Up yesterday, back down today.

I think I'll stand aside until the daily trend clears up.

So much for falling prices!

Today's strength looks like it's moved the daily trend back up, but I'll be on the lookout for a retracement and then a buy signal before going long.

This is the hourly spread betting price action over the last few sessions:

In Thursday night trading, prices broke the channel shown on the last chart and moved lower.

On today's open, the SPI broke above a new, smaller, downward sloping channel to the upside.

This chart shows the action:

The break of the larger channel late last week was during night trading, not my favourite time to trade, and part of the subsequent move lower was during spread betting extended hours over the holiday weekend.

The break this morning seems like a good opportunity as it meets the criteria for a trade. However, I think this may be a part of a multi-day move down. If so, today's action is a part of a corrective rally. Whilst corrective rallies can be fairly large, in points, I'd rather wait to trade with the daily trend, which looks like it's turning down.

If today's price action and that in the night session show a corrective rally, I'll look to short on the break of the next channel - if it slopes up.

As you can tell, I've started to pick and choose trades and not go for every signal.

Prices rallied in the night session, only to come off the highs during the day.

The SPI ducked under the bottom trendline (on the chart above) in late trade, to close just within the consolidation zone.

With a long weekend, we will have to wait until Monday (or possibly the night session) to see if this channel is broken.

I'm waiting for a change in trend on both the daily and hourly charts at the same time to, hopefully, signal a large move (down).

16:42

A large consolidation has formed over the last week. I think we may see another push higher overnight/tomorrow.

Hourly 24 hour chart:

24/01/2007

09:42

Well, the stronger prices came in the overnight session - which I don't trade.

Interestingly, the S&P500 and DOW were up 0.35% and 0.45% respectively and the SPI was up 0.77% on the close - so much stronger than the US market.

15:03

Although a consolidation has recently broken to the upside, it's a bit late in the day. The best ones seem to break at the open or an hour or so into the session (more often than not).

I'd like to see stronger buying on the hourly chart, followed by a higher bottom and resumption of an uptrend, before getting bullish.

Prices came down in the night session - being influenced by Wall St.

Waiting for the next consolidation to build.

I think the trend is slowing so I closed out @5725 - 23 points less spread.

Index @ 5716.

Price action on Friday night broke through a consolidation to give another buy signal. spread betting trading continued longer than the official night session and was quite volatile at the end, closing even higher.

This 'spread betting' action was reflected in today's opening, with prices jumping and making a new high.

I waited for a retracement and then, when prices looked like they were resuming the push higher, bought @5702.

Prices started to firm into the close - you'd have needed a fairly large stop to keep in this trade!

Despite the overnight dip in prices the longer term daily trend is still up, so we should hopefully see a new high - probably next week if it happens.

Prices came off a few points and now are around 5676. I'm now thinking we will see a new high before a multi-day move lower.

I had to do an about turn today, as I got a buy signal whilst having the previous short one open.

I closed the previous position out and bought @ 5665.

Prices are down at around 5626 and it looks like there should be further weakness over night.

Sold @5636.

Prices then moved a bit higher (of course!) but have since come back a bit.

Looking for a longer term trade over a few days. I'll see how it goes.

Prices moved to the bottom of the consolidation zone into the close yesterday, breaking it to the downside when the night session started and giving a sell signal.

I don't like trading (or rather opening a position) in the night session if I can help it, due to the thinner volume and Wall St opening often making prices jump around and often triggering stops.

Looking at the hourly chart at the moment, before the open, I can see a corrective rally. I'll see where prices go at the open and if there is any weakness, then open a short position.

At the current price, there would have been no advantage in opening a position overnight and there would have been the uncertainty of what Wall St would do.

Q: What do you do if prices break out of a consolidation, but don't give a clear signal?

A: Look for the next consolidation, see below:

16/01/2007

10:52

There was a gap in my chart - a few hourly ticks at the end of the night session were missing. A problem when the next tick that appears breaks out of a consolidation!

I went to my alternative data source and it was the same there!?

I would want to see a strong decline and corrective rally before taking a short position - even on a clear breakout and because that didn't come I stood aside.

Just as well since prices jumped higher and are now touching the consolidation zone from below.

This move could have exhausted - but no signal for me as yet.

15/01/2007

13:43

The consolidation pattern is still building and, depending how you draw it, had a false break lower in early trade (only for 10 mins) before prices moved higher.

Waiting for a more decisive break lower.

Prices moved higher overnight, probably on the back of a positive Wall St, with the SPI gaining about 40 points on the daily close.

At the moment, the SPI is holding on to the higher area at around 5593. I think we may see a push a bit higher, but technically, this corrective action since the low on 5th Jan is, in my view, nearly over.

I think we need a bit more price action for a decent consolidation zone to form - so it can breakout and give a signal - and it may be Monday before this happens.

It can be frustrating waiting for a 'bigger' trade, especially when a few signals come along during the wait. Hopefully, patience will bear fruit and there will be a decent move down next week.

14:31

It looks like we're on the last leg up of this move. Hopefully a consolidation will build on today's action, in the night session, for a break tomorrow. We will see.

With a positive Wall St, SPI futures rallied overnight. I wouldn't be surprised if we get some follow through action this morning, to complete quite a large corrective pattern, before further declines.

I'm looking for another consolidation to build for a short position.

Whilst a consolidation zone can be draw on the latest hourly chart, and a breakout to lower prices did occur, the price action still looks a bit corrective.

It was probably the lack of speed of the breakout that put me off and I'd rather wait at the sidelines to see where the next rally (seen on an hourly chart) goes to.

I'm waiting for a larger trade (50 points +) at the moment rather than 10-20 points.

Also, a time cycle occurring tomorrow could halt this up trend. For more information on the time cycles that are mentioned here from time to time, click here and look at today's post.

This is a daily chart of the SPI continuous contract (Day/Night):

The daily trend is down and has found resistance in the last 2 sessions.

With a positive Wall Street overnight, we may see follow through buying today. After this, I think we could see further weakness - I'm keeping an eye on the daily chart for a 'longer term' view and then will move to the hourly for an entry.

There are a number of lines that can mark out a consolidation zone over the last few sessions, see chart below. Any way you draw them, the trend is down.

Pity I had my eye focused on higher prices and missed out on the falls - lesson learnt (I hope).

Prices gapped lower at the open, only to rally strongly - there was a 65 point swing in the first 30 minutes of trade. It would be too easy to get stopped out in this volatility, so I'll wait until things settle down a bit - despite the index sticking its head above the upper consolidation zone line.

Prices continued to decline into yesterdays close, but stabilised somewhat in the night session - probably helped by a positive close on Wall St.

With prices near the bottom of the consolidation zone, as drawn on the previous chart, there will be no trade for me in this session.

Hopefully, prices will move toward the upper line in night trading and provide an opportunity tomorrow.

A better consolidation pattern has developed overnight, with yesterdays high and low as the starting points.

I'll see how this develops although, if a signal occurs, I don't think it will be in today's day session.

This is how it's shaping up:

Note that patterns sloping down usually produce a break to the upside, so there's quite a few points and hourly bars to cover before this happens.

After a false break to the upside during night trading, I bought (single trade, fortunately) on what looked like another break to the upside. Unfortunately, prices retreated to the bottom of the trading range to stop me out.

Need to wait for a better trending market.

02/01/2007

Needless to say a quiet day for the first trading session of the New Year.

Despite this, consolidation zone has been building since the 27th Dec, so I'm looking out for a breakout - hopefully tomorrow and not overnight.