EURZAR and USDZAR 4 hour charts

Over last couple of days quite bad news hit Greece, Portugal and Spain. Their long term debt was downgraded and that caused markets to stumble. Yesterday Top40 recorded biggest single day drop in more than 6 months and today’s picture does not look great either.

Last time when big news hit the market, big guys were quick enough to sell off all risky assets like emerging markets and that caused Rand to collapse. From August 2008 to October 2008 Rand dropped from 10.90 to 15.20 for US$. Is this happening again?

Two charts are shown on the top: First one is USDZAR, while the second one is EURZAR, both in 4 hours time frame.

USDZAR is currently trading in 7.20-7.85 range and that is going from August 2009. From March 2010 new and smaller range between 7.20 and 7.50 was developed. We tested top of the range four times and bottom three times. Those are two levels to watch. If 7.50 gets broken USDZAR will go to 7.85. However, if 7.20 gets broken we could see 6.50 or there about.

EURZAR is still in the channel which started in November 2009 and top trend line was just tested. Support was formed around 9.67 in early April and currently we are close to test it. Breakdown will be significant and EURZAR could drop further towards 9.30. With all instability in Euro zone this can be likely scenario.

All in all, those two charts do not show foreigners disinvesting from SA and such disinvestment would cause ZAR to weaken.

Trade with trend!

Top40 - end of the day recap for week ending on April 26th

We had big internet issues on Sunday evening and Monday morning and that is why I am posting this update only now. Luckily, today is public holiday, so we missed only one day of action. On Monday we had strong up day, so maybe this internet problem came with some purpose.

Last week Top40 spent bellow 10 period exponential moving average, so we could conclude that short term trend was down during last week. On Monday market closed 1.52% up and it did break sideways consolidation of last four days, paired with solid close above 10 period ema and 25922 level, which I mentioned few times in previous posts.

Stochastic turned on Monday coming from very low base, so there is quite a room for it to advance. Relative strength index bounced from 50 and is looking to reach 70 again, while only MACD looks a bit flat currently.

During last correction market broke trend line of small channel, but it bounced back fast and is now seating on the top of trend line. Bigger channel (that started with new bull run in March 2009) is still very much intact and Top40 is currently in the middle of the channel.

Important development last week was making of double bottom around 25585 level on Top40 or 25800 on ALSI (with conformation on Monday) which could take us all the way to the 26700 on Top40 or 27000 on ALSI. Detailed post about that is to follow shortly.

Moving averages, which help us to determine long, medium and short-term trends:  

• long-term (200sma) - UP
• intermediate (89sma) - UP
• hort-term (10ema) – UP

Trade with trend!

Reading to kick start new week

Afraid to Trade:

Revisiting SP500 Trendlines and Adding a Triangle

Bespoke:

Individual Investors Not As Bullish as Their Advisors

Q1 Earnings Beat Rate

SMB:

It’s the Price Action Stupid!

The Big Picture:

S&P500 Average Monthly Change

Existing Home Sales Gain Aheadof Tax Credit Expiration

Duration of Recessions and Bull Markets

Amazing graphics!

Death & Taxes (Updated)

Fun!

Fortune 500 Cover DK’d

The Talent Code:

How to Read

Q & A session – follow up

We got few questions in Q & A session and I would like to use this space to reply:

1. When it comes to neural networks and trading my knowledge is limited to just being aware that there are numerous sites which are pointing to literature and various resources which cover field of neural networks and trading. If readers of this blog would like to share more on this subject, including good Internet sources as starting point for the research, please share in comments section of this post.

2. Stop loss was posted and re-posted on twitter. I’ve introduced small change, so in white section on the right hand side (Last twenty trades) Stop Loss level is going to be indicated at all times (in bold).

3. And as reader Stan pointed out, two valid choices for ALSI data feed are eSignal and HiSat (local source).

As always, I remain open for any comments/suggestions/ideas that might make this blog better.

In addition, I will keep on encouraging readers to join the conversation, so Q & A session will be re-introduced from time to time.

Trade with trend.

ALSI 30 minutes chart

Quick check into what ALSI 30 minutes chart is telling us.

Market broke 26150 – 26750 trading range few days ago, but it did bounce back and ran into it again the next day. Then, on Wednesday market repeated the same pattern of break down and back into range and again the same happened on Thursday, this time with no break into range yet.

As one can see, there are two trend lines to watch: One down slopping and connecting last three tops while the other one is up slopping and connecting three last bottoms.

Currently market is making higher lows and lower highs, making it difficult to see real trend. Current pattern can be classified as triangle.

Watch those two trend lines for further direction.

Trade with trend!

Sad news

Very sad news did hit me yesterday. Dr. Brett Steenbarger will wind down the TraderFeed blog.

I was following his writing for many years. About seven or eight years ago, just as I was starting with trading, I somehow ran into his old web page. It was very simple design that probably wouldn’t catch one’s eye. Somehow, I started to read and I found numerous very interesting stories about trading and life in general. After that, TraderFeed blog came to life and I was eagerly waiting for each new post, as Dr. Brett always had something good to say. The more I red, the more I realized that it is not in indicators; it is not in patterns and it is not in finding holy grail – It is in our heads and it was there before and it will stay there forever. One just has to dig it from somewhere deep within. Simply, TraderFeed blog, three books written by Dr. Brett Steenbarger and his early writings made me a trader I am. Without his inputs, probably, I would not be writing these lines now. As time passed, I’ve realized that his blog didn’t improve me as a trader, but as human being as well.

In his last post Dr. Brett has promised that he will try to do everything to keep the blog up as well as archive "the best of" posts. At least, we can go back and read his impressive writings whenever we want.

I’m not sure if Dr. Brett will ever read my blog and this specific post, but I would like to thank him for changing my life for better and for making me succeed in this tough game of trading. I’m very sad that he is leaving us without new contributions and I wish him all the best in his new endeavor.

I would close this blog post with words from his last post: ”If you put yourself out there, share your best ideas, reach out to people, and give more than anyone ever could expect you to give, you'll attract the right kinds of people--and the right kinds of opportunity. If you have passion and you have talent, make yourself visible: the best people will find their way to you and everyone will benefit.”

THANK YOU DR. BRETT!

Trade with trend!

Q & A session

EDIT: I will wait for a day or two in case we receive more questions and will post all the replies as separate post.

Let’s try something new on this blog – Please ask any question (trading related) and I will try to respond to the best of my ability.

For readers who are interested, just post your questions in comment section of this post.

Trade with trend.