By Chloe Edwards, Trade With Precision
Towards the end of 2018 it was doom and gloom for the global indices, with most closing below where they opened at the beginning of the year. However, 2019 has started strongly, with the rally so far almost wiping out the losses of 2018. That is particularly the case for the US markets as we see from the chart of the SPX500 below.
With this bullish momentum in place, I am looking for long opportunities across several of the indices. Again using the SPX500 as an example, the daily chart below shows an uptrend in place with price action forming a series of higher lows and higher highs since early January. The 10, 20 and 50 moving averages (MAs) are showing good bullish geometry. Both the MACD and the RSI indicators are trending higher in a bullish fashion, which could confirm the trend momentum.
My reading of price action and the indicators suggests the potential for possible long swing trading opportunities, so I will be awaiting a pullback into the MAs on the daily timeframe.
I am also going to look for valid trade setups on a lower timeframe and the four hour chart has been showing some good trend structure, which could lend itself to trading pullbacks to the MAs. Entry on the lower timeframe could also have the benefit of offering a more accurate entry than entering on the daily, with potentially an even better risk-to-reward ratio as I build a longer-term swing position.
I am waiting for price to pull back to the Buy Zone around the 10 and 20 MAs, with the horizontal level at 2735 of particular interest as support. If this happens, I will be looking for a small reversal candle to form in order to take a swing trading position to the upside. In terms of the potential move, the next major resistance level above price I see at around 2790, so there could be the possibility of a high reward-to-risk trade.
The long opportunities may not be limited to the US indices. I also see a potential set up on the Hong Kong 50. The daily timeframe shows us the same higher lows and higher highs of an uptrend, with good moving average geometry. The four hourly timeframe shows a potential level of support at 28,250, so if price retraces down to this level it could offer a long swing trading opportunity, especially if we also see bullish convergence of the RSI and MACD indicators.