Sandy Jadeja explores upcoming trading opportunities. Market Snapshot financial crisis has hit the world stock markets. Were you prepared for the opportunity or did you miss the major moves. Even worse were you caught on of the time physically practising what they were seeing. As simple as it sounds, many people around the world attest to this as a solid practice that can generate quality results.
and guide them step-by-step to deal with the difficult times that might be ahead.
As the markets have declined sharply, instead of being emotionally attached we should probably practice the art of mindful the wrong side?
In the United Kingdom, recent news headlines have been about turmoil in the streets as rioters took over cities across the country; and turmoil in the markets as sharp declines took the stock indices lower. Both situations were emotional and required tactical and strategic thinking to resolve.
In an emergency, if one is not prepared and has no plan of action it can be devastating and difficult to grasp what is happening and to take emotional control. As you have probably experienced from your trading, once emotions get in the way thinking becomes cloudy and we are prone to making the wrong decisions. Remaining calm is essential.
I remember reading, some years ago, about how Soviet athletes were taught the 80/20 rule. No, this was not about business but about the physical versus the mental. During athletic events, many USSR athletes were able to accomplish astonishing results. They were breaking world records – and athletes around the world were desperate to know their secrets. The athletes were taught to spend 80 per cent of their time not in a gym or working out, but visualising. They were taught to look inside their minds and to practise each routine, step-by-step, to perfection. Then they spent 20 per cent
We noted previously that the FTSE A Figure 1: FTSE 100 Wekly
Right now, in the turmoil we are facing as traders or as individuals, it might pay dividends to stop – think – and then act, rather than act in a state of panic. We can place ourselves in a state where we can practise in our minds what to do if a crisis takes place in the markets. Instead of acting impulsively and emotionally when disaster strikes, we can take control of our thoughts trading and deal with the situation as it unfolds, seeking opportunities rather than becoming an emotional wreck.
From our previous article (Jul/Aug 11 YTE UK) we were ready and waiting to take part in a bearish move on the FTSE 100. The markets have now rewarded us for planning, patience and being on the right side.
SEP/OCT 2011 Market Snapshot
Right now, in the turmoil we are facing as traders or as individuals, it might pay dividends to stop – think – and then act, rather than act in a state of panic.
100 index had found resistance at 6090 – 6117 and that for six weeks this level had been a barrier for the index. It would a Doji pattern – indicated by the triangle – suggesting indecision and that a break below could trigger a decline. Once the
Figure 2: FTSE 100 Daily followed by a lower swing high at point 2. Here again the index, on a shorter time span, broke below swing point 1, proving the market was weakening.
Currently the index may be looking to hold above support at 4780 and attempt a rally, whilst it has also created a ‘hammer’ at this support level. A break above 5295 would suggest a move higher could be about to start, aiming for the 5600 area before finding resistance again.
We will continue to monitor this market, along with other markets including commodities and currencies, whilst opportunities arise. In the meantime, it would be smart to keep emotions out of the way and trade the market, not our feelings.
be safe to assume that we were facing a wall that was proving tough to climb over. As I mentioned before, we could look for reversals using candlestick patterns that could provide potential entry signals. On the FTSE 100 Weekly (figure 1) there was
FTSE broke below 5973 we had a signal for a short entry. The index then broke below a key swing low of 5591 to further indicate weakness.
On the daily chart (figure 2) we had an engulfing bar just below resistance,
Sandy Jadeja is the Chief Technical Analyst for City Index, a leading provider for Spread Betting, CFDs and Foreign Exchange. He has been involved with the financial markets for more than 23 years and is a respected and widely recognised analyst and trainer in technical analysis and trading strategies. He appears weekly in the media and financial press and can be reached at firstname.lastname@example.org
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