Short term
Trade view / 11 August 2016 at 5:40 GMT

Watch for SWE30 volatility following tight range trading

Instrument: SWE30.I
Price target:
Market price:

The markets have had quite a run up since the Brexit lows, and the last swing higher off the August 3 low until the peak on August 9 has been no exception. Following the almost panic-like buying on August 9 the market took a breather yesterday producing a small range candle, a Doji. A Doji pattern signals indecision and has yet to either break higher or lower to produce a signal.

To the upside we are watching the August 9 peak at 1412 and to the downside the low of yesterdays candle at 1400. 

We have however Gann pivots at 1407 which we closed below and as further support we have 
1396, 1388, 1377 and 1369. To the upside above 1407 we have resistance at 1419, 1425 and 1439 and 1445.

As a side note cycles indicate that the SWE30.I backed up by the cycles in the banking sector shouldn't top out until Friday at the earliest. On the other hand there is room for a short-term dip due to the stretched conditions. The August 9 close was for example outside the BollingerBands® which indicates a tape that has gotten ahead of itself.

Management and risk description

The plan is to either sell a break below 1400 for a move lower to at least 1388 and from there 1377 and 1369. The stop is a break above 1412.

Or, for the bullish setup we are looking for a break above 1412 for a move higher into 1425, 1439 and 1445. The stop could be placed either upon a clear break below 1407 or a hard stop at 1400.

The main risk to this setup, bullish or bearish, are obviously fake breakouts. Especially during early trading.

The setup from June is found here.

Parameters bearish move

Entry: sell below 1400.

Stop: 1412.

Target: 1388, 1377 and 1369.

Time horizon: 1-2 days.

Parameters bullish move

Entry: buy a break above 1412.

Stop: 1400.

Target: 1425, 1439 and 1445.

Time horizon: 1-2 days.

SWE30.I hourly chart
SWE30.I hourly chart
SWE30.I daily chart
SWE30.I daily chart
SWE30.I daily development chart
SWE30.I daily development chart

Source: Saxo Trader. Create your own charts with SaxoTrader; click here to learn more 

— Edited by Gayle Bryant

For more on CFDs click here

Non-independent investment research disclaimer applies. Read more
Johan Berntorp Johan Berntorp
Not much of volatility so far. It looks like five swings off the lows. I figure an alternative here is to wait for a pullback, see if 1407 holds and then buy the breakout.
Johan Berntorp Johan Berntorp
This is more and more looking like a market that is topping out and given a possible bank cycle peak here it is better to step aside. Not much breakout momo either for that matter.


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