I've noticed that the ASX usually rebounds a bit on Mondays (after an initial drop) if the US session was down Friday night and in the absence of any major news.
Mondays on the ASX seem to come with a bit of a clean slate to what's happened in the past week as there's no US session from the night before to follow on from..
Identifying this and then finding a good trade has worked out quite consistently well on Mondays so something to look out for, for all.
(I haven't found a trade/idea every Monday but I've found more that have worked than those that haven't)
I find that the ASX usually leads the pack (other indexes) on Monday so if you have a thesis or idea it can usually play out if you've done your homework.
Some ideas I've used over the last couple of months for Monday mornings.
- ASX Gold stocks were oversold Friday, Gold had a big move up Friday night.
- ASX Oil stocks were oversold Friday, Oil had a big move up Friday night.
- ASX Coal stocks overbought Friday, Coal dropped Friday night/Monday morning.
- ASX Iron ore stocks were oversold Friday, Iron ore went up Friday night.
- Indexes heavily oversold and with the absence of news they
should/may trend back up..
Sometimes you have to do a bit deeper digging into the FA, like news stories that might impact commodity prices, e.g. worker strikes, cycline/weather, government cuts/shutdowns of mines.
Once I have an idea I will then look through the stocks in that sector and find the best looking chart to take advantage off this idea/move.
Usually a stock that's heavily oversold/overbought and sitting on a strong support/resistance.
Then I will narrow it down to 2-4 and watch these on open.
(I will also watch and trade the index, ASX200 cash or other indexes with the best patterns)
I find the "bullish Friday night catalyst, oversold/bought stock strategy" works best with the early openers eg A-B, C-F as you can get into them usually before the 'herd'.
I've also found that about 80% of my 'Long' winners come from Monday...
As the markets have been so volatile lately, I've found that having patience and waiting for your setups has been the best course.
They will usually always go to your limit entry price, sometimes even lower
The times I've lost money or even made money on bad trades were from chasing.
You chase you lose!2 trades I took this morning,
APT and ASX200-cash both on IG markets platform.
I source my data from Iressview point for stocks and IG for indexes but trade IG platform mainly for the added leverage.
APT - 5 Minute chartThis wasn't the best pattern or the best entry in a chart but I was confident that the ASX would at least rebound somewhat after the initial drop so I took the trade.
The daily chart shows that $11.250 was a major support so if it got close to that or the SP built up a base near, I would take the trade (which I did).
- Entered on the green Pin Bar candle.
- Stop half a candle or so's length below.
I use the 9 EMA (Light blue line) for new entries or when I see a pattern developing (dark blue line). I enter or re-enter when I see 9EMA curling up underneath the candles.
View attachment 1399443ASX200 Cash - 5 minute chart.If you can see the 'flat top breakout'/ Ascending Triangle pattern about mid way up.
I missed the initial move up at the open but that was ok as I couldn't see any 'low risk' pattern for entry, plus the 9EMA was far away from the candles.
- First I looked at Daily, 4 hourly, 1 hourly then trade the 5 minute.
- All timeframes showed heavily oversold.
- I entered on the second red candle under the support line then entered again on the next candle when it touched the 9EMA. (both candles touched and bounced off the 9EMA.)
- Set my stop about half a candle or so under entry.
- Sold half when it hit my first already identified resistance target (first arrow and first target), let the rest ride.
- Kept the next lot running and probably could of re-entered more (but didn't) after there were 3 consecutive flat top break out patterns that followed.
- Sold the last lot when I saw the big red candle developing.... wondered wtf!
Then realised it was a short ASX trading day haha.
All in all this was the better trade of the 2 as more time frames lined up and the patterns were 'cleaner' looking.
View attachment 1399455I find the indexes/stocks usually don't hold too much baggage from the previous weeks move when trading on Monday's, it feels like there's a clean slate for the direction of trading. (if you have already identified which direction you believe it will go.)
Waiting patiently for the heavily oversold or overbought conditions have been great trades lately.
Being impatient and entering trades in choppy/sideways action from boredom has usually always resulted in a loss!
I use Stochastics 5,3,3 as a overbought/oversold indicator.
The stock market is an opportunity giving machine, if you're patient and stick to your plan you will be rewarded.
(20min delay)