More of the Same with a Twist

Hi all,

Nothing much changed at all on the AUS200 CFD this past week. Price remained under last Friday’s 1^st of May bear directional line for the entire week. It has tested it on a number of occasions but has been unable to close above it on a daily basis. A close above it will flip the short-term daily chart direction to bull. The weekly directional line remains a bear at the 5562 level. This week made a lower low, lower high and higher close retrospective to the previous weekly candle. Psar and the short-term moving averages are bullish on the daily chart, and supporting price however the short-term moving averages are still pointing down on the weekly and monthly charts. Price remains in a consolidation zone as it was last week.

Looking at some of the global equity indexes, namely the US500, HK50, EUSTX50 and JPN225 sees them all in bullish mode, we seem to be the laggard amongst them. The Vix is dropping in value, while our BBOZ and XVI are drifting sideways but closely followed by the short-term moving averages and psar on the daily time frame.

In the current state of price action, you can not look to far ahead, so it seems best to search for trade opportunities in the lower time frames while keeping the risk relatively small.

Below I’ll display my swing trading template which shows the daily time frame on the left, 4 hours on the upper right-hand side and 1 hour on the bottom right. The support and resistance levels are displayed on both daily and four-hour charts.

My thinking is that price is primed for an upside breakout this week but as you all know it can just as easily go the other way. A 1 hour close above the green line, the 5430 level would be a trigger to go long with the 4 hourly purple line being the primary price target. Using psar as the initial stop will give a better than 1:1 risk reward.

On the flip side a close below the lower four-hour range will give a signal to go short and using the psar once again as an initial stop will produce a similar risk reward for the bears.

It really does look like each way bet and that is exactly what it is….

Good luck and happy trading to all……