ANZ.ASX - FUNCHARTS - Countertrend Trading with a Trend Filter

Note: Funcharts are interesting charts I have found that offer a potentially unique perspective on a stock. Sometimes I’ll throw something out there that you might find controversial or wrong headed. If that’s the case your 2 cents worth is most welcome.

ANZ, one of the big four banks listed on the Australian Stock Exchange is a pretty tricky stock to trade, conforming more to a six month cycle between dividend and earnings dates. However from a purely technical standpoint, on a medium term basis there are opportunities to trade in line with a longer term trend, and on a short term basis to enter the stock on very short term pull backs.

In this analysis we looked at the Supertrend Strategy using a 50 period length with a 6xATR Factor to capture longer term trends and then looked at buying short term dips and selling short term rallies.

In the longer term timeframe this worked quite well with ANZ making good money based on the Performance Summary but entries and exits are few and far between with this approach. Bringing the time frame back to a swing trading standpoint, the best results came from using the Supertrend STRATEGY in a countertrend way, buying dips and selling rallies using just a 3 period ATR Length with a 1 period factor, giving plenty of trades. Filtering the short term system with the longer term trend also resulted in more frequent winning trades so trading countertrend in the very short term with a longer term trend filter worked nicely.

The catch is when you get a longer term trend change without a resulting rally to exit on the countertrend system, which can at times result in very large losses, like during Covid. It is for this reason a stop loss should be set, even when trading countertrend to prevent large losses on a stock that does often trend. Using the blue trailing stop line is a common sense area to position a stop loss as insurance against a big fall.