SPI Trading 17th Dec 2007

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Please Read the Weekly reports before continuing.


My Philosophy is simply about trading support and resistance. I Buy support and sell resistance. I trade down into support, and trade up into resistance. I fit the profile of a swing-trader and a momentum-trader. I simply chart read. I analyse from the top down. I determine trends and cycles using Monthly and Weekly charts and then day-trade the direction of the trends.

I’m extremely comfortable selling higher opens against the trend, and buying lower opens against the trend....

My trading:- position trading blue chip stocks. (not interested in Day-trading)

Bread and butter:- day-trading SPI Index futures for primary income....

US Index Futures and GBP/USD 1 or 2 good trades per week for directional plays using the Weekly timeframe as support/resistance. Being a Sydney based trader I don’t want to trade any other global markets unless there is a high probability pattern. This gives me 1 or 2 good set-ups per week in other markets, which often puts me into position before US markets open.

I look for higher probability patterns using levels in the market that often repel price. I work with price ranges that often have a huge influence during the trading day. (spiral-points)


Last Week….

If you modelled a downward weekly pattern why didn’t you short it?

I did short the market last week:- twice. Once on the higher open on Tuesday, and once on the lower open on Wednesday. On both occasions the market moved in my direction 22 points before reversing. There was no follow through.

In fact, every trade last week moved from support and into resistance before reversing, which often was around 22 points. Most of my trades last week didn’t have any follow through, after my first exit.

The over all trends based on higher timeframes were bullish :- above Monthly and Weekly 50% levels. And there were no 44-point spiral tops. Those who know my trading style I work with certain ranges to minimize risk, whether short-trading or going long.

There is a big difference trading trending markets as price moves from one level into the next, and consolidating markets. ‘Consolidating’ markets are completely different, and last week is a perfect example. I expect certain levels in the market will once again play important roles, but ‘follow-through’ is going to be like last week. And I expect the markets in Australia to be like this for the next 3-weeks.

I’m not one to guess how the markets will behave in the next few weeks (yes I am), but as long as I trade using support, resistance, and spiral points, then hopefully I can minimising any 'Risk' in markets reversing intra-day trends, as they follow Weekly trends.

Some days will follow through, and other days will be like last week.



Monday:-

With a lower Weekly open, there is always an expectation that price will swing back towards the central levels, and 3-day highs, before resuming the trend, and I think this will be the case with December contract expiry on Thursday.

Normally I would look for a major upswing on Monday because of the ‘gap’ open, but when we analyze the Ranges, there are no gaps. This suggests more downside on Monday, or at least a ‘small range’ day before any upswing occurs from Tuesday. The only gap is Monday @ 6463.

Every lower open in November and 2-day UP swing occured from the 5-day lows, in this case the 5-day lows are much further down. The 5-day breakout on Friday often pushes price towards the extreme of the forward timeframe before the reversal occurs, which is towards the lower 5-day range @ 6394.

Even though I've modelled an UP week, this might not occur on Monday.

Once again I'll trade support/resistance and use Spiral points on the way UP or on the Way down. Hopefully this time I get 1 day follow through.

For US traders who read this blog, the SPI futures can often provide high probability trades in your evening hours. However Monday isn't one of those days.

Weekly Index Reports now available (15th December 2007)

Click Weekly Reports to the right



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Forex GBP/USD 14th Dec 2007 part 3


GBP has continued the Weekly downtrend towards the Channel lows, with the expectation that the overall trend is bearish, with 2-3 day counter-trend moves.

The Trend is defined by December 50% level.


There was a great set-up today, the 90 pip top and 5-day 50% level down towards the
3-day lows, but like any weekly trend, price likes to follow the Dynamic channels, once the Daily channels break.

Next week looking for a counter-trend move, the lower swing point back towards the Weekly 50% level

DOW E-mini Trading 14th Dec part 2

US markets have continued down since the reversal down from the 5-day 50% levels.

This is valid support, but it favours a lower Weekly close.

For those traders short from the 5-day 50% level I would be exitting at this level, and take the day off until next week

Full Weekly report tomorrow.

Forex GBP/USD 14th Dec 2007 part 2



GBP following the trend down from 50% timeframes breaking the 3-day lows.

Expectation GBP is heading towards the Weekly lows

With the overall target the December lows.

Lower weekly open (next week) after a break of the 3-day lows and expectation of a 2-day counter-trend move upwards next week before the down trend resumes

DOW E-mini Report 14th Dec 2007



US markets still consolidating around the December 50% level, and above the Weekly 50% levels.

At this stage both markets are still in UP trends, but looking for lower weekly closes.


Yesterday's up swing from support into the 5-day 50% level, and now selling off, could easily follow the same price patterns on lower weekly closes as other global markets.

It looks like it's going to re-test Weekly 50% levels by the time US markets open, and you don't want to be trading longs below this week's lows.

Full analysis after Friday closes and then switch into March contract 2008

Trend guide for Friday is 5-day 50% level, and Weekly 50% level.

Forex GBP/USD 14th Dec 2007



Trading below December 50% levels and now below Weekly 50% level, but 3-day cycle is still a BUY.


90 pip spiral top, matching the 5-day 50% level and Weekly 50% level, and expectation that price has more of a chance to head down than up..

Below timeframe 50% level and expectation is to head down into channel lows.

Above 5-day 50% level, don't short.

SPI Trading 14th Dec part 3

13.20

SPI following the Weekly trend down (closing on lows).

The r22 high @ 6607 sent the market down into the Weekly 50% levels and 5-day lows @ 6557.

I went long again @ 6558 Stopped (6550).

Once the 5-day lows and Weekly 50% level couldn't hold, market expectation is a random down day, however I didn't expect as much selling, even though the view was for the weekly timeframe to close on it's lows.

Breakout of the 5-day range (6557), Weekly 50% level, and 3-day Sell-cycle


My systems weren't shorting today, so I wasn't short-trading, and the intra-day cycle has been a sell since yesterday. (reason why first long exit was 6604)

There was some support around the December 50% level 6534, and the cycle did turn around.

I entered once price re-tested the cycle low @ 6529 partial exit @ 6539 and ran stops at breakeven, looking for a move back to 6557.

Once price broke the cycle low again @ 6527, it's now in free fall, and expectation that below the December 50% level price is heading back towards the Weekly low...


Full report on Weekend

SPI Trading 14th Dec part 2


10:54am

Finally, after trying for nearly 1 week, the R87 Gap fill @ 6585 completed.

44 points up and it hits 5-day 50% level, and exit for today.

22 points up:- reversal from R6607 and takes out lows, expectation market will move down to 6566-57, which also matches another 44 points down.

And this price action has been occurring in the ‘downward’ weekly pattern:- UP 22 and takes out lows….

Entry 6591 partial exit 6604

Stops breakeven from entry, target double R22-44 points up and exit for today.

SPI Trading 14th December 2007


8:30

Market reversed down after 'gap completion @ 6661, and continued down from 5-day 50% level yesterday, hitting the 5-day lows overnight.

Weekly timeframe trend:- it's either going to close on it's lows today around the 5-day lows and Weekly 50% level @ 6557 (lower Weekly close followed by price rising upwards from a lower open next week)

Or it's going to close around the 5-day 50% level.

Simple risk filter is 6590:- 3-day lows and R44 spiral point

DOW E-mini Report 13th Dec part 2


US markets still supported around the Weekly 50% levels.

At this stage markets look range bound until the new week begins.

Full report later..

DOW E-mini Report 13th Dec 2007



US Markets: consolidating around December 50% levels.

Short-term trend Bullish:- above Weekly 50% levels and 3-day cycles.

Yesterday DOW tested and bounced off Weekly 50% levels.




Intra-day:- Trend is going to be defined by the 5-day 50% level.

Yesterday’s report mentioned I was looking for Wednesday to consolidate before heading higher on Thursday.

This will be determined by the 5-day 50% level.

Otherwise another flat day with no trend direction and ‘ sideways channel trading’ until trading Week completes.

No high Probability patterns for Thursday.

Note:- March 2008 Contracts now trading below 3-week cycle highs on ES, this suggests that any Up trend is less likely after expiry



SPi trading 13th Dec part 6


13:50

I have two modeling patterns: - a down move will head towards the 5-day lows, which I won’t be trading: - currently price is trading below the 5-day 50% levels

The second pattern is an upswing into 6677-92, which I’m trying to trade. (R87 up from yesterdays lows)

Price action today is consolidating around the 3-day lows and R44 spiral point. (6618- Support)

The price action today has been moving in 22-point ranges. It is the same price action that has been happening this week:- the R22 lows have been supporting price with buying support, and today I’m hoping it will do it again.

My partial exits and breakeven stops keep my gains and minimize any losses, and eventually I’ll get a follow through in my favor, or may be not again

Re-entry 6614 R22 low partial exit 6621

Looking for 44 point move and higher…

stops moved to 6613

Forex GBP/USD 13th Dec 2007



GBP:- short-term trend bullish.

Larger trends bearish (trading below December 50% level)

This week there were two good set-ups, reversal back into the 3-day breakout on Tuesday, and then trade longs on Wednesday.

No Trading set-up For Thursday

The support should be defined by the Weekly 50% level, the 5-day 50% level and the 90 point spiral low on Thursday.

SPi trading 13th Dec part 4 & 5

10:53

re-entry 6617 partial exit 6623, moved stops to dollar breakeven @ 6612.

If stopped out I won't trade again.

looking for 44 point up move.
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11:05


Each trading day this week has moved around 44 points. This down move has completed 44-points, so statistically trying to short trade the market around these lows isn't my cup of tea.

The only short trade for me was an R44 completion @ 6665, but it failed to reach that level by 3 points, even though it was modelled that there was a possibility that a 44 point down move could happen after 'gap' completion.

Unless I see another trade today play out or set-up for longs in the afternoon, I'll probably sit today out and trade again tomorrow.

SPi trading 13th Dec part 3

10:33

Gap closure and reversal down 44 points, straight back into the 3-day lows. (6619)

At this point in the trading day, this spiral point low is very important, because the Expectation is that it will swing back up in the highs again and consolidate for the rest of Thursday.

If not and it heads down, expectation that price will move down towards the 5-day lows.


Don't trade longs below 6618 today

SPi trading 13th Dec part 2

10:06

partial exit 6657 (entry 6647) Stops now below today's lows.

Trend defined by 6647, above and expectation is heading higher.

If market reverses down after 'gap' closure 6660 and heads down...it will be a 'weak' trading pattern to see prices back under the 3-day lows @ 6619.

Price would need to rise back upwards off 44 point lows if Thursday
ends up being a consolidating day

SPI Trading 13th December 2007


8:30am

SPI opening around the 3-week high again @ 6647, and this level along with yesterday’s highs is an important reference for any further moves higher this week.

UP Weekly trends will move towards higher prices on Friday, and this level today is an important reference for any UP trend to continue.

Yesterday's view was that price will swing upwards on Thursday to fill the 'gap' @ 6661, this also matches the R44 range.

After 'gap' closure, the rest of the day is an open book:- Trend can continue higher as it follows the Weekly channels back towards 6735 by Friday, or it's going to rotate back down from the R44 high and consolidate on Thursday waiting for trend direction in US markets.

No high probability trades today, after 'gap' fill completion.

Risk 6647:- 3-week Channel highs, 5-day 50% level, previous Daily highs

E-mini Trading Report 12th Dec part 4

The Up trend in US markets are defined by price trading above the Weekly 50% level and the 3-day cycles.

This trend was modeled based on price re-testing the Weekly 50% level, finding support and heading higher over the next 2-days as it follows the Weekly channels.

It started well on Wednesday, however the late sell-off on Wednesday is not what I was hoping for, because now it is following a basis of a lower weekly close. (close lower than open)

The weekly trend will still be defined by the same 50% level 1476.

A lower close on Wednesday will probably try and swing back upwards on Thursday into the 5-day 50% level…

Full report later…

DOW E-mini Trading 12th Dec part 3

US markets continued upwards on Wednesday, much further than expected, but have settled below the previous 3-day break.

Thursday's 50% level should hopefully be the guide on any further up move this week.

Full report later....

Forex GBP/USD 12th Dec part 3


Exitting 2nd 90 pip move @ 2.0470 to be neutral, with trailing stops below 90 pip low.

E-mini Trading 12th Dec part 2

Partial exit and leaving stops below Tuesday lows.

Partial exit below 5-day 50% level and December 50%, with Expectation US markets are heading higher

Forex GBP/USD 12th Dec part 2


Forex traders that went long should partial exit around these levels and run breakeven stops from entry, with expectation that any upmove will continue back towards the highs.

Increase risk of holding longs around 90 pip highs.

E-mini Trading Report 12th Dec 2007


Until there is a weekly close above 1525 and the 3-week cycles, the overall UP trend in December is open to risk. However like the previous UP move occurring in the week of expiry in September, I have the same expectation of occurring next week. (December Expiry)

The majority of trending days in US markets have been driven by % rates, and yesterday’s reversal was another day.




This reversal on Tuesday was want I wanted to see, it’s the exact same price pattern that occurred last week, and two weeks ago:- The weekly 50% level is supporting the market.

And Tuesday (yesterday)the same dynamic level has supported price again this week.

In UP trending weekly patterns, there is always an expectation of a 1-day reversal into support before the trend resumes, and in my opinion this is only a 1-day reversal

Even though, US markets are below their December 50% level, I favor the trend continuing higher, only because of the reason of contract expiry.

Weekly Report 8th December " 1 Daily Reversal down needs to be
verified with support, before trading longs higher the next day from a lower open"




Wednesday:- Expectation that today will be an UP day, but not a large reversal day:- furthest move would be towards the 3-day break from Yesterday, and then the strength of the trend will be defined by the 5-day 50% level on Thursday if price is going to swing back towards Tuesday’s highs again.

Statistically, I favor an UP day, but the Weekly 50% levels must hold and close above on Wednesday for the UP trend to continue.

As I've mentioned before:- Market is heading higher, with the best possible trade from lower prices:- ideally around the higher timeframe support or the 5-day lows.

It's the 5-day lows and higher timeframe support in E-minis


For those already long, I would look to partial exit around the 5-day 50% level, and move stops to below Tuesday's lows, and then continue to hold into next week.

Even though I contine to be bullish, the next UP move might not eventuate until the start of next week.....

"does it rotate down 1 week before rising upwards from a lower weekly open the following week?" Weekly report



Note:- Continue trading December contracts until next week:- Switch analysis on Monday for March 2008 contracts.

SPI Trading 12th Dec 2007 part 5

16:10

SPI finally completes the 44 point move upwards, as it heads back towards the gap closure of 6661.

This is very similar price action to last week:- reversal back into major support in the first two days, and Wednesday continues the trend upwards.

This will obviously be confirmed by how US markets react to Tuesday's reversal.

Forex GBP/USD 12th Dec 2007



Tuesday’s expectation that price would come back down and re-test the 3-day high breakout before deciding whether it will resume any UP move.

This sell-down occurred from the upper channel and 90 point spiral top, and now Wednesday has come down into the 5-day 50% level and 90 pip spiral bottom.




A bullish weekly trend will continue upwards, moving back above the weekly 50% level and heading back towards the channel highs again. (90 pips up)

A weaker market will break the 5-day 50% level, and continue down following the overall higher timeframe 50% level trends.

It is obvious the %rates are pushing the currency around.

SPI Trading 12th Dec part 4

10:55
Monday:- Expectation that price would try and rotate down into support (22 point up move and rotates down 44 points)

Tuesday:- Expectation that price was rising higher into 6735( 22 point down move into gap and nearly makes 44 points upwards)

Wednesday:- Expectation price will remain below the 3-day lows, but also supported in a Up-trending market (22 point rotation up and then down)

But now take your pick on the direction for the rest of the day, an each way bet as it looks for a move towards a 44 point completion.


E-mini currently supported and rising upwards from Weekly 50% level @ 1476 (full report later)

SPI Trading 12th Dec 2007 part 3

10:20

Re-added shorts @ 6605 partial exit 6595, and leaving 1 contract with breakeven stop @ 6615.

Even though today looks weak, and is following a lot of 'bearish' patterns, there is a lot of support around these levels today. And it won't surprise me to see a trading day that consolidates around these levels all day without making a large down move.

If stopped out I won't trade again today:- back tomorrow.

SPI Trading 12th Dec part 2

10:00

SPI moving back into the gap and 22 point up from lower open.

Long Entry 6607 exit 6614

A weak market will rotate back down after after hitting resistance (22 points up) and drift down. (6616)

A 'supported' market will continue upwards into Gap completion 6661, maybe not today but something I'd look for tomorrow.

Switching only 1 lot short @ 6615 stops 6621 , holding for 44 point completion downside.

SPI Trading 12th Dec 2007

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"A rise upwards on Monday would be towards 6735, over a couple of days before the most probable reversal back into the 3-day lows. (Weekly report 8th Dec)"

Last night hit 6735, and once again Day-traders miss the major move as markets are driven by US interest news once again, as price moves back to the 3-day lows




Yesterday’s trading was defined by the Weekly UP trend and ‘gap’ closure as it moved higher towards 6735, and today will be simply defined by the 3-day lows of 6619

Price is opening below this level, and expectation that often it will remain below this level before moving higher the next day.

6618-20 is risk today.

It’s the 3-day low and the 5-day 50% level.

The market will try and rise upwards into this level and probably stall.

Keep an eye on 22-point moves in the market, it often moves 22 points before reversing the trend. It did it on Monday moved up 22 points before reversing. It did it on Tuesday, moved down 22 points before reversing, and a lower open today and 22-points UP matches the Risk levels.


Note: - Technically I’m looking for US markets to move higher on Wednesday (UP day) using the Weekly 50% level as support. (Full report later)

This lower open in Australian Index was the 'gap' closure completion I was looking for before the UP trend resumes.

E-mini Report 11Dec part 2


US Fed cuts rates by .25% and sends the market back down towards major support zones.

This is the price-action that I wanted to see before any UP trend resumes in US markets.

The push down has broken the 3-day lows, the Day range should be left to run its course on Tuesday, and then use Wednesday to verify support.

The December 50% levels are trend guides for this month (Support), but a break of the 3-day lows can often push the market all the way back towards the Weekly 50% level 1476 before the UP trend resumes.

Full report later....

Forex GBP/USD 11th Dec part 2


Tuesday I was looking for a rotation back down to re-test the breakout zone.

Price rotated down from Daily channel highs, and now price is being supported.

How valid this change of 3-day cycle will be determined by Wednesday, because a new UP trend should move higher on Wednesday back towards the highs....

Otherwise it will move back down towards the 3-day lows 2.0222 (2nd day rotaton), and continue down as it remains below all higher timeframe 50% levels, following the monthly timeframe trend.

DOW E-mini Report 11th Dec 2007



US markets are following the Weekly trend upwards towards 13970 in the DOW and 1555 in
the E-mini.

The first reference this week on any further moves are the Weekly highs in both markets (Green Channels)




The market is moving higher, if there is going to be any down day this week before the trend resumes upwards, then the most likely level is going to be around these Weekly highs.

I do expect higher prices, but I would also like a down day back into the trailing 5-day 50% level, which now match the 3-day lows, before the market continues higher into expiry.

No high probability trades for Tuesday

SPI Trading 11th Dec part 4

15.30

Weekly trend continues upwards following the break above 6647, and following the Weekly and 5-day channel higher.

Tuesday is moving 44 point up from today’s lows, after early gap closure.

Around 6709 would often provide ‘shorting’ opportunities, but not today. It’s following the upward movement along with the Weekly trend.

Forex GBP/USD 11th Dec 2007


Monday’s expectation was that the trend would continue down. Whilst price was below all higher timeframe 50% levels and the 3-day SELL cycle, the trend remained bearish.

But often we see lower weekly ‘opens’ try and rotate upwards back towards the Weekly 50% level before resuming the downward trend. But in this case, price moved back above the 3-day high, changing the cycle once again.

Index trading, I would look for a re-test 3-day breakout. Because whenever price breakouts and changes the cycle, it normally swings back down. Lower daily close followed by a lower daily open to verify the break. (support)

If that occurs on Tuesday, then the daily timeframe has a random length, price would be below all higher timeframe 50% levels on Tuesday, and a 2-day stall can take price back down towards the lower channels once again.

Currency markets aren’t a regressive as index markets; they like to spend more time in trending patterns, therefore Tuesday trading is going to be defined by the Weekly 50% level @ 2.0436 and the 3-day cycle.

Overall Trend is defined by the December 50% level.

SPI Trading 11th Dec part 3

10:32

Early downside gap closure on Tuesday and now price is looking to move higher, following the Weekly channels and 5-day ranges.

Yesterday’s price action was very similar:- precise entry but the follow through upwards didn’t eventuate. I modeled that after the 22-point move up and re-test of the lows, price would continue down on Monday.

And today the model was close the gap, and price action could move higher as part of the Weekly trend

I covered remaining shorts on long signal, but haven’t traded longs today (YET) because of the larger range spiral points…

SPI Trading 11th Dec part 2

10:03

Expectation of downside gap closure:-

Entry 6686

Partial exit 6669 (Stops above highs)

SPI Trading 11th December 2007

9.00am

Global markets are pushing higher in December and heading towards the upper weekly channels of 6735 this week, and probably more the following week.

We can see the weekly chart:- trading above 6647, and whilst price is above this level the expectation that the Weekly timeframe will continue higher.

Yesterday I wanted two things to happen:- Price to continue upwards from the first Spiral point of 6647 and continue higher all Monday.

Or if it did come down on Monday (after 22 point reversal), at least complete the 87 point range so that maximum EOD positions could be traded with the expectation that price would continue higher on Tuesday.

Today:- Higher open and expectation that price will try and move down from the 'gap' open.

However:- the previous gap at 6663 could support price, and Tuesday will continue higher towards the Weekly channel highs, as it follows the Dynamic 5-day ranges.

A completion from 6663 and 44 points upwards is 6707 +

I prefer to be trading longs from lower spiral points, but this might not be the case today.

There is no high probability trade today:- if wanting to trade longs price would need to settle above 6663 before trading longs.

Risk today is 6663

Below 6663 and market expectation is another 'stalling-reversal day'..

DOW E-mini Report 10th Dec part 2



US markets are following the Weekly trends upwards, moving higher on Monday into the 5-day dynamic highs and stalling.

The expectation is for markets to move UP, but for swing traders it would be ideal to see some short-term pullback into support before continuing higher, otherwise it's extremely hard to get back into the trend, if it keeps making higher highs each day.

Full report later.

DOW E-mini Report 10th Dec 2007

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Please Read Weekly Report before proceeding



Expectation US markets are rising towards the upper levels, with Weekly upper channels as the first reference.

Higher Weekly open and expectation that price will stall and rotate down before heading higher.

December 50% levels support.


Daily drops favor rotation down, with the 5-day 50% level as support, which matches the December 50% levels.

Daily resistance upper channels.

If Monday rotates down, then support needs to be verified, and then rise upwards the following day.