Potential swing trades
- Thread starter markrmau
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I've posted a handful of swing trade setups on my blog Market Ninja. Still investigating the system but it uses what is called the Traders Action Zone (TAZ) which looks for a specific pattern between the 10SMA and 30EMA.
CanOz
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markrmau said:
So how much of a retrace are you expecting? Personally i can't see it hitting my stop at 23.99 anytime soon. With recent events on the LME we may see a decline but i can't see it lasting.
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Mark are you expecting/hopefull that it will get down to the $24.50 level
Obviously with the carnage on the lme, bhp will drop today. It's hard to put a downside target on bhp as it really depends on what metals do.
2 risks as I see it.
1. Metals rebound sharply after friday's sell of - close position.
2. bhp has better than expected results this week. I actually think the results will disappoint though.
I would put a tight stop on though - around fridays close or slightly higher.
2 risks as I see it.
1. Metals rebound sharply after friday's sell of - close position.
2. bhp has better than expected results this week. I actually think the results will disappoint though.
I would put a tight stop on though - around fridays close or slightly higher.
Hello markrmau,markrmau said:
I salute your courage in posting your forecast, and accept that you actually made a call in advance to the best of your abilities, and that commenting on this later is far easier in hindsight, so please do not take my comments as criticism post the event, but sharing some ideas as a basis for discussion which I hope may provide alternative ideas for you to consider.
Playing the short side is an art. BHP was a tough call to make in the current situation, swing trading technically (using fundamentals, and long term approaches are a different game altogether).
I did have a time and price lock on it for a while (and RIO), but there are times wave structure, time and price methods, and straight technical analysis is difficult to use in situations like this. I do see a dominant cycle in BHP, and your post when you said you’d short BHP spun my head around, since I thought a swing/position trade short was highly risky given the work I’d done on it.
03 Feb was a minor increment in my system, and would have indicated support in time the way BHP traded into it. If it traded up, your call would have made more sense to me. But the price action on the day, and the previous higher lows from a key increment in time for both the major low, and the higher low yielded a bullish probability to me. But I didn’t trade this, oddly my analysis was for RIO to be the better pick, so I got this wrong too. I certainly wasn’t expecting the significant gap up that occurred.
To me this is still bullish, and expect BHP to reach one of the price targets around 23rd Feb ($32, 30.16, 31.07, 29.54). But there are contingencies for this. BHP may try to close the gap before resuming bullishly.
Your idea to short may come to fruition on the 23rd, but I didn’t see any lower highs, and obvious resistance in cycles, or in price from the way I look at charts to warrant a high probability short as suggested for 03 Feb. Sure, BHP in the daily is in a downtrend, but in the weekly it’s still in an uptrend (depending on your T/A of course).
Out of interest what was your method? The chart showed a major low, and higher lows, despite oil and metal prices… What was your rationale for this?
The big move down may come however, especially if the ASX tops around 24th Feb (or 1st April). This seems to be a key day to me. If the market pulls back hard from a high or false break around here, I think this could be significant. It is of course possible for pitch to keep on moving strongly bullishly, and if this is the case, all short bets are on hold again. But a lower high from a major high on the 24th Feb would signal the start of a strong bearish attempt to me…
I hope this comment and the attached chart are of interest… I especially marked up the chart to illustrate the point as simply as I could. Hope it makes sense…
Kind Regards
Magdoran
Attachments
Please, only read this if you are really interested in the finer points of this style of analysis…
I’ve been doing some research on this type of pattern, and I should explain a few things to clarify how I see the probabilities of how BHP may pan out from a position/swing trading perspective.
There are several caveats to consider here from the expected outcome:
Firstly, this type of pattern can behave differently when other cycles are in play, and occasionally truncate the underlying dominant cycle. This just means taking partial profits is a tactic which can be beneficial to reduce risk and lock in profits at points of risk (especially if using leverage), and recognising where these patterns may end prematurely in time, and price.
In this case there is a reasonable chance of a high coming in on the 11 Feb (reads Friday 09 Feb or Monday 12 Feb), or 20 Feb is an alternative fail point. This is based on two different cycles running concurrently through the underlying, and the phasing of the different cycles can effect the price action, hence I’m outlining where the expected main forecast has a probability of failing, and why, so it can be recognised quickly, and appropriate action taken (like winding out a position, or taking partial profits, or hedging in some manner).
There is also a rule I have for this exact pattern of resistance at a key price extension derived from key highs and lows in this pattern. This yields $29.77 (and perhaps ranging up around $29.95) as a potential fail point for a bullish drive should it continue. (There is a secondary and less reliable extension using micro extensions in the actual drive from the 08 Jan swing low – this yields $29.40 as a potential top – but this is much less reliable and I’m still evaluating this approach).
Secondly, the price action, and the pattern is central to evaluating entries and exits from this part of the drive. A long was signalled after 18th Jan using this approach which confirmed the 08 Jan swing low as a significant tradeable swing reversal.
Going long from this point or on a pull back becomes increasingly risky as the 23 Feb is approached. The price action with multiple higher lows and a bullish gap is currently bullish in the daily chart. But there may be an attempt to close the gap. If this occurs, and the attempt to fill the gap fails, this may present a long opportunity.
If the 28.31 - 28.33 resistance is broken and held (layer on it even better), this may also present a short term bullish opportunity.
Finally, any long initiated here, if swing trading, is quite risky. So profit taking (especially if a position doubles) is critical. I wouldn’t be holding a full position after 23 Feb because of the risk – if it spikes up bullishly, then a partial position may well succeed…
This bullish price action may also cease from this point, having hit key resistance, and hit a miscellaneous time point (this odd time truncation is really obscure, and took me a long time researching to figure out, but a fair percentage of this pattern type fails here). The price action in this case is so strong though that I give this a low probability of occurring, but I always recognise “anything can happen” in the market (Ala Douglas).
I hope that clarifies the fine detail for those who are interested, but as you can see, this style of T/A is very intricate, and I find it difficult to explain all the detail.
Regards,
Magdoran
I’ve been doing some research on this type of pattern, and I should explain a few things to clarify how I see the probabilities of how BHP may pan out from a position/swing trading perspective.
There are several caveats to consider here from the expected outcome:
Firstly, this type of pattern can behave differently when other cycles are in play, and occasionally truncate the underlying dominant cycle. This just means taking partial profits is a tactic which can be beneficial to reduce risk and lock in profits at points of risk (especially if using leverage), and recognising where these patterns may end prematurely in time, and price.
In this case there is a reasonable chance of a high coming in on the 11 Feb (reads Friday 09 Feb or Monday 12 Feb), or 20 Feb is an alternative fail point. This is based on two different cycles running concurrently through the underlying, and the phasing of the different cycles can effect the price action, hence I’m outlining where the expected main forecast has a probability of failing, and why, so it can be recognised quickly, and appropriate action taken (like winding out a position, or taking partial profits, or hedging in some manner).
There is also a rule I have for this exact pattern of resistance at a key price extension derived from key highs and lows in this pattern. This yields $29.77 (and perhaps ranging up around $29.95) as a potential fail point for a bullish drive should it continue. (There is a secondary and less reliable extension using micro extensions in the actual drive from the 08 Jan swing low – this yields $29.40 as a potential top – but this is much less reliable and I’m still evaluating this approach).
Secondly, the price action, and the pattern is central to evaluating entries and exits from this part of the drive. A long was signalled after 18th Jan using this approach which confirmed the 08 Jan swing low as a significant tradeable swing reversal.
Going long from this point or on a pull back becomes increasingly risky as the 23 Feb is approached. The price action with multiple higher lows and a bullish gap is currently bullish in the daily chart. But there may be an attempt to close the gap. If this occurs, and the attempt to fill the gap fails, this may present a long opportunity.
If the 28.31 - 28.33 resistance is broken and held (layer on it even better), this may also present a short term bullish opportunity.
Finally, any long initiated here, if swing trading, is quite risky. So profit taking (especially if a position doubles) is critical. I wouldn’t be holding a full position after 23 Feb because of the risk – if it spikes up bullishly, then a partial position may well succeed…
This bullish price action may also cease from this point, having hit key resistance, and hit a miscellaneous time point (this odd time truncation is really obscure, and took me a long time researching to figure out, but a fair percentage of this pattern type fails here). The price action in this case is so strong though that I give this a low probability of occurring, but I always recognise “anything can happen” in the market (Ala Douglas).
I hope that clarifies the fine detail for those who are interested, but as you can see, this style of T/A is very intricate, and I find it difficult to explain all the detail.
Regards,
Magdoran
tech/a
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Moggie.
Without confusing things with my analysis.(VSA Volume Spread Analysis) and just for interest.
BHP is at a crossroad. Conflicting short term signals.
The last day is bullish low volume testing the high means little or no selling supply.The 2 previous days Thursday sees supply with sellers winning the day.
Wednesday saw a huge day with heaps of volume taking all sellers.
The longer term trend is down.I expect the market to test the channel to the downside but its really up to Monday to disclose the markets intention.
Longer term I think is positive---shorter term negative unless we see supply being absorbed in tighter ranges or demand overwhelming supply.
I would personally not be taking a position until this is clear.But short term leaning toward a retracement and re test.
Without confusing things with my analysis.(VSA Volume Spread Analysis) and just for interest.
BHP is at a crossroad. Conflicting short term signals.
The last day is bullish low volume testing the high means little or no selling supply.The 2 previous days Thursday sees supply with sellers winning the day.
Wednesday saw a huge day with heaps of volume taking all sellers.
The longer term trend is down.I expect the market to test the channel to the downside but its really up to Monday to disclose the markets intention.
Longer term I think is positive---shorter term negative unless we see supply being absorbed in tighter ranges or demand overwhelming supply.
I would personally not be taking a position until this is clear.But short term leaning toward a retracement and re test.
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Hello daffy,tech/a said:
You may well be right. I do think BHP should retest the 08 Feb low. I expect the gap to be tested, but if it can hold, would see a bullish drive may end the move, then a more major retest post 23 Feb. Price action is the key to trading this long if the pattern plays out.
Another scenario is that BHP moves directly DOWN into 24 Feb from here, entirely possible with the 11 Feb termination/truncation of the cycle… Then this would become support in time, not resistance.
I suspect a brief bullish drive is more likely, if the window/gap is not closed, and a higher low can hold on a pull back. But I do view any bullish activity as a COUNTER TREND to the current bearish activity, and not the other way. I need more evidence to determine if the bullish trend has resumed, which currently I don’t think it has.
If the key resistance is broken there is also a possibility of a strong bullish push. If this eventuates, I think in the longer term this is likely to be exhaustive, and the way the bearish response pans out will tell us a lot about what is happening with the trend. A shallow bearish response would be bullish.
Post 24th Feb, I suspect we’re in for some kind of correction across the board in the XAO. But there is a possibility of a very strong exhaustive move up to end the bullish drive, and perhaps the entire 2003 onwards campaign. Hence I see a potential major correction in the wings. The possible collapse of the commodity markets does look possible in the charts. (so there is a chance of pitch overcoming the Feb 24 time target).
A lot will depend on how the price action pans out in the next couple of weeks. A lot of “ducks” are lining up (the EW term would be confluence). I’m not the only one seeing this either…
So, does that line up with what you’re seeing?
Regards,
Magdoran
This is harder than it looks to flesh out and make clear, isn’t it?tech/a said:
Yes, there are ambiguities, and agree it’s at the crossroads.
Magdoran said:
I do see a scenario where this is a top, and say a gap down happens, you could get a kind of island reversal here...
The commodity markets have taken a beating over the last few months. If oil and many of the metals continue down, I can conceive of a scenario where a rout happens if a panic move gets going... I think this is a very real possibility.
The question is, is there enough new money coming in from regular superannuation payments, as well as overseas investment, as well as investment funds in general to keep the bull market going?
If you look at the cycles in the weekly, between the 20th-24th Feb there is a “confluence” in time and price coming up... either I’m totally getting this wrong, or a bearish move of some sort occurs around this time.
My guess is an exhaustive bullish blow off into a high... but it could distribute up to this point and give a false break too, that’d be my second guess. If not these two, then my third guess would be we may see a crazy bullish drive which catches all the pessimists by surprise. The least likely of 4 scenarios is business as usual, as it has been going. If that happens, I will need to totally reassess my projections as the price action unfolds. It is possible for an extension in time to April 1, which is the next critical time I can see...
I think I need a holiday!
Mag
tech/a
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Really depend on your timeframe,Moggi.
Short term --- blowoff--- so Mark was a little early.
Longer term bullish so could be seen as a cheap time to buy in on the pull back for long term holds.
Short term --- blowoff--- so Mark was a little early.
Longer term bullish so could be seen as a cheap time to buy in on the pull back for long term holds.
Yes, Daffy,tech/a said:
Absolutely, different time frames are at work. I’m not sure if BHP is long term bullish or not (and which “long term” are we talking about???). A lot will depend on how the commodity markets pan out in say the next 3 months, and then how they recover if they pull back over the next 6 months to a year (that’s long enough in the future for me!). I have a suspicion that the economic slow down in the US may have a (negative?) mid term impact on commodities and commodity based stocks.
Also, the XAO/XJO are looking tired, and XMJ looks like it may rally up to a lower high and may retest (and even surpass) the current major low.
Looking at BHP in the weekly chart, wavepicker and I were discussing this at length, and painted a scenario where BHP continues bullishly very briefly, then pulls back to test the low. Where support comes in if this is the case will tell us a lot about potential time and price patterns and EW structure.
But my instinct is that there will be an attempt in the very short term to close that bullish gap. I suspect the bears won’t be able to do it, and the time for a limited long is on a higher low… but there is some risk of course.
A high that becomes a lower high to the existing major high may be bearish, and this whole move up may have been a counter trend to a bearish move… could also be the start of a bullish resumption… either way the pattern will give plenty of swing trading opportunities, but in each case I’d be gingerly taking profits since the market in this area is so volatile (I don’t know how people with large long term positions can stand the strong swings, and can tolerate the huge risks involved – they must have a very long term view, and really discount the possibility of an ’87 style crash).
Suspect some sort of pull back Monday based on the Friday night market action in commodities and indexes. Then a bullish attempt. The price and time increments are there, just have to interpret the price action within this playing field.
Regards,
Magdoran
Kauri
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tech/a
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Pretty right I think Kauri---even if this current possible wave 1 is not quite complete.
Will know tommorow but think its pretty well done.
Moggi interesting to see where the different types of analysis intersect.
Bit of Gann,VSA and Elliot.
Will know tommorow but think its pretty well done.
Moggi interesting to see where the different types of analysis intersect.
Bit of Gann,VSA and Elliot.
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SYD at $3.01. Would match up with its large Aug 2011 swing in size and time, making it a low risk entry.
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Toot toot.
Some new ones I like:
NST at current price
RED at 80c
RDF at current price
CXU at current price
BLY at approx 1.66
PVM at 57c
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RSG at 1.17
EVN at current price
OGC at 2.02
NCM at 20.20
EVN at current price
OGC at 2.02
NCM at 20.20
How do you guys find potential swing trade setups, do you use a screener?
If so, what kind of criteria do you had to it in order to get a small enough sample of potential lows/highs (depending if you're shorting or not) at swing points?
Always been curious over this.
I look at your recent recommendations, I do like them.
I was pissed off when I didn't get the break through resistance of CCL, it was such a easy picking as well I thought.
Thanks,
If so, what kind of criteria do you had to it in order to get a small enough sample of potential lows/highs (depending if you're shorting or not) at swing points?
Always been curious over this.
I look at your recent recommendations, I do like them.
I was pissed off when I didn't get the break through resistance of CCL, it was such a easy picking as well I thought.
Thanks,
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I look at the downwards legs back through a stock's history and get a feel for how far and how fast it can move from the most recent high pivot. Amibroker does most of this for me, but you can just eyeball it. Plot some pivot points on your chart. I like a stock to be ranging or in a long term uptrend - this ensures the nest swing up will be of decent size.
CCL was a very good candidate for a swing trade over the last few months.
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