Thursday, May 31, 2012
5.31.2012
Low range day due to yesterday's large range and tomorrow's non-farm payroll release. Some profit taking going on today causing a small retrace. Nothing lining up technically.
Wednesday, May 30, 2012
5.30.2012 Cable Trade Review
Seemed like a long way to go for little reward so ended up closing the position for 1.5% gain. Like to get a 2:1 reward to risk ratio but in this case I am more in a scalping mode this week so I'll take it.
I really should have put 2% risk on this one. That's three wins in a row so I will increase risk back to 2% if the next trade warrants.
Trade on 1 hour chart. Entry and exit prices noted. Type II divergence shown.
SMT divergence. This is kind of iffy. Looks like I cherry picked an insignificant swing high during LO on the 15 minute chart. Sometimes it is difficult to show divergence using a close line graph. That's why it is important to also be watching for SMT just using candles.
USDx divergence. Note how the USDx (red line) makes a lower low than previous swing lows (Asian range). At the same time the cable (purple line) refuses to match the lower low with a higher high than it's Asian session. Showing weakness in the cable.
A/D divergence. I did not even note this before entry. Definitely another reason why this could have been a 2% risk trade.
I really should have put 2% risk on this one. That's three wins in a row so I will increase risk back to 2% if the next trade warrants.
Trade on 1 hour chart. Entry and exit prices noted. Type II divergence shown.
SMT divergence. This is kind of iffy. Looks like I cherry picked an insignificant swing high during LO on the 15 minute chart. Sometimes it is difficult to show divergence using a close line graph. That's why it is important to also be watching for SMT just using candles.
USDx divergence. Note how the USDx (red line) makes a lower low than previous swing lows (Asian range). At the same time the cable (purple line) refuses to match the lower low with a higher high than it's Asian session. Showing weakness in the cable.
A/D divergence. I did not even note this before entry. Definitely another reason why this could have been a 2% risk trade.
5.30.2012
Second TP hit at 5540. 1/4 off.
I have a limit order at the 5500 figure for the rest of position. Not sure I'll keep that but we'll see what reaction we get in the next hour or so.
I have a limit order at the 5500 figure for the rest of position. Not sure I'll keep that but we'll see what reaction we get in the next hour or so.
5.30.2012 Cable Trade
Short cable at 5600.
- NYO kill zone
- SMT divergence
- USDx divergence
- Market flow and structure short
- HTF S&R level
- OTE London high to low
- Big figure
- Asian session low
- Previous day low
- MS1 pivot
- Type II stochastic divergence
- A/D divergence (I didn't notice this until reviewing the trade!)
1% risked.
Half off at 30 pips and stop to break even. Seeing if we can reach 5540 ADR and waiting for 1500GMT. I'm expecting choppy price action this week and maybe next so I will make the decision then if I want to close the entire position out or leave a little on for the 5500 figure (162 fib extension).
Tuesday, May 29, 2012
5.30.2012
Bond yields don't tell much of a picture.
All the equity markets traded above their 5.22.2012 swing high so no failure swing there.
One interesting thing. If you believe in the power of three and look back at the last month of trading on, for example, the cable. As the move started we had an up day on Monday, then Sunday and Monday, then Friday, Sunday and Monday. All days (with the possible exception of the Friday which may have been profit taking) where the banks were accumulating for the impending move down the rest of the week.
This week we have had a down Sunday, Monday and now Tuesday. Monday doesn't count too much because it was a holiday. Are the banks accumulating longs for a reversal? Reversal profiles usually happen late New York or right before London close. Couldn't you just see the banks reversing price tomorrow and all the talking heads will say it is because of something Draghi says?
I can just see the headlines "Draghi announces his shoe size. Euro climbs 100 pips!".
All the equity markets traded above their 5.22.2012 swing high so no failure swing there.
One interesting thing. If you believe in the power of three and look back at the last month of trading on, for example, the cable. As the move started we had an up day on Monday, then Sunday and Monday, then Friday, Sunday and Monday. All days (with the possible exception of the Friday which may have been profit taking) where the banks were accumulating for the impending move down the rest of the week.
This week we have had a down Sunday, Monday and now Tuesday. Monday doesn't count too much because it was a holiday. Are the banks accumulating longs for a reversal? Reversal profiles usually happen late New York or right before London close. Couldn't you just see the banks reversing price tomorrow and all the talking heads will say it is because of something Draghi says?
I can just see the headlines "Draghi announces his shoe size. Euro climbs 100 pips!".
5.29.2012 Fiber Trade Review
This is one of my favorite trades. A high made in London and trades down in to New York. Doesn't trade down too much, at least 30 pips but not enough to hit ADR. Then a OTE retrace in New York with SMT divergence.
I had this trade. Unfortunately I had to cut it short to go watch the kids for an hour. However, the .33% increase in my account is enough to put me back in profits. A psychological level that increases confidence.
Monday, May 28, 2012
5.28.2012 Levels
Cable
5830
5730
5600
Fiber
2630
2490
2200
Aussie
9880
9680
9380
Kiwi
8047
7670
7450
5830
5730
5600
Fiber
2630
2490
2200
Aussie
9880
9680
9380
Kiwi
8047
7670
7450
Sunday, May 27, 2012
5.28.2012 COT Data
Cable
This makes a little more sense. Commercials lessened their shorts and are now only a little bit net short. So a pullback in to net longs and then lessening those would be a sign of a reversal. Either way it is really not an extreme value so for now I'm not gleaning too much from this info. You do see a small drop in open interest indicating commercials may be lessening their shorts and a price climb would result.
Fiber
Fiber continues to make much more sense. Commercials increased their longs to an extreme value. When they start lessening their longs it will be a good sign we have hit the low. Open interest remains high.
This makes a little more sense. Commercials lessened their shorts and are now only a little bit net short. So a pullback in to net longs and then lessening those would be a sign of a reversal. Either way it is really not an extreme value so for now I'm not gleaning too much from this info. You do see a small drop in open interest indicating commercials may be lessening their shorts and a price climb would result.
Fiber
Fiber continues to make much more sense. Commercials increased their longs to an extreme value. When they start lessening their longs it will be a good sign we have hit the low. Open interest remains high.
5.28.2012 - Bond Yields
Not really trending right now so difficult to see any failure swings.
http://stockcharts.com/freecharts/perf.html?$ust2y,$ust5y,$ust10y,$ust30y
http://stockcharts.com/freecharts/perf.html?$ust2y,$ust5y,$ust10y,$ust30y
5.28.2012 Top Down - Seasonal Tendencies
Cable usually has a slight retracement around now and then continues down in to June for a near yearly low.
Interestingly, the June low usually matches the low made in March which is the level we are currently at (the weaker fiber blows past that level creating a bit of a divergence on the daily chart).
Saturday, May 26, 2012
Week of 5.20.2012 Review and Next Week's Plan
You look back at the week and trading on the left side of the chart is so easy. Even though I wrote that predicting price action is futile I still focused too much on trying to find the reversal. There are more signs that price will reverse shortly but instead of focusing on trying to predict when it will reverse I will wait for it to do so and then change my bias. Until then I remain focused on shorts.
This week I will only trade the New York session. Assuming the high/low of the day is made in London I will simply look for a retracement during New York to get in sync with the move of the day. To try to pin point when to get in I will concentrate on the four signals I like to use:
This week I will only trade the New York session. Assuming the high/low of the day is made in London I will simply look for a retracement during New York to get in sync with the move of the day. To try to pin point when to get in I will concentrate on the four signals I like to use:
- SMT divergence
- USDx divergence
- Type 2 trend following (or in the case of a reflection pattern Type 1) stochastic divergence
- A/D divergence
I was using A/D divergence incorrectly using a candlestick chart and hopefully by using a line chart I will see it more clearly and the tool will become more effective.
If I see any two of these I'm entering the trade with proper risk management. Risk can be decided by the number of signals confirmed above, pivot zone agreement, market flow agreement, and market structure agreement.
I think I will start with very low risk for the start of the week and see if I can ramp it up by the end of the week.
If I see any two of these I'm entering the trade with proper risk management. Risk can be decided by the number of signals confirmed above, pivot zone agreement, market flow agreement, and market structure agreement.
I think I will start with very low risk for the start of the week and see if I can ramp it up by the end of the week.
5.24.2012 Fiber Trade Review
I did end up going short on the fiber at 2571 1.5% risk. Got stopped out on a stop run but got right back in at 2610. Got stopped out again at break even and got right back in at 2602. Price moved back to 2571 where I took half off and moved stop to break even. Got stopped out but was able to mitigate the earlier loss. Was right on the day too but banks did a good job clearing out stops before sending it down to the 2500 figure by the end of the week.
Wednesday, May 23, 2012
5.23.2012 Cable Trade
This is why you don't trade against the trend.
Went long at 5740. Stopped out 5711. 2% loss. Demo trading the rest of the week.
Went long at 5740. Stopped out 5711. 2% loss. Demo trading the rest of the week.
Tuesday, May 22, 2012
5.23.2012 London Open
Second verse same as the first. Although some of the signs of a bounce are disappearing my bias is still to look for a long just based off where we are on the charts. Look for a Judas down to take out lows and go long.
Fiber
1.2641
Cable
1.5740
Fiber
1.2641
Cable
1.5740
5.22.2012 4 Hour SMT
UPDATE: Nice while it lasted but Asian session just dropped price so no more SMT
Cable Outside Day with a Down Close
Larry Williams teaching (I think it was from him). Days whose high and low exceeds the previous day and closes down has a high likelihood of being bullish the next day. We are at some daily support.
I just don't want to be blind to keep going long when price keeps dropping. I've been pretty good at avoiding that which I see newbies doing all the time (trying to pick the bottom or top).
Also, today was a pretty good ranging day so many times you can expect a smaller range day the next day.
I just don't want to be blind to keep going long when price keeps dropping. I've been pretty good at avoiding that which I see newbies doing all the time (trying to pick the bottom or top).
Also, today was a pretty good ranging day so many times you can expect a smaller range day the next day.
USDx 4 hour Divergence and Daily Chart
Dollar makes a higher high while cable and fiber do not make a lower low. Shows dollar weakness and cable/fiber bullishness.
USDx hit resistance from December. Not sure if that could be considered Type I reversal stochastic divergence from the May 17 high.
UPDATE: Cable and fiber have been dropping in to the Asian session. Divergence I guess technically has been eliminated as now both have made a lower low to USDx's higher high. However, they sure haven't matched the level so I still give a little credit to this difference.
USDx hit resistance from December. Not sure if that could be considered Type I reversal stochastic divergence from the May 17 high.
UPDATE: Cable and fiber have been dropping in to the Asian session. Divergence I guess technically has been eliminated as now both have made a lower low to USDx's higher high. However, they sure haven't matched the level so I still give a little credit to this difference.
5.22.2012 Fiber Trade Review
I ended up going long on fiber @ 2755.
I was hoping that this would be an OTE on 1hour chart for a pullback to go long until Friday. But at the same time without stochastic and/or A/D divergence I knew I was trading against the daily bias I was watching very carefully. In this case moving my stop when it got to 20 pips profit saved me any loss (actually profited $1.20!!).
When I saw the hammer form on the 1 hour chart I had a good idea we were going nowhere.
I only wish I had went short on the nice retracement on the cable but I was not at the charts at that time.
Bias is a bit muddled right now. 4 hour market flow down and I don't like trading against that.
- New York kill zone
- SMT divergence
- USDx divergence
I was hoping that this would be an OTE on 1hour chart for a pullback to go long until Friday. But at the same time without stochastic and/or A/D divergence I knew I was trading against the daily bias I was watching very carefully. In this case moving my stop when it got to 20 pips profit saved me any loss (actually profited $1.20!!).
When I saw the hammer form on the 1 hour chart I had a good idea we were going nowhere.
I only wish I had went short on the nice retracement on the cable but I was not at the charts at that time.
Bias is a bit muddled right now. 4 hour market flow down and I don't like trading against that.
5.22.2012
Both cable and fiber had a Judas up and then went south on "news" that Spain's bond offering did not go well. Risk on became risk off. In reality the banks knew they would go short the entire time, they just use news like this to really hammer it down and take out any stops before anyone can react.
Price is now sitting and consolidating at the levels I had posted last night. As of right now there are no technical reasons to get in to this market. I will sit on my hands until the picture becomes more clear.
We do have SMT divergence for a long and at the same time dollar is showing some strength against the fiber. (Fiber, the green line, has made a higher high while the dollar, the red line, did not make a lower low)
Price is now sitting and consolidating at the levels I had posted last night. As of right now there are no technical reasons to get in to this market. I will sit on my hands until the picture becomes more clear.
We do have SMT divergence for a long and at the same time dollar is showing some strength against the fiber. (Fiber, the green line, has made a higher high while the dollar, the red line, did not make a lower low)
Monday, May 21, 2012
5.22.2012
Working off the fractal we made Friday makes me want to see a Judas down and go long.
Cable
1.5770 level would be an OTE from previous low to all these highs. Are they just building orders to go long?
Fiber
1.2750 level would be an OTE from PDL to PDH.
Cable
1.5770 level would be an OTE from previous low to all these highs. Are they just building orders to go long?
Fiber
1.2750 level would be an OTE from PDL to PDH.
5.22.2012 Top Down
US Bonds
Nothing
US Bond Yields
Open Interest
Nothing
Cable Open Interest Chart
Fiber Open Interest Chart
Equities
No failure swings but check out the reaction levels. DJA hits 62% and old resistance, S&P 50% and old resistance, NASDAQ a little bit below 50% and old resistance. For now it appears risk on trading.
Calendar
Nothing too earth shattering.
Forex Calendar
USDx
Using today's swing you see an OTE at 81.22 which has confluences with a number of other resistance levels.
Interesting enough note that cable refuses to make lower low when USDx makes higher high showing strength for the cable. Not too significant yet but something to keep an eye on.
SMT
Looking at a line chart of close values you can see SMT bearish divergence between Friday's close and today's.
However, when you look at a candle chart you see it is not too significant.
Look at the 1 hour and it makes you think again. They have run up fiber but cable, with more relative strength has stayed almost flat the entire time. Are they going to pop it? Did they keep it flat because of some EUR/GBP manipulation?
Nothing
US Bond Yields
Open Interest
Nothing
Cable Open Interest Chart
Fiber Open Interest Chart
Equities
No failure swings but check out the reaction levels. DJA hits 62% and old resistance, S&P 50% and old resistance, NASDAQ a little bit below 50% and old resistance. For now it appears risk on trading.
Nothing too earth shattering.
Forex Calendar
USDx
Using today's swing you see an OTE at 81.22 which has confluences with a number of other resistance levels.
Interesting enough note that cable refuses to make lower low when USDx makes higher high showing strength for the cable. Not too significant yet but something to keep an eye on.
SMT
Looking at a line chart of close values you can see SMT bearish divergence between Friday's close and today's.
However, when you look at a candle chart you see it is not too significant.
Look at the 1 hour and it makes you think again. They have run up fiber but cable, with more relative strength has stayed almost flat the entire time. Are they going to pop it? Did they keep it flat because of some EUR/GBP manipulation?
5.21.2012 Review (cont)
Just a quick note while the kids nap: Both losing trades today would have been profitable had I not had such a tight stop or screwed around with the stop loss.
The aussie alone would have been 40+ pips at 2% risk.
UPDATE: OK, what can you do but shake it off. The aussie went up nearly 90 pips. Even the cable which had a relatively flat day would have made you 40 pips.
The aussie alone would have been 40+ pips at 2% risk.
UPDATE: OK, what can you do but shake it off. The aussie went up nearly 90 pips. Even the cable which had a relatively flat day would have made you 40 pips.
The tools work. Trust your analysis!
5.21.2012 Review
My trading plan allows for one more trade on a day I trade for a loss to try to mitigate. I went long on the aussie and got stopped out and then went long again and mitigated some of that loss. Ending up down .9% for the day. Less than half of the 2% allowed.
Cable has come all the way back to break even so I could have avoided that loss if my stop had not been so tight. (and actually as I write this just went in to profit).
If things stay the same this may end up being a down day for both the cable and fiber. Cable's OTE to go long is 5763, about 33 pips away from current price. Which would also knock out today's low.
Fiber's OTE to go long would be the 2700 figure. About 40 pips away from current price.
Will analyze more later but we may be setting up as I wrote earlier this morning for a Judas down in Tuesday's London open and then an opportunity to go long.
Cable has come all the way back to break even so I could have avoided that loss if my stop had not been so tight. (and actually as I write this just went in to profit).
If things stay the same this may end up being a down day for both the cable and fiber. Cable's OTE to go long is 5763, about 33 pips away from current price. Which would also knock out today's low.
Fiber's OTE to go long would be the 2700 figure. About 40 pips away from current price.
Will analyze more later but we may be setting up as I wrote earlier this morning for a Judas down in Tuesday's London open and then an opportunity to go long.
5.21.2012 Cable Trade
Limit order hit at around 7:00AM and by 7:19 stop loss hit. I only risked 0.6% on this trade as I don't like trading Mondays.
Had SMT, USDx divergence, Type II stochastic. No A/D divergence. Plus trading off the figure, the CPP, weekly low, 4hr market flow.
In thinking about the trade I should have waited for a bounce and then an OTE.
Had SMT, USDx divergence, Type II stochastic. No A/D divergence. Plus trading off the figure, the CPP, weekly low, 4hr market flow.
In thinking about the trade I should have waited for a bounce and then an OTE.
5.21.2012
Trying to predict price action in forex is a futile endeavor. First, I don't have enough experience to really predict with any accuracy. Second, even if you choose the most likely scenario to happen because there are so many options your choice may only have a .15 probability of occurring. So you would only be right 15 times out of 100, not great odds.
Of course, with that being said, here is what I was hoping to see. I wanted to see Monday be a down day representing a Judas down for the week. Low made in London open Tuesday and then price would move up through Friday.
As of now we are not seeing that. I'm ignoring the fiber for now because it is trading right at fair value on the weekly trinity. If price were to drop to the 2700 figure I would be interested in looking for longs.
Looking to the cable the same corresponding level would be the 5780 institutional level. Not sure if we will make it to either.
I looked for a long at the 5800 level but so far no USDx divergence. (difficult to see divergence with no real price action)
Of course, with that being said, here is what I was hoping to see. I wanted to see Monday be a down day representing a Judas down for the week. Low made in London open Tuesday and then price would move up through Friday.
As of now we are not seeing that. I'm ignoring the fiber for now because it is trading right at fair value on the weekly trinity. If price were to drop to the 2700 figure I would be interested in looking for longs.
Looking to the cable the same corresponding level would be the 5780 institutional level. Not sure if we will make it to either.
I looked for a long at the 5800 level but so far no USDx divergence. (difficult to see divergence with no real price action)
Sunday, May 20, 2012
5.20.2012 Futures
5.20.2012 USDx Review
Proof of relative strength for cable and fiber versus USDx?
USDx makes higher high while fiber and cable refuse to make lower low on the weekly chart.
USDx makes higher high while fiber and cable refuse to make lower low on the weekly chart.
5.20.2012 SMT Review
Fiber makes a lower low from the mid March swing low while cable doesn't.
Fiber almost makes it all the way down to the January low whereas the cable isn't even close.
Fiber almost makes it all the way down to the January low whereas the cable isn't even close.
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