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In Chart 1 we have the update for NAB showing that the market has now managed to cross the 50% milestone after making a small retracement on the weekly chart that did not stop us out. I have added volume to the bottom of the chart to highlight the fact that during the small retracement the market rallied on falling volume. You will notice that on the weekly bar that makes the first lower swing top, has a very small range but much higher volume, this was an indication that a high had been reached.
Chart 1
click chart for more detail
The confirmation of this first lower Swing top also provided an opportunity to add to the position. I have indicated on the chart where you could have added to the position. Now that the market has crossed the 50% level we move the stops down from entry + commission to a position of profit. The question is where to move the stop? This week has managed to cross the Swing bottom as I have highlighted with a black horizontal line. Old support should become resistance, so the most prudent move is to place the stop profit just above this old bottom. Let’s say 20 cents above the bottom leaving the stop at $32.05. With an initial entry price of $33.49 and the stop now positioned at $32.05, the worse case scenario for this trade is a profit of 144 points. The entry and exit prices on the ISF market would not be identical to these prices, however the size of the profit would be virtually the same, that’s $1,440 per contract. This is without considering that you may have added to the position.
Now there will be those that say NAB has only sold off due to the news relating to AMP. This maybe true, however the chart was giving an indication to trade the market short and that’s the decision made several weeks back, before any talk about AMP. It’s funny how these things work out. Let’s keep an eye on the trade from here, certainly not a tough position to be in now.
Successful trading to all…
Noel Campbell
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