21 Apr This Week’s Swing Trading Review, NZD:CHF, USD:CHF, DOW, FTSE, SPX; 21st April 2013
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.
Due to the speed of the reversal I banked the trade on the basis that a pattern on such a long term chart will probably give fresh opportunities for a re-entry into the trade. The 52 points came so quickly I couldn’t resist closing the trade but have to wonder how likely it is that we’ll get another chance at 1596 again in the short term. Here’s the latest chart which is still in its early days but definitely becomes more interesting now we know the market reacted to that megaphone pattern:
I still hold the 2nd NZD:CHF swing long but in view of evidence seen in Indices that the current sell off may have legs, I may look to jump out of this trade and buy USD:CHF instead. The following 2 charts clearly show my reasoning:
NZD:CHF struggling up against the 4 Hourly 200 MA. Failure to break above here would be bad news for the swing long. The trade currently shows around 30 pips profit so I have a small amount of leeway before having to make a final decision:
Meanwhile the USD:CHF chart looks much more interesting:
Moving on to Indices and all the major Indices that I trade have shown evidence that the correction could go much deeper than current levels. The difficulty with the call is that if we’re in a small correction it will just keep going down but if we’re in a major topping pattern it could take quite some time to play out. The type of MACD divergence formed on all of these Indices is almost certainly suggesting we have further to go before a break of 2013 highs becomes likely. In fact the divergence seen here is very similar in formation to the positive divergence seen on Indices in the latter part of 2011 and as we all now know, that preceded some record breaking rallies.
I’m often arguing that FTSE leads World Indices, and someone always manages to find evidence to prove me wrong. Nonetheless I continue to believe I’m right and I think this chart viewed in comparison to the U.S charts below adds confirmation to my belief.
All in all it appears we have some interesting times ahead. The evidence may also suggest that my EUR:USD swing long idea may not work out, but I’ll continue to watch that and may still take a position if I can take a low risk position in the 1.2750 to 1.3000 region. Below 1.2750 would probably signal further losses for EUR:USD.
In the meantime I hope you’ve enjoyed the update and I hope your trading continues to prosper.