Tuesday Morning Briefing

Welcome to our morning briefing. Here we are reviewing short term setups ahead of the NYSE opening bell. If you are a scalper or swing trader then these setups may be of interest to you. As usual keep in mind that these are short term setups although they could be used as early entries for more longer term positions.

As Ivan pointed out overnight we have a potential fake-out sell setup on the daily spoos today. However the trigger is quite a few handles away at 1829.25 and that candle is pretty large thus affording us only few contracts given the stop above 1856.75. So all in all this would not be my favorite setup to get positioned should we indeed have painted an exhaustion candle. There is a decent change we’ll produce an inside candle today which would be much more preferable.

But alas – let’s not put the cart in front of the horse – after losing much of my ill-gotten gains late in the session my longs from yesterday are still in the running. Given that we almost reached 1.2R yesterday, and this being a discretionary trade allowing me to consider the overall context, I have cheated by a tick or two and advanced my stop to the old Net-Line Buy Level (two ticks below my actual entry) which still sits at 1840.25. Prices almost grazed it overnight but thus far it is still holding.

Besides there is some encouraging development as the GBP/JPY appears to be producing higher lows and higher highs – as evidenced by the diagonal I painted. Let’s see if that was merely a shake-out attempt or if we are indeed gearing up for a more pronounced correction. As of this writing the bulls still have a chance to get their act together and bounce back higher. Below the 1840.25 NLBL things get a bit more difficult.

Still thin on the setup side – many futures contracts just rolled over and Forex is a bit of a mess right now. As I said yesterday, I caution everyone to limit their exposure to 1/2R at most. The one interesting chart this morning is cotton which is retesting its 25-hour after a valiant push higher. I am pretty familiar with this type of configuration – usually they resolve in a volatile manner, meaning a large move to either side of the inflection point. In this case that’s the SMA – which is why I am currently long with a stop below 88.85 (the current low of that hammer).

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Cheers,