Weekend Update:

Wall Street ended marginally down during the Friday night session.

This has kept us well within the current consolidation zone, with a lower high and lower low on the hourly chart toward the end of last nights session.

I'm still looking for the longer term daily trend to turn down, which would mean a clear break of the consolidation zone to the downside needs to be seen to give a signal of potentially lower prices.

We did stay within the zone indicated on the previous chart - apart from a brief 'blip' above during volatility toward the end of the session. We closed @6034, so well within the zone.

Let's see if Wall Street pushes the SPI one way or the other overnight.

A strong open quickly blew the triangle theory out of the water - which is good since I don't like to trade them.

This new chart shows how we stand at just after 11am.

An upward sloping consolidation zones 'often' leads to a break down in prices. So, I'll be watching to see if we move to the bottom of this one. It's quite a few points away (not a bad thing since bigger consolidation zones lead to bigger moves) - but it may mean the next trade will be next week.

The chart below shows where we stand after last nights action.

Over the last few days, we've had a decline from 6064 and it looked like the longer term trend had turned down when 6000 was breached.

Now we've had a rally, stronger than I expected, up to 6022 - a lower high if it stays below 6064.

During last nights session, the dip and rally into the close probably followed Wall Street action more than anything and the lines I've put on the chart show a triangle pattern forming.

I've found this type of triangle a bit problematic to trade - basically false signals, but if the 6022 high holds and the triangle breaks to the downside I think my original thinking of lower prices may be back on track.

Higher prices above 6022 was cause me to pause for thought.

That's a shame, the trade was stopped out with a 2 point loss.

With a flat opening, I moved my stop to 6001, so just above this resistance level.

Prices moved lower overnight, closing around 5959.

If my thinking is right, this should be a daily change in trend which will head lower for a number of days. Even if this doesn't happen, I still want to protect the position as early as possible because "if you get stopped out without a loss you can always trade again".

The 6000 level finally gave way with the day session closing around 5978 after touching a low of 5960.

If and when there's a rally and further decline, I'll be looking to move my stop to 6000 to protect the position.

Of course, after I shorted the market it promptly rallied 30 points!

I guess when prices are at an import psychological level such as 6000, they're either going to fall through or bounce off. I was probably focussed on not missing a trade - that's the fear creeping in (as in the 3 motives of hope, feed and greed).

The way I look at it (maybe to justify it) is that I'm looking at the longer term and by that I mean making at least 100 points if not 200+ points, if it turns out to be a big move. So, a move against me early on isn't going to kill the trade, as long as I don't get stopped out that is. That's why I have reasonably large stops to allow the market to move.

You can't expect to get in at the exact high or low - you need to tell yourself this when the market goes against you at first.

Prices are heading back down to 6000 with lower high's and lower low's on the hourly chart which, hopefully, bodes well for lower prices.

Prices opened lower and when they cracked 6000 I sold @5999 with stops around 6045.

Well, we pretty much got a sell signal by the end of the night session.

With the consolidation zones angling up and with the SPI moving sideways to down, it slipped out of both of the zones to close around 6008.

It hasn't breached the red line on the previous chart - which is @6000.

I'll see how the open goes this morning. If prices gap up or move higher, I'll probably wait. If they move down I'll probably sell.

Wall Street took a dip and recovered overnight, producing a similar action in the SPI.

A new spike low has allowed me to add another consolidation zone on the chart - it's smaller but a break of both zones should give, hopefully, a more reliable signal.

When the red line has broken and if there's a failed retest, it'll be a short signal.

The uptrend persists but looks like it's flagging.

Still waiting for that breakout - you've got to have patience at times like these.

Prices spent the day moving back toward the lower consolidation zone line.

Perhaps it will take some more Wall Street action to push us out of this one?

The SPI rose to the top of the current consolidation zone, found resistance and sunk slightly lower.

I'm waiting for a suitable breakout to trade. I still think it will be to the downside, but I'll go either way if and when I get a good signal.

From yesterday "and who knows what Wall Street will do overnight" - well I didn't know it would cause a 90+ point spike in the SPI in 50 minutes!

Despite this aberration, we're still pretty much in the same consolidation zone.

I'm a believer in each market having it's own trend and that other influences, such as Wall Street, can have temporary effects, but we will return to 'our' trend.

Here's the latest chart, before the night session starts. There's been a corrective rally - what I was looking for in the previous post.

Further weakness here and on Wall Street could give a good signal.

The SPI has broken the consolidation zone on the previous chart - to the downside.

Whilst this would normally be a sell signal for me, considering it's getting late in the day, the last trade in this trend was stopped out and who knows what Wall Street will do overnight, I think I'll wait for added confirmation such as a larger break, a corrective rally and additional selling.

The SPI did break the channel indicated on the previous chart, but I don't really like to trade at night if I can help it as local volume is lower and we're more swayed by Wall Street than anything else.

So, I thought I'd see what the morning would bring and it brought a rally. I've drawn another consolidation zone on this latest chart. It gives the SPI a bit more room to move and hopefully there will be a breakout during the day session, as I've found these to be more reliable than signals overnight.

I think the SPI woke up to the fact that Wall Street was up around 1% overnight, as we gapped up at the open at hit 5969 around 30 minutes into the session.

We've come off these highs and are around 5932 at the moment.

The next 'possible' consolidation zone I'm looking at is shown on the chart below. An 'ascending wedge' is one description - whatever you want to call it, it's probably worth bearing in mind.

As I've been thinking the trend will turn down, I'm expecting this wedge to break to the down side. But, if we break upward, I'll go with the signal.

Unfortunately, the trade was stopped out during the night session.

The SPI reached a high of 5944 and the price action can only be described a 'meandering' at best, despite Wall Street adding just over 1% to the S&P500 (+15.11) and 0.96% to the Dow (+115.76).

The SPI doesn't look like it is in a strong uptrend and it's a shame that my 'line in the sand' was breached - but them's the breaks. In the long run, it's better to have a firm stop than not.

If that's all the SPI could mange with a buoyant US market, I think my general thinking is still correct and we will see lower prices.

Now I'm waiting for a new trade.

We went as high as 5924 today and closed @5911.

I've left my stop @5936 and with prices climbing, I'm starting to feel a bit unsure as to the direction the SPI will take next.

Wall Street should hopefully give us some direction - down.

Prices took an initial dip at the open and then rallied up to 5897 - so far.

Support and resistance levels seem to be at 5850 and 5900 respectively.

A break of 5850 would indicate that the downtrend has resumes and lower prices are to come.

If prices go too far above 5900, I'll have to have a re-think.

* As you can see, I've changed the order of the posts so the latest is at the top now.

The trade started out well, with the SPI falling to 5852 at one point. There's been a rally since about 1:30pm and we're currently around 5898.

I've moved my stop to above the previous high @5936 - just in case the trade needs a little more room to move as things can get volatile into the close.

Wall Street looks in a similar position - lower highs and lows on the daily chart - sideways moving on the hourly.

I still think the trend a turning down and we are likely to move below 5730 before we see 6000 again.

We followed Wall Street's rally over night, with prices coming off their highs by the end of the night session.

We've had a trend line break to the downside from a new channel. Because this is inline with my current thinking, I sold @5881 with stops @5924 (a few points above the previous lower high).

The continuation of the rally is starting to peter out.

It actually looks like a smaller version of the recent price action from the 5th-12th March - namely, a big surge to start and then 'choppy' sideways to upward action.

I'm expecting it to stall and for a sell signal - but I haven't got the signal as yet.

Prices dipped and then rallied strongly during the night session, in line with Wall Street action, to close up around 46 points on yesterdays day session.

The SPI has easily broken the upper channel line, mentioned in the previous post, so this is not a valid resistance line.

I'll see what the price action looks like today, to see if the rally continues or runs out of steam.

I'm only considering short trades at the moment (unless things drastically change).

Prices have essentially moved sideways since I closed out the last trade.

I've drawn another channel line on the price action, see below.

I'm waiting to see if the SPI rallies back to the upper 'downtrend' line and then sells off.

We should see a rally at some point with the size of the decline so far.

I closed the trade out @5787 for 110 points profit (less spread).

You don't get 100 points profit that quickly too often. I still think prices will go lower, but there many be a rally first.

I'll be looking at shorting again at a good point above 5787, to continue to trade this down move.

I moved my stop up to 5950 last night, to give the trade 'room to move'.

With prices falling away during the night session, I've now moved it down to 5920. I'd like to move it further down to start locking in some profit, but 5920 is just above the last lower high in the pattern.

If prices rally and then sell off again, I'll probably move the stop to just above the new lower top.

With the channel broken to the downside early in the night session, I took a trade and shorted @5997 (not I'm on the June 07 contract now). Initial Stop @5935.

The night session can often be quiet, until Wall Street opens, but with a fairly strong 'reversal day' yesterday, this gave me more confidence.

With today's weakness, I think it confirms that I was right to stand aside.

The uptrend formed over the last week is looking weak now and new channel lines can be draw with recent price action, with the SPI at the bottom of the range.

It looks like this channel is breaking out to the upside - but, as I think the daily trend is waning, I'll stick to the sidelines for the moment.

Prices have worked their way higher and consolidated again, see chart below.

I'm expecting the daily trend to turn down to attack recent lows, so when this is confirmed with a good breakout signal I'll probably make a trade.

Despite the break out to the topside of the consolidation zone on yesterdays chart, I still think that this downtrend may have more to go.

The daily trend is down and I'll stick to the method that produced 255 points profit over 4 separate trades in February - namely, using short term (hourly) techniques to enter on longer term (daily) trend changes.

We had another sell off yesterday and not surprisingly a bit of a bounce today.

The SPI is trading in a channel on the hourly chart below.

A rally did eventuate yesterday, but it wasn't that 'tradable' - it was better to wait for a better opportunity.

Overnight prices slipped further, inline with a weaker Wall St, but rallied into the night session close.

This morning the SPI continued up, but ran out of steam toward the day of the day session.

I think we will see further declines over the next week or two before to uptrend continues.

Prices consolidated overnight and even look like they may have just broken a consolidation zone to the upside.

I think I'll see how the opening goes before making a trade.

I'll probably wait for a rally and then profit taking before getting in.