Tramline Trading Alerts Newsletter

This is an ongoing series of emails analysing setups in various markets that I believe appear promising for swing trading. They are not intended for day trading or long-term position holding (except in rare instances).

My plan is to issue them whenever I see promising setups, and I expect to issue between three and five per month.

Bear in mind that the material contained in the Alerts is for educational purposes only, and is intended to alert you to real-life setups that illustrate the various patterns I cover in my book Tramline Trading.

When I point out a particular setup, I will reference that pattern with the relevant page reference in the book. For example, if I refer to a kiss and scalded cat bounce, I will add (text, pp 83-84) to help you research that pattern.

Naturally, markets can move away in the time between writing the Alert and the time you read it. That means that my analysis may not be appropriate when you read it. Market forecasting is all about probabilities – and they can change suddenly.

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SAMPLE ALERT NEWSLETTER CONTENT

EUR/USD

The market made a 2014 high on 8 May at 1.40. It has declined over 7 handles since then, largely on the expectation that the ECB would soon instigate QE to counter the low (and negative) growth in the eurozone.

When the market was trading up to the 1.40 level, bullish sentiment for the euro was high, but now a more bearish picture has emerged. That raises the question: is the euro oversold here?

This is the hourly chart:
tt6

This is my tramline trio (text, pp 55 – 57). My centre tramline was broken to the upside (text, pp 104 -114) and weakly rallied to the upper third tramline target (text, pp 60 – 61) and turned down.

These are my new tramlines:
tt5

There was a terrific short trade when the market broke below the w1 low and entered a long and strong third wave (text, pp 118 – 120).

My w1 = w5 target is at the 1.3270 area.

Outlook

Shorts can look to take partial profits in the 1.3270 region.

My other targets are closer to the 1.32 area. The remainder of profits can be taken there if market reaches.

My longer-term strategy is to look for a good rally off the wave 5 low (which I hope will be an A-B-C (text, pp 88 – 90, 97 – 104)).

Short-term long trades during this rally phase could be considered, but the best trades will be to resume shorts following completion of the relief rally.

Gold

We have seen very choppy action recently which has produced whipsaw trading. Swing trading has been very tough, but I believe the market is setting up for bigger moves.

Here is the daily chart:
tt4

I am working this tramline trio and the last great setup was the long entry as marked, which produced a $50 profit in three weeks. That entry was a tramline break signal (text, pp54 – 55, 68 – 71). The exit was a hit (actually, an overshoot) of the third tramline target (text, pp 60 – 61).

Here is the current chart on the hourly:
tt3

A break of my major trendline is a tradable event.

My longer-term scenario is this:
tt2

Outlook

Short trades are looking good and a break of the $1280 level would confirm the downtrend is intact and next target is the lower tramline in the $1260 area.

My longer-term forecast is for a break of the $1180 level and a move towards $1000 (and beyond).

AUS/JPY

It has been in a bull market since the lows of a year ago. Here is my daily chart:
tt1

I have a great tramline pair and the next target is the upper tramline – about 300 pips away, so a trade here might be worth a small risk.

Heavy resistance here at the 96 area since April, but once overcome, the market should rally out of it strongly. Note that this resistance is at the Fibonacci 50% level. The next Fib level the 62% lies just ahead.

Outlook

If bullish, long trades on dips from here appear sensible. First major target is the 112 area.

Remember when trading, I advise you apply rigorous money management discipline. I always use stops and employ my 3% Rule and Break-Even Rule at all times.

The 3% Rule: Never enter protective stops more than 3% of your account size away from entry. This applies to small to medium size accounts. For larger accounts, reduce risk from 3% to 2% or even 1% per trade.

Break-even Rule: When the market has moved anywhere from 100% to 150% of your initial risk, you can move your stop to your entry price. This ensures a wash trade as worst case scenario, except in those rare situations where markets gap through your stop. This will only happen very rarely when trading the 24-hour markets. It can happen more frequently when trading individual shares which are not 24-hour markets.

chris-fantataTramline Trading Newsletter