Happy Saturday! :)
Wow.. I went to bed at 9.30 last night and only checked the US market this morning.. I guess it has been a long week for me.. body needed the rest..
Anyway, here is the belated daily summary for the FKLI for Friday.
We traded to these following levels for Friday.
Opened 1603.50 from 1593.00 the previous trading day
High 1604.50
Low 1594.00
Close 1594.50
Here is the Daily Chart.
In the morning, our levels were as per the following.
Upper Resistance: 1595, 1598 and 1604
Lower Resistance: 1590, 1588, and 1586
What a day we had! In the morning, we opened +10 points in the futures! This was in line with the positive performance in the US market the night before! Now, I expected that it would gap up, but not by so much, and honestly, I felt the gap up was overdone. Price opened at 1603, near our third resistance of 04. Price in fact traded to a high of 04.50 but could not trade through it.
We expected the day to be range trading to a slightly upward biased and to test the upper resistance and for support to hold.
Because we open right at the top of our daily range, all the resistance that we had identified traded through and automatically changed into support.
In the morning, I have a fellow trader Teo placed a trade to short 01 on a stop when prices were still trading in the 1604.50-1601.50 range. But we pulled out the trade which was unfortunate because it would have resulted in a nice downward scalp to test the next support level of 98.
I actually went long at 98. After prices broke down from 01, we traded to touch 1598.50. Being a Friday, and with economic numbers coming out tonight and Bernanke speaking, a pullback was a reasonable trade to take as we expect a possibility of a range trading. However, you need to take your profits quicikly, more so especially on a day which might be choppy. Price indeed went up to 1601 which would have resulted in a nice scalp.
Then we close for lunch at 97.50 and reopened at 98.50. Then we traded in a small range of 99 and 97. Now being a Friday afternoon, I would not have taken this trade as I consider it to be a bit risky and the cash market was holding up nicely. But if you were inclined to, you could have placed a buy stop and a sell stop above and below the range. It worked today due to the massive gap up in the morning and prices wanted to fill the gap and due to the uncertainty of the economic report and Bernanke's speech at night causing traders to lighten their position into the weekend which pushed prices down further. On other Fridays, we might not have such an exciting price action so you have to be careful when trading Friday afternoons.
We closed the day at 94.5 which was +1.50 from the previous day. We did trade into the bullish wedge pattern but close back just right outside of the doorstep again. The S&P could not trade back into the bullish channel last night so we will plan how we are going to trade after the futures pre-market has opened on Monday morning.
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I want to just quickly update on the Cash and FCPO Weekly here.
KLCI
Cash weekly traded to the following levels:
Opened: 1599
High: 1604.71
Low: 1586.99
Closed: 1603.12
In our last weekly updates, these were our expected weekly ranges.
Upper Weekly Range: 1612
Lower Weekly Range: 1587, 1582, 1577 and an outside chance of 1566
So our first level of support held nicely to the dot at 87. We never tested the high of the week of 1612. We mention that the general trend is still up as the lower trend line is still holding in the weekly and we are also still trading above the 20ema. We also talk about the possibility of breaking the trend line, then do a 180 turn and trade back up into the wedge pattern! Which we actually did!
What I wanted to point out here is that, we always have to let price action be our guide. The technical and levels are there as a guide and reference points. Breaking a lower trend line doesn't mean price is going to the dogs and vice-verse. However, we need to be aware of all the possibilities and then plan accordingly with the daily ranges and levels and also take into account all of the possible factors what would affect the market that we are trading such as the performance of the other regional markets and mainly what is happening in the US market.
This is also the reason I do not use any indicators other than trend lines and moving averages. I find them not so useful and I can't trade profitably with them CONSISTENTLY over time. They are good as a guide, and can be used together with other factors that you are watching to form an opinion of the market. But honestly, too much information will cloud your judgment. Now, those of you reading this whom are big supporters of the respective indicators, please do not shoot me. This is just my preference and you have your own way of trading. But remember when the indicator gave you a sell signal but....... price still went up and vice-verse? :)
There are none one best way to trade honestly.. and I'm sure there are some people who employ these indicators to good use. But prolly just not me.
Alright lets move on to the FCPO Weekly.
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FCPO
FCPO weekly traded to the following levels:
Open: 3610
High: 3628
Low: 3505
Closed: 3510
Price almost touch the our lower weekly range of 3500 which was actually just the lower trend line of the bullish wedge. In our weekly commentary, we talked about the possibility of price pushing further if there were any fundamental reasons. But we also talk about the possibility of price reversing and pulling back into the pattern if buying momentum wanes. which was why I had the lower weekly range at 3500 and not higher up. You can read our weekly preview here and the weekly updates here. Hmm... doesn't this seemed familiar? Price breaking out of trend line and pull back? *Thinking of FKLI this week*
With the 4 CME grains namely Soybean Oil, Soybean, Wheat and Corn unable to overcome their upper resistance, it was unlikely that our FCPO could march further up. This is the reason why we are always looking at other related markets to give us a cue on our local FCPO. I believe a large part of successfully trading the FCPO will be also your understanding of other related markets too.
The Upper resistance for the Soybean Oil Futures and Soybean Futures held nicely at their respective levels. You can read the weekly resistance levels for the 4 CME grains here.
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Alright.. Wishing everyone a great weekend ahead!
See you in our Week Ahead post this Sunday!
Ciao!
Best Wishes,
Tech Trader
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