Swingin' the ftse 2010

[tomorton]

Interesting - what level are you long at?

I have a buy above yesterday's high.

I have no entry targets right now: what I should have done was trade the plan, i.e. go long on Wednesday at the breach of Tuesday's high, as this was the swing low, and not get tricked out by overnight volatility that is not reflected in the charts that are the basis of the system.

The high of the swing low is a significant resistance level but going long based on the high of the day after the swing low doesn't ring any TA bells for me. I am going to sit around (actually, get on with my real job) and await a further entry possibility (maybe a short below today's low, who knows?).

 

[wallstreet1928]

FTSE 100 weekend analysis and your thoughts on the direction in the week ahead chaps and chapess's

BP should dictate any moves?

5250-5300 should hold as solid resistance in the week ahead!!

200 MA to suppress the bulls

alternative views welcomed, especially swing traders as I am more of a 30-40-50 point guy intra-day trader !!

 

[tomorton]

Hi ws - Personally, have pretty much given up predictive TA as an interesting diversion, but not profitable when conclusions converted into positions.

So I anticipate going short tomorrow at appr. 5116, stop at 5185, initial target 5047.

However, I suspect you're right about the overhead resistance. It looked until recently like we were heading through a descending wedge but now seem to be ranging. Very good BP news or very bad BP news could well be the key to the eventual escape direction.

 

[tomorton]

Hanging man, overprinting putative swing high. Could be a good short tomorrow below 5165.

 

[heavy_a24]

Where do you think it will go from here? So are you saying if it falls below 5165 then its a good opportunity to short?

 

[tomorton]

Yes, maybe allowing a few additional points drop for clarity, if it drops through 5165 I shall short it, with 5215 as the stop. We might breach 5165 very early, say before 9: I always try to ignore early trend-joining signals like that as they tend to be unreliable. If price drops, it seems to have little support until 5040-5030.

 

[tomorton]

Little bit of rough and ready backtesting of Key Reversals on the FTSE100. These are swing trades initiated long when price closes above the previous range, having traded today below it, or short when price closes below the previous range, having traded today above it.

Assume Key Reversal day's range from entry as both stop and target.

How many Key Reversals occurred 01/07/00 to 31/12/09, 9.5yrs/114mths? = 129, about once per month
How many made the Key Reversal day's range as profit? = 53 (41%)
So, what risk:reward ratio is required to make this strategy break even? = 1:2.5

Some Key Reversals heralded spectacular market moves but, despite being welll known, it seems clearly an infrequent and unforgiving signal on our index.

 

[tomorton]

Difficult price action today - technically, the short signal triggered very early, but as I said last nght I try to avoid acting on signals pre-9:00am. Waited for confirmation of the signal later but this never came as price rose steadily: in fact we have now an outside day on yesterday's range, which would be suggest a continuation of buying pressure from the wing low last week.

I'm not happy about going long so far above the swing low on an upleg built on low decreasing volume, but, if you want, there might be a choice of two long swing signals today - key reversal, if we finish above yesterday's high, and whiplash if we close above the 50% mark of today's range. Think I'll remain in cash and wait for a short.

 

[tomorton]

Morning all.

We have gapped above yesterday's high to open around 5252. This suggests two possible short entries will be available at the close IF these patterns are confirmed -
close is below 5252 and below the 50% mark of today's eventual range (whiplash)
close is below yesterday's low of 5156 (key reversal)

There's always room for an alternative view and you might regard a low close on another up day or on an outside day in this continuing upswing as a bonus, allowing an entry or re-entry at a discount.

 

[tomorton]

Most of the day it looked like we would have a whiplash but buying kicked in at 3:30 and took price above the closing confirmation level. Today's another putative swing high, and still didn't breach the last, 5263 03/06. A narrow range day too.

Hoping for a down day tomorrow, or maybe a true whiplash or key reversal to get me in short.

 

[vocalist]

Hi Tom. All the major markets are now trending up except the ftse. Would you still take the short on.In MR's book he states intermarket checking is needed but at the same time he says he takes every ftse swing trade on. The markets are looking a tad overbought short term so maybe a ftse short is possible with say 100 points gain then lower stop to entry. Ash

 

[tomorton]

Hi Ash - I wold take the short, yes, anmd 100pts would be ebough to make me smile. It would be correct to be still long at this point from 09/06, when the buy signal was quite clear, and the swing low it came off was helpfully higher than the previous, 25/05. However, I am already out of that long and I see it as too late to re-enter long now. I hate going long on a high price.

 

[vocalist]

agreed

 

[tomorton]

I have followed MR's methodology (not always religiously) since I first heard of it but it is not strong on exit or re-entry. Exits are covered and the method here would work well enough most of the time but its not derived objectively from the TA entry signal and is therefore somewaht arbitrary: we also have some bad years using MR's swing trading as you will see if you hunt back or backtest.

Its also light on re-entries into the same swing. Basically, if you missed the entry day, usually the day immediately after the swing day: strictly speaking, that's it until the leg retraces or reverses. Its frustrating to miss that one day and then see a 20% price rise in a single leg from a swing low to a swing high, as happened last year.This is mainly why I upload other swing trade methods here - often they will allow re-entries at intermediate points between the swing days, on equally valid TA grounds. Sometimes my ecelectic signals are short-term only, especially if counter-trend: other times they are true re-entry points in line with the underlying trend.

 

[tomorton]

Bearish pin bar suggests possible short from today's low if we get selling confirmation tomorrow.

 

[tomorton]

Frustrating to be on the sidelines as the current upleg continues.

Been thinking this week that, with all we people know about TA and how ther FTSE behaves, surely there is a way to trade from close to close and make a 24hr profit.

Set off poring over charts to find the single method that would allow this - actually, my suspicions seem proven - there can't be a single method that can achieve this as the market's movements are so random. However, what about the rationale behind this? -
note if today's high and low above 14EMA
if tomorrow's close lower than today's but low still above 14EMA, go long at close
exit at closeof third day
(reverse this for shorts)

Stipulating the lows are clear of the MA means price is probably uptrending. Using a short EMA (14) means that these signals are not generated when price is rangingg, as the 14EMA usually intersects price daily ranges through these periods.

Quick eyeball of randomly chosen periods on FTSE chart suggests this has a 2:1 win:loss ratio. More backtesting to follow but does this sound rational first of all?

 

[tomorton]

Frustrating to be on the sidelines as the current upleg continues.

Been thinking this week that, with all we people know about TA and how ther FTSE behaves, surely there is a way to trade from close to close and make a 24hr profit.

Set off poring over charts to find the single method that would allow this - actually, my suspicions seem proven - there can't be a single method that can achieve this as the market's movements are so random. However, what about the rationale behind this? -
note if today's high and low above 14EMA
if tomorrow's close lower than today's but low still above 14EMA, go long at close
exit at closeof third day
(reverse this for shorts)

Stipulating the lows are clear of the MA means price is probably uptrending. Using a short EMA (14) means that these signals are not generated when price is rangingg, as the 14EMA usually intersects price daily ranges through these periods.

Quick eyeball of randomly chosen periods on FTSE chart suggests this has a 2:1 win:loss ratio. More backtesting to follow but does this sound rational first of all?

Has a 56% win rate over recent 6 year period. Not a huge edge, though I feel the principle's right, as it involves buying on the dips in an uptrend and selling on the rallies in a downtrend.

Probably just simpler to look for a close that's 1% contrary to the trend and take a with-trend position: its all down to position management after that really.

 

[tomorton]

Inside day yesterday but note Wednesday had narrower range so we don't have an ID/NR4. I haven't found ID break-outs on their own particularly high probability but the ID could give birth to a hikkake next week and these are normally successful short-term.

Highest volume in last 15 sessions, with a lower close, is bearish.

The week ended higher but on a weak note and I expect a reaction back below the 200EMA which is now just below the close, around 5241

Thursday remains putative swing high, and is higher than the previous, so could suggest we enter an uptrend if we can make a low higher than 4984.

 

[tomorton]

Gap up at today's open, followed by low close indicates whiplash opportunity from tonight's close 5299 so I am short.

Today was an up session nevertheless, so prints as a putative swing high, offering a short from breach of 5280 if 5330 holds.

The upside breach of Friday's inside bar also suggests the short hikkake entry commented on may print this week if Friday's low of 5239 breaks.

Of course, the high close has suddenly kicked the P&F chart out of bed and we are closed above the 50EMA (just) for the first time in 7 weeks.

 

[tomorton]

Whiplash short went well, swing and hikkake shorts triggered and if we get a bounce in early trade tomorrow I'll add another short.