Index Swing Trading & Technical Analysis - Latest Posts

Following my earlier post updating on recent trading I thought I'd post a quick snap shot of the USD:JPY channel back test I'm waiting for. Its not too often I post such set-ups too far in advance because there simply isn't enough on the chart at this early stage to support the trade idea but in short I'm simply looking to see how price reacts if and when it reaches the underside of the old channel with a view to entering a swing short. What you'll often see on such set-ups is a pip-perfect back test that instantly finds sellers, but some days later price will rally again and actually briefly break back inside the channel stopping out all those early positions. It is after this second back test that the real sell off will begin.

Another quiet Week with the only trade taken being a re-entry of a previous set-up on EUR:AUD. Since Thursday's sell off price has recovered a fair bit so it is now my intention to lower the stop loss to just above the 1.4290 area which will allow for a 61.8% retrace of the current "correction". I think strength above 1.4290 would suggest bulls remain in control and if a topping process is taking place it could take longer than anticipated. A stop out at 1.4290 would close the trade for a 50 pip loss whereas as things stand the trade is showing a profit of 80 pips.

Having closed the previous EUR:AUD swing short for a quick profit the time has come to take another look whilst price continues to struggle against Daily resistance. The MACD negative divergence has now confirmed itself and price breaks above the 1.4270 level appear to attract selling pressure. I was so close to entering short last night but at that time price was above 1.4270 and looking lively so the decision was made to wait until today. Price did drift lower overnight and my entry wasn't at the best possible levels but it turned out to be good enough.

Here's hoping you had a better trading Week than I did! Despite last Week's promise to re-enter the EUR:AUD swing short I missed the favoured re-entry level on Monday and beyond that it just kept selling off (around 400 pips in total) with no decent retraces to catch a good entry. Nonetheless on Friday it rallied like hell almost reversing the whole Week's losses, so I'd have probably ended up back where I started anyway!

One new swing trade was taken this Week in the form of a EUR:AUD Swing short. In view of the risk attached due to there being very little technical confirmation that I'd be able to pull the trade off, I decided to close it and go flat into the Weekend with a view to re-opening it next Week when further confirmation is in place. The trade delivered 120 pips profit in less than 18 hours so the result was quite satisfying. If and when this trade is re-entered I'll post details in the comments section under the relevant supporting post.

EUR:AUD has had some interesting moves over the last couple of Years, some of which were technically quite simple to catch and resulted in significant moves. The Daily chart below shows historic analysis that I applied to the chart before trading it and you can see that 4 horizontal lines and 2 vertical lines was all it took! To explain further you can see that between October 2010 and December 2011 price remained range bound in the top left of the chart. When it eventually broke down from this range I made the decision not to trade it until price retested the range. After quite a long wait the re-test came in May 2012 as defined by the first red circle. I call such set-ups "Box Trades" simply because price has retested the annotated box that previously contained price before it broke down.

USD CAD caught my interest after the FOMC announcement tonight and on inspection I was surprised to see its been trending upwards since September of last Year.  In fact you could argue its been trending up ever since July 2011 although in reality its been pretty much range bound. The area around 1.0253 has been marked on my chart as S/R for a considerable length of time and its fair to say price has been through it in both directions numerous times before but breaks above that level do seem to coincide with short bursts of strength that propel it 150 - 200 points higher relatively quickly.

Due to family circumstances I was unable to update last Week's trading over the Weekend. Nonetheless you haven't missed much as no new trades were taken. This morning I entered a GBP:NZD long with a view to posting the analysis tonight, but within a few hours the trade was showing +176 points so I just banked it. I'll continue to watch the chart with a view to trading the long side again if we see further confirmation that a correction low is in place.