it is suitable to show what I deem to be a very bullish pattern emerging in the Shanghai Composite. This market has been in a clear sideways pattern for a year and it now seems to me we have put in the E leg of a triangle. Despite the panic throughout Asia on the earthquake news, this index put in a very constructive hammer right on the moving averages and has begun to rally once more. I feel this will be a major position trade as we breakout of this pattern. Monitor this! As an example, see the pattern on the Hang Seng Daily that emerged in 2010 and the ensuing breakout. This is almost an identical scenario.

Shanghai Composite Daily:
There have been some great trades in this market despite the bigger picture sideways action. Study the inverse Head and Shoulders pattern as well as the wedge breakout. I think a strong breakout of this triangle pattern is now in play. Get long prior to the downward trendline and add on confirmed breakouts above.

Hang Seng Daily 2010- Triangle Breakout Comparison

Hang Seng Daily Current:
The Hang Seng is clearly building another consolidation pattern ABOVE a previous breakout/res level. This is bullish. We have either already completed an ABC Flat down or a triangle is still basing out. Nonetheless, focus on the bigger picture bullish patterns.

I got short EUR  just below 1.42 in line with my trading plan: http://swingtradersedge.blogspot.com/2011/03/usd-big-picture-double-bottom-trade.html. This has worked well initially and we saw quite a sharp fall on Friday night. As per the chart below, we need to break 1.40/1.4050 to see increased momentum to the downside. I know that a strong USD and Equity market do not go hand in hand but I have always found it more profitable to trade the setup first and then react according to the underlying price action rather than trying to over think. EUR has topped nicely and trended down in line with my double top pattern despite equities continuing their strong run. Anything can happen. Something will give at some point but keep following the price.

EUR 60mins:

DXY Spot Daily:

In conclusion, the Shanghai composite and the Hang Seng appear to be breaking out of big consolidation patterns. These are longer term bullish plays and anticipate strong trending moves out of these patterns. I am sure this will have a positive read across for the rest of the region in the coming months. US markets continue to grind higher and our strongest trade is to buy a retracement back into the breakout levels. Despite this, I am short EUR and am looking for breaks of 1.40 to add.

Thanks
Austin