This Week’s Swing Trading Round Up; 6th October 2012

This Week’s Swing Trading Round Up; 6th October 2012

This Week started with 2 potential swing set-ups. Neither of them looked like absolute certainties but both had characteristics I like to see before entering a position.

These were GBP:NZD for a Swing Long and CAD:JPY for a Swing Short.

Of the 2 I’d have preferred a CAD:JPY position as it’s generally far less volatile but in the event it rallied past my ideal entry level and started showing a little too much bullish momentum so the trade idea has been put on hold, but definitely not discounted altogether just yet.

GBP:NZD on the other hand was somewhat more attractive and offered almost everything I wanted to see before jumping in, although I was a little late recognising that a short term low had been printed and entered the position at the end of the day near the days highs which added the risk of buying a short term high just prior to a pull back. In the event it continued it’s rally and already looks a little overbought on smaller intraday time frames so the decision was taken to bank half the position on Friday evening just as price hit an old congestion/resistance zone, taking 157 points profit.  I think this turned out to be a good move as price instantly pulled back 50 pips and only time can tell whether it can break this zone and deliver a decent profit on the remaining half of the trade.

Looking at the Markets in general there is a risk-on theme across stock Indices, but this is not backed up by what you’d expect to see in the FX Market, and more concerning is the increasingly large disparity between DOW Industrials and DOW Transports. You would wonder how Industrials can be so bullish against the back drop of weakening transports. If goods are not being transported then how are they still being manufactured and sold in such high numbers? If you know the answer I’d love to hear it. Technically the Stock Indices still look bullish, but internals are not as strong as the price levels might imply, so for now it’s probably worth keeping an eye across various markets looking for clues as to what to expect going forwards. I’m neither Bull nor Bear on Indices, but my system remains in long positions on the Daily time frames.

If I get time over the Weekend I’ll take a closer look across a series of charts and post details of any interesting findings.

Have a great Weekend.

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