Portfolio chart analysis 22.12.2016

Markets have been surprising in the last weeks. Not only did I make some bad trade decisions, no, all traders I copy right now on eToro are between 5 and 30% in red. So I am not the only one who got surprised and messed up. Anyhow, now I am here, two days before Christmas wondering what to do with those unfortunate trades:

Sell $Ger30: -33% and -38%
$Copper: Sell +23%, Buy -34%
Sell $DJ30: -11%
Buy $Gold: -21%

I am especially worried about the $Copper and $Ger30 trades so I tried myself analyzing the charts of those assets. The target is making decisions whether to hold or close those trades or to tighten the stop loss limits. As usual I like to share and discuss my thoughts with you in this post.

Chart analysis on $Copper

According to my statistics $copper is the worst asset I have been trading on eToro. Nearly 25% of all my trades were on copper, but I generated most of my losses with this commodity. And again, I messed up pretty badly. I opened a sell trade on November 30th at $2.567 right before copper went all the way up to $2.700. Afraid of missing the rally, I opened a buy trade at $2.704 on December 5th. Due to different leverages and trade sizes my situation is as follows: Every pip copper goes down means a loss of approx. $0,03. So as long as I keep both trades open, market movements don't hurt much. Of course that is not my idea of trading, so my focus for the chart analysis is to find good points to close those trades and maximize profits (or rather minimize losses).

My 1D-chart starts in the mid of October but doesn't get interesting until October 25th, when copper suddenly started to rally. On November 11th a red candle with a small body and a long upper shadow occurred: An inverted hammer. As literature tells us, this candle is a reversal signal in a bullish market - and copper proved them right. But only to a support level around $2.460 where it bounced off and started a rally all the way up to $2.7 (and temporarily above). This level appears to be a resistance, as copper didn't manage to close above that, before it pulled back on December 6th. In order to find more supports and resistances in my chart I created two Fibonacci patterns. The first one from October 25th to December 12th thus covering the start and the (so far) overall maximum of the rally. The second one from November 11th to November 24th thus covering the second part of the rally after the asset bounced off the support. If you look closely you can see, that the 38.2% line of the first pattern matches the support level at $2.46, which is also the 100% line of the second Fibonacci pattern. In combination with the last candle (I would call it a "weak hammer"), that implies a trend reversal, there could be a chance that copper starts another rally. Two more indications for an uptrend are: First, the MACD shows the first green bar, thus indicating that a downtrend is slowing down (remember this indicator is lagging). Second: The %K-line of the Stochastics indicator crossed the %D-line, which can be seen as a buying signal.


So to sum up: It looks like copper could bounce off that $2.46 support level and start to rally again. That would mean it's a good time to close my sell trade and keep the buy trade. Since all those analysis techniques I applied do not guarantee anything, I want to play save and use proper stop losses rather than closing the trades immediately. Copper closed at $2.506 today. If it starts to rally again, it will probably open higher and increase fast. That would be the right time to close my sell trade. If the rally doesn't start it will probably not go more than 20 pips above today's closing rate, so I will set my SL to $2.526 for now. If I interpreted the chart wrong and copper will pull back further, I want to limit my losses on the buy trade. Therefore I set the SL 20 pips below the support level at $2.44.

Chart analysis on $Ger30

When I look back to the beginning of December I cannot understand why I opened two sell trades on $Ger30, just when it started a fine rally. I understand even less why I didn't close those unfortunate trades and bought $Ger30 to benefit from the rally. Anyhow, the question now is, should I close them and take the losses or is there a chance that Ger30 comes down again?

I drew a 1D-chart that starts on August 2016. It clearly shows, that Ger30 was more or less moving sideward between $10,000 and $10,800 the whole time until December 5th. There was one remarkable candle on November 9th, when it gained more than 600 pips in a single day (probably the Trump-effect). Anyhow, for me there was no clear sign for a rally until December 6th, when Ger30 broke the resistance at $10,800 and closed slightly above (that would have been the best time to close my sell trades). The rally continued till December 9th, when it first pulled back for a day just to continue in at a lower pace. Two days ago on December 20th it broke another resistance at $11,430, a value that it couldn't exceed in his rally from October to December 2015 (not shown on my chart). But maybe it is only testing the resistance and will pull back from now? Today's candle looks a bit like a doji, showing the indecisive sentiment of the traders. The stochastics indicator implies that the asset is overbought, but doesn't give clear signals in trending markets. The MACD indicates that the uptrend has already slowed down and might reverse. The Fibonacci pattern I drew over the complete rally indicates, that the former resistance of $10,800 could become new support as this value matches the 61.8% line - but just in case the market pulls back. Looking at the past two years of the DAX it appears most likely, that the market will pull back. So there are a lot of indications but they are all very vague.


Of course I like the idea of a pullback, thus reducing my losses, but I cannot rely on that and need an exit plan. If the market is only testing the mentioned resistance, it will not go above $11,500, so that appears to be a good SL limit. Since it is close to the current rate, it is possible that the trade is closed with high losses right before the market pulls back. Therefore I will only set the SL for one trade, leaving the SL for the other trade wide open. Thus I give the market the chance to form clearer patterns.

Now it is time for you to give some feedback: What would you do with my trades? What do you think about my analysis approach? Any remarks on how I used the Fibonacci patterns (as I just started learning them)? Please leave me a comment here or directly on eToro.


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Related posts:
Rearranging my CopyTrading portfolio cw50/16
Getting out of sync @CopyTrading
portfolio review 12.11.2016 <<= didn't look that bad back then...

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Important remark: The results presented above and throughout my blog are no recommendation for your trading! I only share my personal findings and opinions to give ideas and let my followers and copiers know what I am currently working on. I can not guarantee the correctness of my calculations and my presented results. Furthermore past performance is not an indication for future results. Only trade with money you are prepared to lose!