Monday, August 23, 2010

Long ES @ close

Took a long position into the close today. Tight stop 2 pts below LOD.

Sorry for having been MIA but between travel and being a bit sick have not had much time to post but following every day. We are setting up for a nice divergence again on the decl/adv ratio on the daily, so we have a high chance that todays LOD will not be broken.

However, on the bearish side, this is a perfect close for a nice GAP down below support and strong follow through lower for tomorrow. So I am playing it a bit on the cautious side here as I do not want to get caught holding a looser.

Thursday, August 5, 2010

Expanding Triangle with Time Fibs

This is something I have been playing with the past few days. A very unlikely scenario but one that could be used for a trade with a limited amount of risk. Why limited?

So take a short at those levels (anywhere from 1140-1150) with a stop around 1180. If market keeps on trucking towards 1170, double down on position there and get out on retracement (you dont need much of a retracement to exit position at break even or with small loss).

If the market retraces back towards 1100, then it gets a bit tricky. Depending on how it bounces (likely back to retest 1130) and how the coming rally will resolve technically one can make some great calls on whether this pattern will come true. On break you can double down on your position likely around 1080 with a stop at the recent rally high (the rally off 1100).

This could turn out to be an extremely low risk trade with a potential for some really nice gains. As this is a longer term trade you can start position sizes quite small without too much pain if we are wrong.

In terms of giving this pattern credit here, I would say maybe 3 out of 10, so its not something I feel quite strong about but the risk/reward makes this a bit more interesting.

Also take a look at the time relationships here - from top to bottom, 38% hit the first top, 61% could be inline with our upside targets towards next week right between 1140-1150.

Tuesday, August 3, 2010

USDJPY - really?

Well, my third try yet again ended without much gains. We did test a key area in the 85.6X range today which is quite significant. At this point, I am going to hold out before another attempt to see how today develops on this pair. Three tries, no profits, but no losses either which is great.

Based on the intra day chart we may be forming a continuation pattern here that will lead prices to possibly below 85 where I will give it a try again. We have been making new lows but very marginal on each new push lower. Advances are getting smaller, much smaller, and declines are getting a lot smaller as well. Its coiling here nicely and could still go either way. Many things are pointing up but the hesitation to breakout of the very tight channel towards the upside has me a bit concerned that we may have a big washout coming before finally making a move higher - whether this will be a retracement on the daily chart to continue lower or of course a bigger leg towards the upside.

Sorry for having been so focused on FX markets recently. I will be posting more SPX updates soon as well.