The US500 and Nasdaq continued their falls and finishing in the red on Friday. The ASX200 also had two consecutive lower low days breaking slicing below 6000 to finish the week also in the red.

ASX200

 We could see slight recovery back into the 6000 which is key for the advance, or rejection indicating falls the ASX200 has not seen since June.

ASX200

Key Points:

  • Price holding below the 200 EMA
  • Price holding below the 50 EMA
  • Fibonacci 50% support cluster with target 1 (April Low – June High)
  • Price holding above the 50 EMA
  • RSI could break trend and range simultaneously for momentum

Key Levels:

Support – 5800, 5700, 5610

Resistance – 200 EMA, 50 EMA, 6000

Entry Zone:

Optimal entry provides the greatest reward to risk ratio while supporting entry is a zone for reversal signals.

Optimal Entry – 5925

Supporting Entry – 5890

Candle Reversals for entry

  • Bearish Shooting Star
  • Bearish Engulfing
  • Bearish Dark Cloud CoverBearish Candlesticks

 

The Risk:

As traders, it is your job to mitigate the risk and only trade structures that provide high probability and great reward to risk ratios.

If you are not comfortable with defined exit levels, experiment with Moving Averages to help set solid exit rules to protect your capital.

IF: Price breaks above level 6000 and violates 200 EMA– this would suggest the structure is not in our favour and would be wise to reduce exposure or close the trade until a solid signal gives us reasons to re-enter.

Reward / Reward Targets:

Optimal Entry 5925 – Target 1 5700 = 3x Reward to Risk

Optimal Entry 5925 – Target 2 5610 = 4x Reward to Risk

Supporting Entry 5890– Target 1 5700 = 1.5x Reward to Risk

Supporting Entry 5890 – Target 2 5610 = 2.2x Reward to Risk