Daily Form April 28, 2009

Detecting Profitable Patterns For Active Traders
Trade successfully without having to be right about the underlying market direction
TUESDAY APRIL 28, 2009       07:16 ET

Markets appear to be gripped by growing anxieties about the possibility of a flu pandemic with all of the accompanying negative consequences on an already vulnerable global economy.

As this is being written key European markets are down by about three percent and the Nikkei in Japan suffered a 2.7% decline along with falls in other Asian markets.

The chart for the S&P 500 (SPX) reveals a rather intriguing pattern where the candlestick registered in Monday’s session was an inside pattern - all of the price action was confined within the range of Friday’s session. As can be seen on the chart this coincides with a key potential chart resistance level and, given the disconcerting news flow, there is additional plausibility that we may be headed back towards a re-test of levels in the neighborhood of 835 again.

Chart for The Nikkei 225 (N225) and the DAX in Germany shows that the leading export based economies would perhaps be most immediately affected if the flu pandemic causes further consumer retrenchment this can only augment fears that any recovery in business momentum could have even more adversity to contend with.

The chart for the Nikkei is not looking at all constructive at present with a break down from the uptrend clearly visible and should the index fail to find support at the 8400 level this could trigger a rather abrupt drop to lower levels last seen in March.

The DAX has retreated by almost three percent in trading in Europe on Tuesday morning.

The chart pattern reveals that the index struggled to remain above the 62% retracement level, using the fibonacci grid and levels that I have been outlining for some time, and that there now seems to be a probable return towards the 50% retracement level on the fibonacci grid and perhaps to another test of the 50 day EMA at 4350.