swingin' the ftse: 2009

[tomorton]

I am thinking we haven't strictly speaking yet had a 3 day pullback to a swing low to signal a further long entry. Is that how others see the chart?

My 2 day swing chart showed a swing low in pullback 02/09, but I only went long at Close 07/09, as second strong Close above 14EMA forming a strong pattern with the previous candlestck.

We're above 5000 again and the politicians and journalists are lapping it up. If these big fat round numbers meant anything, why did we top out all-time at 6930.2?

 

[barjon]

tom

i see it same way - been plenty of oomph in the rally don't think i can remember a thousand points without a 3 bar pullback before.

i'm still smarting from closing out my main positions but that third i mentioned is still running so it could be worse.

good trading

jon

 

[tomorton]

Half of my 07/09 from 4933 remains open - I took half-profits at 4987 when we had a lower Close 10/09. The remaining portion will run until we close again below 14EMA. 4828 would have been the 'catastrophe stop' if we had not already gone up.

A close below 14EMA would be my 're-set' signal, waiting then for the following day to close below 14EMA for a short, or two consecutive closes above, in both cases only if the two candlesticks form a strong pattern, for another long.

 

[tomorton]

Broke my own plan, but to the cautious side, and closed the remaining long this morning. I say, Never let the profit go back into the market.

 

[barjon]

Broke my own plan, but to the cautious side, and closed the remaining long this morning. I say, Never let the profit go back into the market.

why that, tom? i got another third in at 4950 so two thirds of original running. stop zone 5070 - 5040.

good trading

jon

 

[timsk]

We're above 5000 again and the politicians and journalists are lapping it up. If these big fat round numbers meant anything, why did we top out all-time at 6930.2?

Hi Tom,
I'm great fan of round numbers and generally find them very helpful. They tend to be areas of interest because the smart mony knows that the less smart money makes their buying and selling decisions around them. So, in answer to your question, I can think of two possible reasons (I'm sure there are others) why the FTSE failed to hit 7,000.
1. Everyone expected at least a pullback at the big fat RN and bailed out early while they still had time to sell and someone to sell to.
2. Everyone was taking their lead from the DOW. It had hit a major big fat RN at 14,000 and duly pulled back. Upon the re-test, it was really struggling to breach that figure which meant that there wasn't really the opportunity for the FTSE to reach 7,000 if it was to remain in tandem with the DOW. This happens a lot on the YM. Price falls short of - or overshoots an RN, but the cash index has hit its RN and reversed or retraced or whatever.
3. Ideas anyone?
Tim.

 

[tomorton]

Hi timsk, where've you been?
1 and 2 both plausible. 1 is contrary to what I suggest, 2 is parallel -
1) RN's are so significant that their resistance effect is expected to be so powerful that nobody will risk still being long at 6999
2) FTSE RN's mean nothing, as a Dow RN can occur at any FTSE value.

 

[timsk]

Hi timsk, where've you been?
1 and 2 both plausible. 1 is contrary to what I suggest, 2 is parallel -
1) RN's are so significant that their resistance effect is expected to be so powerful that nobody will risk still being long at 6999
2) FTSE RN's mean nothing, as a Dow RN can occur at any FTSE value.

Hi Tom - I've been sunning myself in Andalucia for two weeks - sorry if I'm raking over old ground!

 

[mpat89]

Hi everyone,
Forgive me as I'm still quite the newbie. I make the current FTSE 100 uptrend as starting on 13th July. I have read T2W Day Trading & Forex Community articles/simple-swing-trading/ and note that to enter a trade 3 consecutive 'lower highs and lower lows' are required. Forgive me if I'm wrong but at no point between now and 13th July are there 3 of these consecutively. So how are you guys swing trading, what triggers do you follow?
Also, is it possible to swing trade using smaller time frames than one day?
Please forgive me for my lack of knowledge!

 

[barjon]

mpat

yes, you're quite right Any long position relied on the intial break of the last swing high in the previous downtrend (and should still be running).

You'll see from various posts that's why we've been occupying ourselves with intraday stuff where 3 bar swings still "work" (try hourly or half hourly, but are a lot less reliable)

good trading

jon

 

[mpat89]

aha. i see. thank you.

 

[tomorton]

Hi mpat89, thanks for calling in here.

The 3 lower highs and lows don't have to be consecutive and most people would regard the outside day opf 13/07 as a continuation of the downtrend. so most swing traders would have gone long on 14/07 on breach of the 13/07 high. Previously, I would probably have gone long on the 13/07 as the candlestick pattern formed a key reversal day and a whiplash day. However, I have been burned so many times by early signals that I have moved to a more cautious strategy than most visitors here, now looking for second consecutive close above 14EMA after close(s) below, with a strong two-day candlestick pattern - this would only get me in at 4:30pm on 15/07.

A late entry maybe, but less risky. This pattern also has printed two re-entry points since July - 19/08 and 07/09, whereas, unusually, the basic swing trading system has been a straight uptrend with no significant retracements since 14/07. I did enter long again on 07/09 but took a cautious view and exited near last week's high. Now hoping for a re-entry or a reversal (I will take either) but my simple rules will keep me flat until at least Thursday night. Either way, I would like a really bad day on the FTSE today, closing below 14EMA - sorry guys.

 

[tomorton]

Doh!

 

[Mr. G]

Swing Lows?

I've just posted this over on Wallstreet's thread.

Looking at my charts we have putative swing lows on the DOW, the Nasdaq 100 and the S&P. Buys above Friday's highs would appear to be the way to go. If the FTSE's low had been 6 points lower then we would have a putative swing low there too.

Any thoughts anyone?

 

[tomorton]

Hi Mr. G - Sort of agree but I think you're early with the signal. I draw the outside day pattern 23/09 as putative swing high on both Dow and S&P, so looking for another day's price action at least, making a lower low, before putative swing low. This will probably be well above previous swing lows, 02 and 03/09, and confirmation would suggest continuation of the uptrend - though it defies gravity, a signal is still a signal.

 

[Mr. G]

Hi Mr. G - Sort of agree but I think you're early with the signal. I draw the outside day pattern 23/09 as putative swing high on both Dow and S&P, so looking for another day's price action at least, making a lower low, before putative swing low. This will probably be well above previous swing lows, 02 and 03/09, and confirmation would suggest continuation of the uptrend - though it defies gravity, a signal is still a signal.

Tom - interesting that you define 23/9 as swing highs; are they not just highs for the current uptrend?
Taking Rivalland's definition we need a 3+ day pullback in an uptrend to form the swing low which we have had.
Or are you saying 3+ days after the day the high is made? I guess reading Marc's definition of an outside it is difficult to categorize an outside day that has made a new high as a down day, hence your comments I would imagine.

 

[barjon]

mrg

??

ftse reached a high for the move on 22/9 - there's only been 2 lower lows since then.

dow and s&p made highs for the move on 23/9 - again there's only been 2 lower lows since then. bit complicated since s&p was an outside day on 23/9 with the low juuust taking out the low of the earlier high point bar on 17/9. Depending on how you treat outside day you could argue that there's been 3 lower lows on s&p but, like tom, I'd prefer to see another one

good trading

jon

 

[tomorton]

As Jon says above, I take the outside day as a continuaiton of the prevailing trend - but here is a weakness in the strict Rivalland system - the close on 23/09 on both the Dow and S&P was as weak as it could be, and candlestick studies rather than HL bar charts would definitely count these patterns as bearish reversals - how could they possibly be bullish continuations?

However, if you're going to apply a system, you have to play by the system's rules. I will be looking for, on the FTSE, a lower bar than 24/09, followed by a stronger bar as a long entry signal. that said, I am also already short on a couple of mid-250 equities so really hedging my bets.

 

[Mr. G]

mrg

??

ftse reached a high for the move on 22/9 - there's only been 2 lower lows since then.

dow and s&p made highs for the move on 23/9 - again there's only been 2 lower lows since then. bit complicated since s&p was an outside day on 23/9 with the low juuust taking out the low of the earlier high point bar on 17/9. Depending on how you treat outside day you could argue that there's been 3 lower lows on s&p but, like tom, I'd prefer to see another one

good trading

jon

Jon - agree on the FTSE hence my comment re Friday's action.

On the Dow and the S&P, again I agree and I guess the crux of my question relates to how to treat the outside days. Given the close was very weak they could be down days but as they marked the high for the trend then is that right to do....interpretation, interpretation......

 

[tomorton]

Hi Mr. G - I agree outside days are open to interpretation and are not the best feature of Rivalland's approach.

Outside day 23/09 on the S&P was a Key Reversal Day - high above previous high, low and close below previous low, reinforced by string uptrend to that point. It was also a weak form of a Whiplash signal - the open should really have been above the previous high but the close was certainly down on the day and well below the mid-point of the range.

Short-term aggressive players would have taken 23/09 as a short signal on the close, with the previous high as stop-loss. The suggestion would be at least to tighten stops on any long position and prepare for a possible correction. That's exactly what happened. Rivalland's approach is silent on the warning signals from such a day: I feel it is better for traders to be informed and able to anticipate nasty shocks when these things come along and have sensibly placed stops or even take out some profits. After all, nobody knows whether 23/09 represents the conception of a retracement allowing a low-risk long, or the death of the uptrend