17 Mar This Week’s Swing Trading Round-Up And DOW Analysis Re-Visited;17th March 2012
Another Week has ended where the positions I’ve chosen to run have not performed as well as some of those I intended on running but never actually entered.
Last Weekend I discussed (here) the bearish characteristics across all of the main Indices particularly on longer time frames and promised to revisit that analysis were the markets to break higher as they now have. What’s interesting is that in the main those bearish characteristics still remain, but in reality we already know they can continue that way for significant lengths of time. The only key to successfully trading bearish signals in a rising Market is to wait for a break of support to confirm those bearish signals and enter a position, but at no point during the trading Week did that happen.
In actual Fact I pointed out that a break of the previous Week’s high would be an ‘add to longs’ signal for many Swing trading systems and that turned out to be quite a powerful signal because across FTSE, DOW and SPX, entering long positions on that break would have incurred no draw down whatsoever (just 5 points on DOW) as Markets continued to rally straight through those levels. I wouldn’t say we’ve learned anything new from this but what we have seen is clear confirmation of that analysis at work.
From that point onwards, on DOW in particular we didn’t see a single occurence of more than 2 consecutive full bodied red hourly candles indicating that adding to long positions on the close of each 2nd red full bodied hourly candle would have kept you well on the road to a great Week’s trading:
Just a quick note on that DOW chart though, I do think it’s worth bearing in mind that price is currently against it’s upper channel line whilst also exhibiting overbought characteristics on smaller time frames. Therefore, be wary about entering longs at current levels, and if entering day trade shorts, place stop losses outside of the upper channel line and trail them:
During the Week AUD:CAD became a very attractive swing long candidate as detailed here, but my expectation of a swing low being a more drawn out process meant I didn’t get positioned in time for the sharp rally that soon commenced. There may still be opportunities to enter this trade on a low risk/high reward basis so I’ll be keeping my eyes open ahead of this possibility.
Here’s an update on my open swing trading positions and details of those I closed:
GBP:CHF had finally started to break down and was one of the more exciting trades I had open. Showing a +140 pip profit there didn’t appear to be anything that could get in it’s way, but suddenly an unfounded rumour that SNB was to raise the Euro Peg set things on fire and it rallied significantly in a very short space of time. I was very disappointed to have to make the decision to close this trade out for a 47 point loss.
I took half profits (+161 points) on GBP:NZD on the basis that it’s mid Week rally could have been forming a lower high. That assumption turned out to be correct in the short term as price has since weakened with the remaining half of the position just shy of break-even. When I eventually close this I’ll post the aggregate points gain/loss across the whole trade in the Swing Trading log.
I entered an aggressive short on CAD:JPY at my revised target level of the Weekly 200 MA. Position goes into the Weekend showing a +31 point profit but as a top is far from being confirmed I may decide on taking profits and re-entering the position on each bout of strength. As stated previously, this is a risky strategy and not one I’d recommend, but it is something I have an eye for so I’m happy to continue the aggressive stance for now.
The Gold analysis detailed here gave way to a short entry which maybe I should have closed intraday on Friday but chose to run it a bit longer. The position goes into the Weekend showing -2 points and I do need to review this properly and make a decision as to whether I’m going to widen stops and run it as a longer term trade or whether to just take profits at intraday support levels and be done with the idea. The stop loss is quite tight which does make it a great risk Vs reward play on the basis that the down side targets are achieved, but it’s possible the stops are too tight. I’ll have a closer look over the Weekend and make a decision.
The AUD:NZD Long, now part of the furniture, goes into the Weekend showing -8 pts.
Overall based on this Week’s closed Swing trades and the current open ones, I have ended the Week on a small overall profit (remember, the +161 points on GBP NZD was only half the position, whilst the -47 on GBP:CHF was a full position) of approximately 25 points at full stake size.
My day trades, although not posted on this blog, ended the Week in an overall loss, mainly because I shorted Cable on Friday and got stopped out at the upper end of the 100 point data spike at 12:30
Going into next Week, there are a few things I’m looking at and some aren’t quite ripe for entries yet, but I’ll try and get them detailed here over Weekend and early next Week.
Have a great Weekend.