Trading Help – Support 6435, 6388, 6326 Resistance 6503, 6525, 6538, 6553, 6558

Good morning. Well I wasn’t expected to see the bottom of the 20 day Bianca channel yesterday at 6447, but where did that bounce come from yesterday evening?! With all the Greek carry on recently China has slowly been worsening under the radar of the main headlines, but their session today was down 8%. Looks like the EU have had enough of Greece now and are saying conform of leave. It is a bit ridiculous really and I am sure lots are getting pretty fed up of it now. Even Obama chipped in yesterday and gave them all a clip round the ear with a message to sort it out. I think today will be another weak day as despite the FTSE climbing 100 out of hours last night the gains haven’t stuck. All in all, its certainly not a time for calm controlled trading!

US & Asia Overnight from Bloomberg
Asian stocks slipped into a correction, with the regional benchmark index falling 10 percent from its April peak, as Chinese shares extended a rout and European leaders gave Greece until Sunday to submit a new set of reforms.

Chinese brokerages Huatai Securities Co. and Citic Securities Co. slumped at least 16 percent in Hong Kong, leading losses on the regional benchmark index. Hong Kong Exchanges & Clearing Ltd. dropped 7.8 percent, heading for a record ninth day of decline. Fortescue Metals Group Ltd., Australia’s third-largest iron ore producer, sank 3.6 percent as the raw material used to make steel dropped below $50 a metric ton for the first time since April.

The MSCI Asia Pacific Index dropped 2.1 percent to 140.59 as of 11:11 a.m. in Tokyo. Investors are flocking to assets that offer some safety amid speculation that China’s stock rout and Greece’s possible exit from the euro are beginning to infect global markets. The Shanghai Composite Index slumped 4.7 percent, while the Hang Seng China Enterprises Index of mainland shares in Hong Kong fell 5.3 percent.

“China’s stock market rout is now spreading to other financial markets, creating a sweeping sense of panic and a liquidity crunch,” Zheng Ge, an analyst at Wanda Futures Co., said by phone in Beijing.

Greek Crisis
Sunday now looms as the climax of a five-year battle to contain Greece’s debts or see the country exit the currency union, potentially splintering a currency that was meant to be irreversible and throwing more than a half-century of economic and political integration into reverse. German Chancellor Angela Merkel conceded that she is “not especially optimistic” that a solution can be found.

“The Greece crisis has been causing volatility,” Steven Milch, chief economist at Suncorp Wealth Management in Sydney, said by phone. “A negotiated outcome is better than a chaotic outcome that might arise if they exit from euro.”

Hong Kong’s Hang Seng Index decreased 4 percent. Japan’s Topix index lost 1.7 percent as the yen gained. South Korea’s Kospi index slipped 1.1 percent. New Zealand’s NZX 50 Index fell 0.3 percent Australia’s S&P/ASX 200 Index slid 1 percent. Singapore’s Straits Times Index declined 0.8 percent.

China suspended initial public offerings and brokerages pledged to buy shares in weekend measures aimed at halting the market rout. Mainland shares posted their biggest three-week slump since 1992 on concern leveraged traders are liquidating bets after valuations exceeded levels seen during China’s stock-market bubble of 2007.

E-mini futures on the Standard & Poor’s 500 Index fell 0.5 percent today. The underlying U.S. equity benchmark index gained 0.6 percent on Tuesday. [Ref]

FTSE Outlook

FTSE 100 Prediction for trading help
FTSE 100 Prediction for trading help

Interesting week this one! Will Greece be “saved” or kicked out of the Eurozone? What does it mean for the rest of the Eurozone – beginning of the end? Spain, Italy and Portugal will be the next ones to watch, along with the UK maybe jumping ship too? Anyway, for today we have the pivot as first resistance at 6503, though I think we may see a bit of a rise towards the top of the 10 day Bianca channel at 6558 – a level that will be worth a short. I didn’t expect the bottom of the 20 day at 6447 to hold as well as it did yesterday and that rally was a little bit odd, especially out of hours. Had a feeling of “must not let it drop” about it….. Prior to the 6558 level we do have the 200ema at 6538 currently which has acted as good resistance recently – twice dropping off it this week, Monday and Tuesday. Initially I am thinking at 6479 will hold as support for a push to at least the pivot, and maybe higher. There is a fairly decent 30min channel today, with resistance at 6551 and support at 6385ish – tallying with the bottom of the 20 day Bianca again, 6388.

Looking at the 10min chart, 6470 marks the bottom of a declining channel – if that breaks then 6440, 6388 are the next supports to look out for.

60 Comments

  1. Tmfp, I finally can see why you had mentioned a target of 6300. Was looking for answers in the wrong timeframes 🙂
    cheers!

    1. No prob icarus, mine’s a bit back of fag packet sums, would be interesting to see your interpretation.

      1. We’re sedate compared to China and Hong Kong lol.
        It would be a mistake to ignore what’s going on over there.

          1. Is that how you plan to start your next seminar?
            “Good afternoon, ladies and gentlemen. Basically, if the engine room goes down we are all f*cked”.

            LOL

  3. Good bounce off Nick’s 6435, out at 60 and looking to short around 70, 15 point stop.
    Last night was funny in hindsight, me and Senu running round like headless chickens as that bullsh*t rally just kept going and going lol.

    Seasonal VIX chart looks interesting. 15=about 5%~100 pts on S&P=new highs or Jan lows from here

    http://i.imgur.com/7gzZT9g.jpg

        1. out, should have taken a few when 60 failed twice, drifting now.
          If we get through 60 properly will be interesting to see if it’s got the muscle to have a go at the highs, otherwise another look at 35?

    2. Stop killing rise I think last night. Burnt the longs on the way down, then rose to stop the shorters. 6388 today? I was a bit too optimistic this morning but that 6440 held ok.

      1. Apparently a lot of these HFT programs do a switch around to an opposite position when they are stopped out. I suppose other HFT programs recognise this and trade accordingly, which would fit in with last night’s DOW like you say.
        The Battle of the Machines.

      1. Sure, my default basic set up is 1min 10 period.
        I will just about always open positions of one trading unit at readings of 80 or <20 in a ranging market. I close when I feel it's right, usually too early lol, but it ain't a profit till it's taken.
        Confirmations from 3 and 5 min increase the size of the position up to three units, as do other confirmations like resistance, stochastic etc.
        Be aware of the time factor. These are very short term trades which lose their relevance quickly.

        1. If you understand coding Hugh’s Wallace and Gromit system seems similar, I think he’s happy to share it.

          1. Hi tmpf & dc – On IG Indicator alert set
            1 Min
            Cooking with Gas
            RSI 6 >80 + RSI 17>70 + RSI 31 >70
            Oversold
            RSI 6 < 20 + RSI 17 < 30 + RSI 31 <30
            All must match to create alert.
            The RSI 31 is the sticky one – stops the alerts unless very extreme price movements – e.g. last night and this morning.
            For shorter term – quicker trading the 6 and 17 seem good (both have to meet the conditions).
            tmpf – I've learn't alot from your style of trading – so big respect – "peak" (that's the new trendy saying apparently by the way ….)

          2. Hugh, may I ask what exactly is RSI 6 >80 + RSI 17>70 + RSI 31 >70
            Does it mean rsi 6 periods > 80, rsi 17 periods > 70 etc?

        2. Thanks for that.

          I suppose the key question is: “How do you determine whether you are in a ranging or trending situation”.

          That can be quite a tricky judgment. Do you just assume ranging and take the loss when you are wrong?

          1. Basically yes, just do it.
            You have to psychologically accept that you will always be going against the prevailing move. That takes some adjusting to.
            Stop losses are tricky too, because the rsi is only going to say it’s better to increase your position not exit it when you’re losing.
            I automatically put on a 20 point platform stop in case the world ends, but play it according to circs otherwise.
            In practice, 12 points is about the max I will run solely on 1min rsi. You can always go straight back in again.

    1. Yes Hugh thinking the same here. We have two short term uptrends at 71 (just being tested) and 63 atm, if they go it’s a triple top and a test of 50 for me.

      1. I think there is some conflict going on here – as Mika pointed out – US down and possibly just the right time to take it up to the open …US down from last night’s close 138-167 points – but still hasn’t tested yesterday afternoon’s low at 17475

        1. So Higher Hi & Higher Lows ( 1min Chart ) – but is buying this break out 6473 the alternative ?? I’m not convinced…

        2. 17600 was being touted as important support and it went through that with no prob by 135 points, became oversold and bounced as often happens, although 17800 was a lot more than expected.
          Now we’re back around 17600 again. If it holds for the rest of the week, then yesterday’s breakthrough can be discounted. If it fails and closes below 17600 then 17200 is on the cards.
          imo. 🙂

          2. 68 also surviving uptrend line, which it just bounced off.
            Running out of momentum, being supported by DAX which is still 30 off its morning high.

  5. I cannot see the dow open nearly 200 points lower as the spreads suggest, but then will we see another meltdown as soon as it opens? China is not the headline but its certainly up there with greece

      1. All I see is a bout 2 minutes airtime on China followed by 30 mins on Greece. There’s nothing more to say beyond they’re waiting on each other. I would have thought a China meltdown was much more significant than the Greek tragedy

  7. Thanks for your insights and time TMFP.

    What do you do when the RSI is not getting to 20/80?

      1. You can change the entry levels according to whatever you think.
        E.g. the 2 minute has been bouncing off 40 rsi for the last 2 1/2 hours, look to buy at that if other input tells you the rally is likely to continue.

          1. Yes and no. It’s a pretty simple rigid system so you have to apply it that way, but not blindly.

          2. I don’t only trade my system, I also do “hunch” trading which obviously sometimes has rsi influence.
            I keep separate accounting for the different trades.
            System is winning so far this year.
            Would have been different if I’d kept my big MP 6620 short stop at 6720 and not lowered it to b/e in a moment of weakness, but I’ve got over that.
            *bangs head on wall and kicks cat*

  10. Nick didn’t get it right with arrows yesterday. I felt it and didn’t trade. Glad I did.

  12. I know it can’t happen every day, but it looks like it’s setting itself up for downside into the close again.
    Only 1 point divi, maybe at test of 70?
    Short at 91 9 point stop

      1. out for nowt, never really got going today

        No aftermarket for me today lol, see you tomorrow

          1. Cheers Nick.
            The NYSE problems don’t seem to have caused any panic, IG still trading.
            WSJ and United Airlines too, bet the Chinese get blamed.
            Goodnight.

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