Some of my thoughts + Trading System - Page 11
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  1. #101
    elang's Avatar
    elang is offline Superior Master Contributor and Member
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    Default Gbp/usd

    Good day everyone,

    Quick recap.

    GBP/USD:

    The rise from 1.8833 (start) to 1.9846 (termination) spawned consolidative price action in the range of 1.9433 (low of consolidation range) to 1.9749/6 (high of consolidation range)

    On the UPSIDE our initial aim was to break over the consolidation channels' high of 1.9749/6 in order to resume the rally from 1.8833

    On the DOWNSIDE our aim was to break below the consolidation channels'low of 1.7433... and that we did, which developed a decline taking us all the way down to 1.9260

    On the downside there were two major levels of S that should have been watched, those were 38.2% and 50.0% retracement of 1833 to 9846.

    The initial prediction and history says that most rallies and declines with intentions of resuming their direction will normally only retrace to levels of 38.2, 50% and in some cases with weak retracements only to 23%

    You should feel comfortable with price retracements to the 38.2 level, it is normal.

    Retracements to 50% should raise the question as to whether this rally will come back, your bias however should still be in the initial direction of the trend, if you are a mid-term trend trader.

    Retracements moving from 50% to 61.2% are in the danger zone, around here you should have pretty much lost all hope and terminated most of your positions, waiting for more signals to confirm a new trend direction with a break of 61.2%

    As we know it, the fall from .9750 treminated around the 50% Fibonnacci zone as the mass expected. The oppinion in such a case was that the rally would naturally begin to resume for a break of consolidation channel low now S (9450-ish) and eventually the consonlidation channels high now R (9450)

    The bounce of 9260 moved upwards supported by an ascending trend line and round the 9320 price on monday the 8th of January (yesterday to the alcoholics) the price broke out of that trend line downwards after which i sold expecting it to fall back down to test 9260 once more.

    It was the most logical scenario at this point, however the logic of a good TA (Technical Analysts) is sometimes no match for the global emotional jungle that is the forex world, so what happened ?

    Perfect break, followed by a +40 pips decline and then all of a sudden we have a massive bullish engulfing candle which takes us right back above the trend lines... well, obviously some big players ain't likin the poundin on the pound if you know what i mean, so they slip they fall and they accidentally hit the GBP/USD buy button for 100,000,000,000 lots and weee we're back up 40 pips and over the trend line.

    We don't care why it happend, my broker says some soviet name bought in on it and that was the reason, i say i don't care because i had my stop set at .9344 so i was only out about 25 pips.

    It is EXTREMELY reliable to place stops above trend lines when you are trading a trend line breakout. You almost always know that if the price pops back above the trendline decicively, that things aren't going your way. (BEARISH Scenario)

    It is more likely for the price to break and pop back up to test the trend line before heading down (BEARISH Scenario).

    Before we delve into the present now, please note several things.

    ONE: The price is currently located around 32.8% Fib. Retracement of 9750 (High) to 9260 (Low)
    TWO: This also happens to be around the 9450 area which is a major R/S
    THREE: RSI on H4 is nearing 70

    Around this level there are (now were, because things progressed as i was typing this) ....so there were a few possible scenarios.

    1. The price broke over 9450 DECISIVELY... did it ? No... check M15, it broke and closed the candle in a perfect shooting star, followed by a bearish engulfing... which equals what ?... thats correct a perfect Evening Star pattern.

    Once the evening star was formed it moved down with a break attempt of the trend line, but didn't succeed to well, obviously there is still a lot buying pressure.

    It just so happens that these are very reliable reversal signals, we've got the one, two, three factors up there, plus these candle stick signals too.

    I can't shake the notion that we have a top here and we might see a mass retest of 9260.

    The thing about evening star patterns is that they sometimes take a while to actualy form a good top, but there are in most cases extreeeemely reliable.

    My bias for now is on the downside and i am thinking a break of the up trend line from 9260 with a retest of 9260.

    Now... because we are smart people we know the market moves both up and down and sideways, so... we need to prepare ourselves for a possible bullish scenario too.

    In this case its pretty obvious: we need to break 9450 decisively then 9474 > 9530 > 9750 (i've bolded them because they are majour R/Ss)

    Thats all dudes and dudettes, good luck!!

    Regards,
    E. Lang

    PS: CHECK THE CHAARTSSS, they are in order of development!
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    Last edited by elang; 01-09-2007 at 05:14 AM.

  2. #102
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    elang is offline Superior Master Contributor and Member
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    Default Gbp/usd

    Hey guys,

    Just updating the situation on GBP USD

    As you guys can see we broke the ascending trendline, but boy there is a lot of buying pressure still holding the price down.

    It is now hovering above BLUE 50 EMA.

    It managed to get as far as 9408 after bouncing of 9454 (todays high)... but it is really struggling to get below that 50 EMA, everyone knows if it does it will drop.

    Its a tough situation, and you may go crazy if you're in a position right now, so just set your stop above the last high and wait.

    A little patience can go a looong pippage

    Regards,
    E. Lang
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    Last edited by elang; 01-09-2007 at 10:27 AM.

  3. #103
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    elang is offline Superior Master Contributor and Member
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    Wow guys,

    Today was a terrible trading day.

    Before things developed i was certain in a few possible scenarios, but a lot of contradictions came up and i got confused.

    Confused = You don't know what is going on, hence it's not possible to have any sort of bias and it is not acceptable to trade.

    I closed my position with loss for today, i still believe the GBP/USD may fall and if it does i think it will reach the 9350 level after which it will bounce back up.

    If this comes true we will have a bullish Head and Shoulder trend reversal pattern with a neckline around the 9455/60 area with a probable profit projection of 150+ pips - a good place to set buy orders would be around/above this area.

    On the downside. The possibilities are a break of the 9350 are and a test of 9260

    Thats pretty much it.

    I will look forward to tommorrow to recover my loss and make some profit.

    Regards,
    E. Lang

  4. #104
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    elang is offline Superior Master Contributor and Member
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    Default Gbp/usd

    Good morning guys,

    For those of you who had the chance to hold on longer to the trend break short play we made, you could have profited at least 70 pips.

    I had a loosing day and too many contradictory signals so i decided not to trade for the remainder of the day.

    As i predicted the price break-out (bearish) from the ascending trend line started at 9260 went as far as the 9360/50/40 area after which it reversed.

    This was also 50%.

    On the upside for now our next targets are: 9454 > 9564 > 9570

    On the downside possibilities are that the price bounces of 9545 and declines to retest 50% or the 9340 area and then 9260

    As the facts have made it clear we have a right shoulder at 9340 a left shoulder at 9348 and a neckline around the 9454 area.

    Head and shoulder reversal patterns are extremely reliable signals, just like the evening star on yesterdays short trade.

    In theory probable profits on a neckline break from a head and shoulder pattern should be projected by calculating the distance in pips from the HEAD of the pattern to the neckline > in other words from 9260 to 9454 are about 200 pips > that projected of 9454 is about 9650 as a projection after the break of the neck line (IF it happens)

    We only use IFs in TA, there are no certainties.

    Thats pretty much it for now.
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    Last edited by elang; 01-10-2007 at 04:40 AM.

  5. #105
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    elang is offline Superior Master Contributor and Member
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    Default Gbp/usd 11.01.2007

    Good morning everyone,

    " Cable's fall from 1.9454 extends further to 1.9316 and is now pressing trend line support (now at 1.9318) again.

    Intraday bias is still on the downside and further decline towards 1.9261 low is in favor as long as cable stays below 1.9423 resistance. On the downside, break of 1.9261 low will indicate decline from 1.9750 has resumed for 1.9177 cluster support.

    Meanwhile, on the upside, above 1.9454 will suggest that rebound from 1.9261 has resumed for 1.9564 cluster resistance. "

    So basically, either the price bounces of the trendline now, or it breaks through and tests 9260 with a possibility of a break lower or a bounce back up.

    Indicators on H4 and D1 all show oversold conditions and i feel its time for a big turn around.

    On the upside levels ot watch are: 9421 > 9454 > 9564 > 9750

    TODAYS NEWS: Easy-Forex: The Financial Calendar

    Regards,
    E. Lang
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    Last edited by elang; 01-11-2007 at 03:30 AM.

  6. #106
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    elang is offline Superior Master Contributor and Member
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    Default Potential Gbp/jpy Trade

    POTENTIAL GBP/JPY TRADE
    Entry Criteria:

    1. 5/10 EMA cross
    2. RSI < 50
    3. Stochastics are trending down
    4. MACD is negative

    Targets:

    1. Last R turned S at 231.91
    2. Cluster support at 230.97
    3. 228.16

    Stop Loss:

    - 234.82

    Regards,
    E. Lang
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  7. #107
    elang's Avatar
    elang is offline Superior Master Contributor and Member
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    POTENTIAL GBP/USD TRADE
    Entry Criteria:

    1. 5/10 EMA cross
    2. RSI < 50
    3. Stochastics are trending down
    4. MACD is negative

    Targets:

    1. 9315

    Stop Loss:

    - 9484

    Regards,
    E. Lang
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  8. #108
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    Dear Effi,

    thanks for posting your potential trades. this way, we can all see for ourselves what to look for according to your system. keep on posting this way!
    however if you mention which timeframe should be reliable enough for us to short on, it would be great. (is M30 enough? 1H? 4H?)
    thanks!

  9. #109
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    elang is offline Superior Master Contributor and Member
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    Hey Parsush,

    The market is really choppy, so I'd wait for good signals on H1 for now.

    Neither the GBP/JPY nor GBP/USD trade worked out.

    The same trades could have been played on in reverse eg:

    GBP/USD: Instead of a break of the trend line, you could have bought at the trend line bounce and set your stop at the last low: ~.9424 with a target of .9531 > .9564 > .9750

    GBP/JPY: Instead of a break of the trendline, you could have bought at the trend line bounce and set your stop at the last low: ~233.87 with a target of 235.06 > 240.98

    Regards,
    E. Lang

  10. #110
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    Hey Elang, just wanted to say thanks for what is probably the best thread on babypips - I posted this link in the online trading room I'm in and people were impressed!! Your system is a permanant fixture on my platform now and provides great confirmation to the another system I use as well as standing up on it's own. Your daily thoughts are invaluable - keep up the good work!!

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