Finally after 2 Years of consolidation FTSE has made new highs with the prospect of a new bull run to follow.
Its always difficult to ascertain whether a break-out is a fake out or genuine and sometimes the only way to deal with this is to enter the position against the probability that most break-outs are successful. The more difficult aspect is stop loss positioning.
The increase in volatility across Indices has been quite notable over the last 6 Weeks and this often occurs before a deep correction or a trend change. Therefore here's a few longer term charts of some Indices to look at the bigger picture.
From the outset this looks like a healthy chart. There are historical corrections on DOW and SPX that look identical to this one and on every occasion the Bull markets continued in both Indices. As things stand, shorting this would be a risky place to be.
You may have spotted there was no trading round-up over the Weekend just gone. This was simply due to the fact no new trades have been taken and the suggested swing trades I had lined up either didn't provide what I was looking for on smaller time frames to enter, or, I missed the entries and decided to let them go.
There are a couple of swing set-ups I'd like to focus on over the next couple of days and I'll post further details ahead of entries if they start going to plan.
I've decided to close half of the DAX swing long to take a profit of 503 pts.
I'll update the trading log with the aggregate profit once the entire trade has been closed but for now the remaining half is to continue running, not sure of target etc, just going to trail it. Stops currently at b/e but will have a closer look at raising them over the next day or two.
Having held the trade for almost 6 Weeks its probably the longest held trade so far this Year and is paying off accordingly. This chart shows the trade along with my emotions and reasons for banking half thus far:
Although my concentration lies with swing trading, there are times when a great trading set-up makes day trading worthwhile so here's a quick synopsis of a trade I took earlier today.
On the Daily timeframe my system has remained short on the FTSE 100 since May 2013, although the Hourly time frame has switched between short and long on a few occasions. However, today's trade was based on the simplest form of T.A but keeping in mind that I find FTSE a quirky index that has its own characteristics.
After a refreshing 3 Week break from the Markets I'm now back and scanning through the charts of which some have surprised me, the strength in the Pound in particular.
Last Week I entered a DAX long for which I've only now got the opportunity to talk about. This trade is based on the Monthly chart and I've never before taken a trade on such a large time frame. Furthermore I had to stop myself being influenced by other Indices because none of them support the type of strength I'm seeing on the DAX even as far as to say my system is still short from May on the FTSE Daily chart.
This is exactly the same simple idea as detailed in last nights post for USD:JPY.
Keeping an eye on FTSE for a back test and failed re-entry into the long term 4 Hourly channel for a possible swing short dependent on how other factors play out if and when the back test occurs:
It's been an interesting Week that has shown a number of potential medium term trend changes.
After shorting SPX at 1596 in a speculative manner based on that huge multi-Month Megaphone top pattern I've since realised there may be more to this set-up than first anticipated. The original analysis can be found here.