Support 6285 6250 6210 6190 Resistance 6319 6339 6341 6375

Good morning. Thats 6380 short worked out well, nearly running all the way to the 6290 target in the end. Thought 6340 might have provided better support than it did on the way down though. The bulls fought back from 6300 to retest 6360, but overall the bears where in charge yesterday and could be for a few more sessions yet. We are around the 6290 area now, though I still think shorting the rallies is the best option for the short term. Yes terrace main UK news was that consumer prices slipped to their lowest level since April at -0.1pc on the back of falling energy costs and sluggish growth in clothes prices. But in more encouraging signs for the economy, core inflation – which strips out volatile elements such as energy and food – remained unchanged from August at 1.1pc. Economists now expect inflation to start bouncing back at the end of the year, as the commodity price fall stabilises.

US & Asia Overnight from Bloomberg
Asian stocks dropped for a second day, tracking a decline in U.S. equities, as investors awaited Chinese inflation data amid renewed concern about the slowdown in the world’s second-largest economy.

The MSCI Asia Pacific Index fell 0.4 percent to 132.35 as of 9:00 a.m. in Tokyo. Global equities snapped their longest rally since February on Tuesday and the Standard & Poor’s 500 Index fell from a seven-week high amid a plunge in Chinese imports. Investors will be watching Wednesday’s consumer and producer prices data to gauge how weakness in China’s economy will impact the global economic outlook.

“The cautionary element in the market is likely to continue,” Chris Green, an Auckland-based strategist at First NZ Capital Ltd., said by phone. “In terms of global growth the risk is skewed towards the downside. A softer read on the Chinese inflation data reinforces the backdrop of deflationary pressures and a softer growth profile globally. The Chinese economy is probably the largest risk that the global economy faces.”

Japan’s Topix index lost 0.8 percent. South Korea’s Kospi index slid 0.3 percent. Australia’s S&P/ASX 200 Index fell 0.3 percent. New Zealand’s S&P/NZX 50 Index added 0.4 percent. Markets in China and Hong Kong have yet to start trading.

The Shanghai Composite Index gained 0.2 percent on Tuesday, after sliding as much as 1.1 percent, as investors weighed the prospects of stimulus measures after imports fell more than estimated. FTSE China A50 futures advanced 0.4 percent in most recent trading, while contracts on the Hang Seng China Enterprises Index added 0.2 percent.

Chinese Inflation
Chinese consumer prices may have risen 1.8 percent in September from the previous year, according to a Bloomberg survey of economists and analysts, against a 2 percent increase in August. Producer prices may have dropped 5.9 percent, the same as the previous month, the survey showed.

E-mini futures on the S&P 500 were little changed. The underlying gauge declined 0.7 percent on Tuesday as industrial shares sank and selling picked up in biotechnology stocks.

Traders are now pricing in a 37 percent chance of a Federal Reserve interest-rate increase by December. [Bloomberg]

FTSE Outlook

FTSE 100 Prediction
FTSE 100 Prediction

I am thinking a similar pattern to yesterday with an initial rise to the resistance levels at the 6320 area, before more downside. The Dow failed to really break the 17150 level after that spike there on Monday night, and a move down to 16500 looks possible, which would take the FTSE with it. As such I am favouring shorting the rallies at the moment and we have a pretty decent declining channel on the 10 min chart at the moment. With the daily pivot at 6319, and the 30min coral as resistance at 6315 I think a short around this area is a good initial play. On the 2 hour chart there is resistance at 6375 which is worth a short but I don’t think the bulls are strong enough now to get there, but worth shorting if they did.

143 Comments

  1. Morning.
    Well I got my overnight weakness and covered my remaining short, but got a little overexcited on the bear side and have given points back on a couple of top picking attempts on this strong rise back over 6300.
    Very difficult to pick, but like Nick, I prefer the short side and just trying again at his 6315 level, very short term overbought too.

    1. Morning,Thanks for pointing out that exhaustion candle yesterday.Did say so yesterday,but the post never appeared.Heres to a good day.

    2. Took +15 ,probably too early, but I think the bulls will want to defend 6300 after being caught having a lay in earlier.
      It’s also the lower end (99-12) of the 09.03 3 min candle, my fav new toy.

      1. 🙂 I’ve never tried that tactic.On the 3 min chart I lke the 3ema above/below,but obviously that only works as an indicator if we are going up or down and then only if it isnt forming Pennants or something like last Friday afternoon.

        1. I like it because it wiles away the sideways action, is limited risk, keeps me interested and, like yesterday, can be spectacularly profitable.
          I have a little 01 40t stop long now looking for 7 or so. It all adds up. 🙂

          Edit kerching 🙂

          1. But had a feeling it wasn’t going to last this time.
            Now back in my all too usual situation, bearish but not short, in a vulnerable looking market. 🙁

          3. I’m trying to stay away from what I call Armageddon Thinking i.e. immediately expecting weakness/strength to develop into something big and chasing the market, but if we break 80 and DAX 9910, then I think another short is in order.

            DAX is looking a bit frisky though.

          5. LOL you can see them everywhere when you start looking. New toy. 🙂
            I’d say no in that instance, I look for exhaustion candles which usually come with extreme rsi.
            Today’s 3min 0903 showed the breakout aspect, when the bottom level broke (00) then it dropped nearly 20 pts quickly. Also the upper limit (12) was tested in the two following candles and they failed to close above it.

      4. Morning tmfp I don’t fully understand this pre engulfing 3 minute candle theory that you are successfully using,I am going to see if I can understand it better and re – read your posts yday, Once the penny drops I will be fine but I’m scratching my head at the moment.GLA.

        1. Morning Hugh, if it’s easy enough to explain without it being a pain to you could you explain the RSI trios you mention please ,that and tmfps 3 minute candle theory I don’t understand.I realise it’s hard to explain in a short few words so don’t worry if you are to busy GLA

          1. Here you go Anstel….
            RSI TRIO
            Set it up on the IG Platform as an alert.
            All – 1 min
            RSI 6 >80
            RSI17>70
            RSI31>70
            &
            RSI6<20
            RSI<30
            RSI<30
            All have to meet the condition for signal.

          2. Look at today’s 0903 candle (IG). Range 13 pts, high rsi, accelerating, all move exhaustion pointers.
            The following sideways movement should be contained within the parameters of that candle’s range i.e. 99-12.
            A break of those numbers signifies further strength or end of trend weakness (today), whereas, like yesterday, every time it bounces off the hi/low can confirm a sideways scalping range developing.

          3. Yes tmpf – Thanks for explaining.
            9:03 Candle I’m noticing – over extended from 19 & 39. RSI6 (1Min) >90.
            (The RSI Trio picked this up as well)
            Perrrrfect Entry in hindsight.

          4. Thanks tmfp I get it now,it’s basically a way to estimate the trading range for scalping and if it breaks out we need to recalibrate got it thanks,I’m not using The IG platform but understand now thanks.GL.

          5. Anstel…
            I’ve used lots of different platforms – you’re missing out not using IG. If you’re in it for the long term – you might consider it. I could probably list any number of reasons but …it’s just the best.

      5. 🙂 Thanks,new toy,yes I want one too 🙂 I saw City had just over 60% of clients long this morning so I was thinking that might indicate a ranging market with a down bias,now I have a confirmation bias.

        2. I file those under bogus stats WSF. All it means to me is that X people will be right or wrong.
          If it said 90% long or something like that, then I’d short it 🙂

          1. Interesting thought on the number of clients long or short etc,it might tell you how many clients on a percentage basis are long or short but there could be as an example 10% of the clients with 90% of the monetary position size and as we know it’s not the number of individuals it’s the amount of capital flow that moves the market. Just my thoughts hope it helps.

        3. Yes,but with the 90 rule with SB co’s being 90% of Clients lose 90% of their money in 90 days (allegedly that’s their rule) it’s probably safest as a contrarian indicator either way 🙂 like the suggestions in their daily email where they often seem to have the Dow moving the opposite way to other markets

  2. Seems to me …. in the Shorter time frame …we’re all a bit weary of
    being caught off side.
    The 19/39 EMA on a 1 min is a good bias indicator – as is the
    RSI31 above or below 50 on the 1 minute, is also good.
    Even then – entry is key and the RSI 6 on the 1 min is a good
    place to start >80 or <20.
    Alot of times – I find my bias may be right – but my entry is rubbish
    and when I look at the RSI 6 I find I’ve entered right at the top or
    bottom.

    We do need more strategies on here…!
    If I was to ask “what your trading strategy is – can you tell me
    ??
    What do you look for ? What proceeds the entry?
    It need only be a couple of lines – otherwise it’s possibly too
    complicated.

    For me personally – I’m pleased with the RSI Trio and it’s worth using
    on a few other things although it’s worth getting to know how it
    behaves a
    little with other instruments.
    My main issue with it – is that it’s a counter trend indicator
    (trading against the trend) – I’d like to find something that is Trend
    Based and that I’m happy to use. I think I have to accept that Trend Based trading is going to carry larger Stops.

    Any thoughts welcome.

    Ho hum…

    1. Those are always the Posts that never appear,ZigZagger (?) on Friday,I think,was talking about financial Astrology and then the board went dead for hours.I actually do think Eclipses are as reliable an inflexion point,say a week either way,as as a H&S,but maybe I am bad at spotting H&S’s and Eclipses are easier to see.

      1. LoL … I like the eclipse New Moon ideas more as a muse ..then I forget about it….
        What I think I’m driving at is that we need to drill down from the largest time frame to the smallest time frame.
        When you’re watching 1 min – 5 min – 10 min charts it’s very easy to forget to look at 1 hour – 2 hours charts which should set up your bias.
        Just looking at the hourly chart below tells you the trend & trade bias = Sell the rallies up to 6319 .
        If the green line breaks – it doesn’t necessarily mean a trend change until it repeats.
        – all I’ve done is draw 22.5% lines on each swing.

        http://td.md.it-finance.com/ProRealTime/display_chartimage.phtml?name=nqj7icjwwjup8ssvmmg3iivq3&type=png&purpose=file

        1. Sorry Hugh,got you 🙂 and wrote a long answer and lost it .
          Cliff notes highlight version:
          Working on improving my short term.
          I start the day with Week,Day,8 hr 4hr 1 hr,below that = not my strength,but your 6319 from hrly = my 6318 8ema on Daily,so we can get to the same place.I like 8 and 3 ema’s on multiple timeframes and want to know where key Sma’s are on weekly ,daily etc etc
          Patterns: Triangles,Symmetrical,Ascending,Descending and Pennants are things I wont trade against short term.A bad Pennant = a Flag,same rule.
          Peter Brandt says people know Patterns + Machine trading so not as useful as they were,but I think those are,fear/greed etc etc .Brandt trades major patterns on very large Timeframes nowadays,but he has the money for that.I have to go out soon so hope this thread continues later.

  3. Thanks Hugh Please excuse my lack of knowledge here, am I right in thinking this……..we are using 1 min chart I get that, RSI 6>80 ? Does that mean the 6 period RSI and bought to a strength of 80.RSI 17>70 the 17 period bought to a strength of 70 and 31 bought to a strength of 70 and if all three of the conditions meet its a signal to sell short? And the other three using a RSI period of 6 for a buy signal. Thanks for this Hugh I have lots to learn.

        1. No worries Jack I’m inexperienced also,try putting an RSI (relative strength indicator) on your chart.a standard 14 period and when you get a nice big green mountain above the top line of 71.6 watch what happens ……it usually sells off to some extent.the extent it sells off is dependant on the underlying strength of the upward momentum so just watch what happens and you will get the idea,hope that helps GL.

          2. OK, Thanks. I use RSI all the time and for me the importance is 50 dividing line for extra confirmation, but it’s not my major indication. But thanks for explaining that.

      2. Hi Hugh thanks for your help,I think sometimes inexperienced traders don’t like asking question for fear of looking foolish but that’s how we all learn.I just use Bog standard 14 RSI ,standard SMAs and Macd and try and combine it with a feel for the market, I think 90% of trading is controlling our fears though,i think it’s a mental game as much as anything else.I like a man called Rande Howel a trading psychologist on you tube,have a look if you get chance.GL.

        1. Not wishing to but in, but I will.
          Conquering fear of failure is obviously essential, but it can mean inappropriate stubborness and a ‘small profit, big loss’ syndrome.
          Using indicators puts a numerical value on your confidence in a trade.

          1. Thanks tmfp I’m really on the fence at the moment with the market volatility we are experiencing.you are right about the small profit big loss syndrome,I just don’t know what the best way of trading is I really don’t it’s so damn difficult.

    1. No mate, stopped out.
      It’s an After the Lord Mayor’s Show day for me.
      Everything turned to gold when I touched it yesterday, but I can’t get anything right today.
      Just made a cup of tea and poured boiling water down my leg.
      Pretty much sums it up.
      🙁

          2. Looks like the reverse of what i thought was going to happen has happened. I now plan to leave the trade past 1.30 and see what the figures are when they’re released.

          1. It was worth waiting since 9am and even closing my early short at 9.06 from 9962 for a couple of points only. I calculated the rise wasn’t finished yet.

    1. Anstel
      – Are you trading what you think ?
      – Or –
      – What the charts are telling you ?

      Subtle difference…..

      1. I look at the charts quite a lot,like eg the Dow 1 hr the 200 sma is approx 168750 and the other SMAs are in compression which is dangerous but I look at how we got that strong rise last week above 17000 and that also influences my decisions.A lot of the time I then put a trade on based on how I feel and where I think the market will go.

        1. Just to continue Hugh I look at the 10 min 5 min and then the 1 min like now for example we have been up to and just past 17095 on the Dow,just before the retail sales came out at 0.1 compared to consensus 0.2 it dropped at that point but I don’t think that it’s going to stop that positive sentiment returning and push it back up towards 17100 a bit later on.im wrong a lot but it’s just how Im doing things today

      1. Yes it’s 17049.9 hugh and I have a second position also at 17042. It’s a little warm in the kitchen at the moment!!

          3. DOW’s trying to get some traction off 60 but I think it will be shortlived
            took +7 anyway
            Better feel tmrw hopefully, cheers all

  26. Thanks tmfp – just looking – to get a rhythm – we need to break > 17012.
    Everything seems to be restricted by the 39 ema on 1 min

    1. Missed the 1st >80 when it was a nice RSI6 >80
      2nd on the phone…!!
      Closed at b/e . Dull
      When you think about it – we’re calling a top on this at 6285 are we ??
      I don’t think so …..

      2. Woah trigger, I was only asking because I was interested in how long you estimate that trio-inspired move is good for?
        When you pointed out a while back that I get good entries but take profits too soon, I was going to say, but didn’t, that one of the reasons is that the signal (usually rsi) that triggered the opening had only a short shelf life without other indicators to back it up. Hence being happy to take +5 off the back of a short duration signal.
        Whether that move then develops further has nothing much to do with the original reasoning.
        So, back to the top, does a trio conjunction have any bearing on things after, say, half an hour?

        Re: calling a top at 85, this time of night the FTSE is incidental, you’re trading the DOW with different numbers.
        16960/17015 appears to be the current range, is it a bottom forming or a breather on the way down?
        I don’t think there’s much support before 16800 and the daily has petered out overbought and topping at 61.8% so I choose the latter, with the proviso that I’ve been “Armageddon Thinking” all day and my judgement isn’t very good atm.
        🙂

      1. looks like it is forming a continuation pattern on the 3 mins to me too,if it doesnt turn here I will short it.It doesnt seem to want to close above any of the EMA’s it’s been under on the way down….maybe spoke to soon 🙂

      1. That’s interesting to see,Thanks,sorry I was trying to relate it to levels on the Dow chart at the moment.Basically where we are now I think.

        1. Well I’m stuck staring at this climb looking at where it might turn 🙂 I have noticed 17085 has been a bit of magnet lately,so maybe I’ll see what happens in the 50 area if it gets there,but hopefully it wont.

          1. If it stays turned back from 17033 that’ll be a 50% dead cat of this session’s drop 17113/16953.

          5. Might be a false memory,but I thought 50 wasnt a Fib number and it is in the retracement sequence due to Gann.

          6. Oh ok, I didn’t know that. I thought the golden ratio translated into 38.2 and 61.6% which average 50%.
            Gann does use 50 degrees, but obviously 45 degrees has a 2:1 (50% ratio to 90).
            Bit geeky….
            Dinner time

            🙂

        2. All i could see with a quick look at Investopedia is,”many traders also like using the 50% and 78.6% levels. The 50% retracement level is not really a Fibonacci ratio, but it is used because of the overwhelming tendency for an asset to continue in a certain direction once it completes a 50% retracement.”
          Think I am remembering a verbal lesson,so it might not be true I’ll look it up later.Cant remember anything useful 16952 so it worked though 🙂

          1. 🙂
            Hugh,thanks for that Renko chart by the way.
            I always appreciate seeing the charts you post I’m sure everyone does.

      1. Yup me too, I’m debating whether to take a huge +100 at £1 pp on that dead cat DAX short lol, or do I wait for a last 10 minutes meltdown to the 16800’s?

  33. Got out at 900 on the first touch,so just watching at the moment missed that move back from 934 to 900.

    1. WSF – I mentioned earlier – have you got the RSI 6 up on a 1 min.
      Puts your head in the right space I think…!

        1. Thanks I see what you mean I’ve saved it as a Chart Profile with the other stuff I had on Screen and I’ll watch it.It would have been useful this evening I think.20 sma on the one minute this evening looks like it could have been worth watching along with it,in the last hour anyway.

        1. Thanks,that looks good I’ve saved it.I need to put some hours in to looking at these things.Were you running an EWT count on the FTSE the other week?and was it you who posted the Muathe video rec ?

          2. Yes EWT is a thing that always seems easier to see afterwards for me too.Well we came down from the base of the previous trend,but it doesnt feel right somehow and I’m not expecting this to fall as far as it should until after the U.S election.One way or another.Thanks for the Charts and the RSI tip,if you didnt tip the weekly Eric Muathe Video they are a good break and a good frame of mind thing on a Sunday too I think.He has a page on YouTube.

Comments are closed.