Some of my thoughts + Trading System

Elang

Do you set your EMA on the open, close, weighted or doesn’t it matter.
Thank you for sharing your system and knowledge it is very helpful.

Paul

Hi Elang:

You are an intelligent person! What is your educational background? I’d swear you were in your 40’s or more by the wisdom you’ve transfered from your brain to the keyboard. Very impressive, and you’ve mastered the English language as well.

pwegner, I believe all EMAs are applied to price close. Anyways, that how I have set mine.

Question:
After EMA5 & EMA10 crosses and RSI crosses 50, what do you guys see as spread or distance between the 2 EMAs when you make your grand entry? 2-3 pips?? I usually want to wait for visible gapping.

Thanks Ramrocket that is where I have them set but was wondering what others were doing. I have not use this system long enough to comment on the entry point.

Hi PWeger:

For what it’s worth, I also set my EMA’s and SMA’s to reflect the closing. As best I can tell that is essentially the norm.

Hello guys,

Happy New Year to everyone!

I’m sorry for not writing for so long, but work has been very hectic the past few weeks, plus I’ve been spending a lot of time optimizing my system for better results.

Let’s see what GBP/USD is up to.

Price consolidation from the high of .9846 took us as far as .9750, it tried testing it a couple of times producing two candle stick stars, all and all you should know that dojis and stars around major R and S are good reversal indicators, so on its own just with that you should start becoming weary.

Now as I mentioned before, one confirmatory factor is not enough to let me trade enter a trade, so we need to look for more evidence and lets see what we can find…

  1. Dojis / Stars at .9750 (Price consolidation high from .9846)
  2. We see a 5/10 cross around the .9730 area (H1)
  3. PAR SAR confirm the down move
  4. RSI is below 50
  5. MACD is below 0
  6. Stochastics are looking fresh
  7. Trend line was clearly broken (the white ray)

As you can see we have a lot of factors and as in any strong move, the white 5 ema cuts right through the other emas like a hot knife through butter, these are all very good signals.

So what are our targets here ?

  1. First major Support at .9632
  2. Second major Support at .9565
  3. Third major Support at .9450
  4. If we break .9450 then it’s a whole new bearish world down there, much of which we can discuss later should such a scenario be confirmed

Talking about scenarios once more we try and avoid becoming surprised so we assume there are more than one scenes available.

  1. Is what we just talked about up there.
  2. Price bounces of .9632 (S1) and retests .9750

I very much doubt scenario 2 due to the strength of this move, plus look at the emas we don’t even have a clear spread yet, which leads me to believe there is more to come on the downside.

You will notice I’ve made a few additions and changes to my charts.

-I’ve added a few more emas. I now have 5,10,20,30,40,50. I added 30 and 40 not so much because I need them, but more of a visual aid.
-You will notice I’ve added horizontal lines at each 50 pips. The reason I’ve done this is because my experience tells me the price always moves 50 pips, as long as you can determine the move direction and catch the break out you will always be able to bag the 50 minus the breakout pips, so lets say at least 40. It’s strange but it works, in fact even if you scrapped all TA and just determined the trend direction and bough and sold at each 50, you bag at least 30-50 pips. Another factor here is that every 50 is almost always a significant support and resistance level.
-I am testing RSI levels of 7 and 9 at the moment, 7 seems to give me very good flexibility in catching tops and bottoms for the moment.

Anyway. From what I can see now as I’m writing this is that the price is correcting of S1 .9632. I think that .9650 or .9660 (10 EMA on M30) will handle the price after which we can aim to follow the bearish scenario.

Now as I’ve said before. We do our TA the best we can, we enter our trade and then we monitor to see if we were right or wrong, there is always only two outcomes here.

Minimize your Stop Loss value every time you can and the more the trade advances in your direction.
Preferably move your stop loss to your entry so you don’t loose anything even if the trade goes against you.

That’s it guys, I’ve already bagged my 50 pipos for today.
I will wait for the retrace and eventual break of S1 before I enter short again, in which case I will be targeting .9565

Regards,
E. Lang

PS: I use Exponential EMAs calculated at the Closing price.


Hey Guys and Girls :wink: ,

Quick update.
Perhaps meaningless to some, but i wanted to show you how important it is to draw trend lines.

Whenever we get into consolidation or a retrace the first thing you should do is draw your trend lines so you can determine when best to enter of the retrace bounce.

Please take a look at the chart i’ve attached.
As you can see i’ve gone down to the 5 minute chart to get the best entry point. Like i said before i closed my position out around S1 and said i’d wait for a proper break, and when i say that i mean that:

  1. Price breaks decisively through S
  2. Retraces upwards
  3. Breaks back down below the new low (formed due to the retrace)
  • This is what i call a checkpoint. The price leaves checkpoints here and there and thats where we have our critical R and S levels. When we have a rally or a decline, the price will retrace and create a checkpoint.

Think of it as saving your progress in a video game, this way if you die you know where you have to go back to (your latest checkpoint) and if you continue moving onwards, you know where you have to create your next checkpoint eg: end of level or mid level (in other words the next R or next S)

Hey, thats how i think of it :slight_smile:

Regards,
E. Lang

PS: Also notice how 5 EMA and 10 EMA handled the price so gracefully, like a ballerina doing the swan dance. This is a good signal signifying a healthy move.

PSS: We also have the next 50 pips coming ahead (.9600), we may expect some sort of a checkpoint to be ceated there, if this all works out we will run for .9565


I just noticed something a little bothering which i overlooked.

There seems to be a visible uptrend going on here and 9600 is sort of the next S.

Do take a look at the attached chart.

It will be v. good news if we break below that, im sure there are some stops below that, which would fuel a heavy drop.

Heads Up.

Regards,
E. Lang

UPDATE:

We are looking for a break of the lower trend line on the M5 Chart to revive the drop back down.

Check the first attached chart for the update M5 S and R.
The second chart is an answer to the reason why .9600 is being a female dog :slight_smile:



Me too +52 pips on USD/CHF.:slight_smile:

Hey guys,

Here is the breakout update.

You could have sold when the price broke out of the trend line to bag a good 10 pips just there.

We need to break .9593 however to move our crosshairs back to .9565 followed by .9450

Regards,E. Lang
PS: Great trading Ram! Happy new year to you!!



Good morning guys,

This is where you entry should have been today, once again using simple trend line techniques plus RSI/Stochastics you could have pipped that trade like a ninja and got in on the break straight off the bat.

My entry: Short @ .9508 (at the trend line break M5 Chart)

All you have to do is watch for a trend line break and thats it… Kabooom…

Don’t forget to watch your EMas.

The sentiment is that this retracement will terminate at 50.% or 38.2% of 1.8836 to 1.9846 which we just broke before resuming the rally to break 1.9846, thats the bullish scenario as well.

As i always say keep more than one scenario open.

If it breaks (50.% of 1.8836 to 1.9846) at 9340 then things will turn bearish and if 61.8% is broken you are in an all new secondary bearish trend.

So just keep your eyes open for now.
If you’ve been paying close attention you would have already bagged your 50 pips for today.

Easy as pie.

Regards,
E. Lang

PS: Watch out for the next 50 at .9450, the price might decide to leave a check point there and save game progress :))

HAPPY NEW YEAR!


stopped out this am eur/usd -15 pips
stopped out this am usd/cad - 15 pips
still open on the cable from london session +69 pips so far on 1D chart. Will see how today goes.

Hey Elang,

I see you are using new parameters on RSI, MACD, Stoc. How are those settings working for you?

They are doing great RAM, in fact im a lot more satisfied with these than my previous values for now.


GBP/USD Update.

Good morning everyone,

As i mentioned yesterday the overall sentiment was that this decline would be terminated at 32.8% or 50%.

We managed to break decisively through 32.8, but 50% is causing a problem.

Notice how at every 50 pips the price stopped to create a checkpoint, this way if the decline is terminated and the price starts rallying it already has predetermined destinations to check on the way back up.

I’m trying to break this down into a simple logic so you can understand things, the more you simplify and accept things for what they are the easier all of this pipology will become to grasp.

So whats happening now. This can be a scary point for a lot of begginer and novice traders, so we had a great decline but what now. You hit a dead end and you don’t know what to do…

Rule 1, if you don’t know what to do, close all your current positions and sit on your hands to do some TA.

Lets try and draw out an overall bull/bear bias for today with the available factors and data at hand.

H4:

  • We have a clear bounce of .9350
  • We have a possible morning start forming, we need a bullish engulfing candle close on H4 to confirm that. If this happens we have a very strong reversal candle stick pattern
  • RSI is under 30, with visible previous attempts for a break above 30 which ended up in bearish rejections… now however a break seems to be coming up.
  • Stochastics have broken out over the oversold zone

All in all these are bullish signals.

Upside targets are 9400 > 9450 > 9473/8 > 9529 > 9500 > 9565 > 9750

Downside targets are 9350 > 9300 > 9222/00 61.8% > 9180 > etc. etc

Thats pretty much it.

From what i can see while i was writing this is that we are getting a good morning star formation on H4 as i mentioned before if we get a good close, im sure we will see a lot of big candle stick players kick in to help through some fuel in the bulls fire.

My bias is bullish, as we’ve broken previous higher highs on m5, m15 and have create higher lows on the new upmove, as long as this continues its all good.

Not much else i can say for now i guess.

Regards,
E. Lang


Hey Guys,

Here is a possible break out trade which could take us all the way down to 9350 if we’re lucky.

It’s not late to get in on the trade so hurry :slight_smile:

Regards,
E. Lang

UPDATE:

After the break down the price reached 9385 and spiked back up. That was unexpected for me, either way i am still holding short untill i see a break above the trend line after which i will be forced to close out my position.

Do take a look at the news for today guys, NFP are coming in very soon:


Hi guys,

I’ve attached an ugggggly drawing of what i know to be breakout types.

Some break straight out.

Others break out and sort of consolidate before they go down or up

Other break out in a fine curve to their new direction.

Take a look at the ugggllyy drawing i’ve attached.

Trading on breakouts like this is an extremely reliable trading method, but as always there is more than one scenario so heads up.

I wount be too surprized if we hold into a tight trading consolidation untill NFP in 1 hour.

Regards,
E. Lang


Non-Farm Payrolls Preview - How Bad Can It Be?

We are expecting the December Non-farm payrolls report tomorrow morning and now more than the ever the amount of jobs added or subtracted by US corporations last month could determine where the US dollar is headed next. After having sold off significantly at the end of November, the US dollar is on its way to recuperating all of its losses. Whether it is able to do take the EUR/USD below 1.30 will be dependent on if we see a sub 50k print in payrolls.

With a skyrocketing stock market at the end of 2006 and low oil prices, the negative ADP print caught the market off guard along with the weakness in the other employment reports that followed. This surprise has forced many banks to lower their NFP forecasts, but before becoming too concerned, there are many reasons why payrolls could remain positive. As usual, non-farm payrolls is one of the most market moving indicators for the US dollar and the level of payroll growth in the economy last month will help to determine if a soft landing scenario is in full play.
Examining the NFP Leading Indicators

Arguments for a Sub 100k Print
[ul]
[li]First Negative ADP Since April 2003[/li][li]Drop in Monster.com Employment Index[/li][li]Drop inHudson Employment Index[/li][li]Employment Component of Manufacturing ISM Remains Contractionary[/li][li]Payrolls Derivatives Auction Settles at 82.2k[/ul]There are number of �leading indicators� for the non-farm payrolls report that we watch very closely and most of them paint a very grim picture of the labor market. The biggest surprise was the 40k drop in the ADP survey. Even though the ADP survey has had a poor track record of forecasting the absolute number of payrolls, it has had a very good track record in forecasting the direction of payrolls. Since January 2003, there have only been 3 months where the ADP report forecasted an increase in jobs while non-farm payrolls actually dropped in the same month and that was over 3 years ago (as shown in the chart below). In addition, the Hudson Employment Index posted a 2.6 percent drop while the Monster.com employment index fell 8 points in the month of December. The employment component of the manufacturing ISM report also points to another month of job losses in the manufacturing sector. As a result, the payrolls derivative auction indicates that traders are expecting jobs to increase by only 82.2k, which compares to the market’s downwardly revised forecast of 100k[/li]Not Bad Enough for a Negative Payrolls Report

However, even though the ADP report has done a great job of forecasting the directionality of payrolls, the December NFP may actually buck the trend and remain positive. The following factors support a positive reading:
[ul]
[li]Jobless Claims Improved in December[/li][li]Employment Component of Service Sector ISM Accelerated[/li][li]Challenger Reports a Drop in Layoffs[/li][li]Mild Weather Should Prolong Construction Projects[/ul]Jobless claims for the month of December averaged at 314k, which was less than the 327k average in November and suggests that companies may not be firing aggressively enough to warrant a drop in overall payrolls. The US economy is also mostly service oriented and today’s service sector ISM report revealed an improvement in its employment component. The sub-index increased from 53.3 to 51.6, which indicates that companies in the service sector are continuing to add jobs. Finally, the planned job cuts according to employment consulting firm Challenger, Gray and Christmas fell by 29 percent in the month of December compared to the prior month. The mild weather should also keep construction programs going and delay any major layoffs in that sector. Therefore even though non-farm payrolls could easily come in below 100k, it should not be negative. We expect payrolls to be somewhere between 50k-70k. [/li]What is Expected

Here is what the market is currently expecting:
Change in Non-Farm Payrolls: 100k Forecast, 132k Previous
Unemployment Rate: 4.5% Forecast, 4.5% Previous
Change in Manufacturing Payrolls: -15k Forecast, -15k Previous
Average Hourly Earnings: 0.3% Forecast, 0.2% Previous
Average Weekly Hours: 33.9 Forecast, 33.9 Previous
If construction sector jobs do hold steady, then the biggest potential sector where job growth could be hit would be in the retailing sector. From the initial holiday retail sales reports, sales have been modest and weak job growth would explain the weakness in consumer demand.
What does this mean for the US Dollar?

For the US dollar, how non-farm payrolls fares will be extremely important. The EUR/USD is trading not far from its one month low while the GBP/USD has already broken that level. Both currency pairs are very vulnerable to a further correction after having broken through a trendline support. We would need to see job growth in excess of 100k to validate a push through 1.30 in the EUR/USD. If job growth is anywhere between 50-70k or less, the EUR/SUD could see a much needed bounce as the market begins to price in the possibility of weaker US growth in 2007. The labor market is the backbone of the US economy. Weak job growth poses a big threat to consumer spending. Even though the Federal Reserve is currently worried about inflation, at the rate that oil prices are moving lower, it should not remain a problem for long and growth will soon become the central bank’s bigger concern. However with both service and manufacturing sector ISM reports expanding in the month of December, if job growth surprises to the upside instead, economic fundamentals would support a continuation of 5.25 percent rates and a move below 1.30.

The non-farm payrolls figure is expected to be 100k increase for the month of december, but the market is starting to factor in a much worse number.

One of the major investment houses ratcheted their figure down almost 50% just this week based on the ADP figure.

There seems to be an interior figure of 75-85k that the market is focusiing on.

[B]50k would be the surprise on the downside and 100k to the upside[/B]

GBP/USD Short

After all the reads and all the TA today on this, i upped the ante a bit, and even though i was pretty sure of the outcome, i stillll placed my stop loss.

2 reasons, first being that there may be whiplash, second… well because there is allllways more than one probable scenario.

I’ve set my target and locked in my profit, all i am going to do is just wait for this trade to play out.

The actual next target is cluster resistance of .9178, but i cam going to close it at 9200 (hopefully) as we will most likely start feeling some jitter there.

Have a hap hap happy weekend.

Regards,
E. Lang



Before the US session my open short trade was up +132 pips. I decided to lock in guaranteed profits of 86 pips and now just wait what happens after the news release.