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At a recent Safety in the Market Interactive Trading Workshop, we were analysing the 1-day ABC setups from our ProfitSource scans. We used a systematic approach and applied price forecasting lessons from the No 1 Trading Plan to select potentially profitable trades.
One trade we considered was SEK on the ASX and the simple application of resistance cards gave us the confidence to take this trade. Using the ranges resistance card we saw that point C was sitting under 50% of the recent weekly up swing as shown in Chart 1 below.
Chart 1: SEK Daily Bar Chart with ABC Short Setup
click to enlarge
Other price forecasting techniques we used included the highs and lows resistance cards and you can see in Chart 2 below how this ABC short trade also had point C sitting under a multiple of the March 2009 low.
Chart 2: SEK Daily Bar Chart with Lows Resistance Card
click to enlarge
I still get excited when I see support or resistance lining up behind a trade. And adding time analysis can give you even more confidence. Chart 3 below shows that this trade ran to 100% in just 3 days – a nice 3:1 reward to risk ratio.
Chart 3: SEK Trade Runs to 100%
click to enlarge
For those who have been following my series on the banks, I thought I would provide a quick update on the CBA. In the last week we have seen a double top on a 50% level again and Safety in the Market students who have studied Time Analysis will see an equal number of trading days on both legs. This represented a great short opportunity for those who were able to take an advanced entry. I have shown this setup in Chart 4 below.
Chart 4: Daily Bar Chart of CBA Showing Double Tops on 50%
click to enlarge
A double top can often run to 200% but as we have seen CBA range trading for the past year, the coming days will be interesting to see if the market can break below the June lows. If it does then the next target will be 150% of the double tops which lines up with the lows from November and July last year. If the market breaks these then it is well on its way to the 200% target but until then a 100% target which lines up with the more recent June low might be more realistic.
It’s the Journey
Lauren Jones
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