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[tonymand]

This is the final trade of the week that I am still sitting on. Its based on a momentum trade as prices approach the round hundred and I went through this on the 40-100 thread. This is the 8th successive winner with this strategy this week although overall I find it works about 60% of the time so beware of the old regression to the mean. I bought at 85 and sold half at 2.0200 so my stop is now at be. Final profit target is 2.0215. I would normally go to bed and let this thing run but with the weekend coming up I am just going to go quietly insane as this thing winds oh so slowly to its target. Have a good weekend all

[tonymand]

Trading classic patterns can be very rewarding and GY was certainly putting the 'flags' out last night. For those wanting to read more there are many books on technical analysis but my favourite is the classic by Edwards & Magee 'Technical Analysis of Stock Trends'. A flag looks like its name suggests and is a small compact parallelogram of price fluctuations. Uptrend flags as shown usually form after a rapid and fairly extensive advance which provides a reasonably steep price track on charts. It is tilted back moderately against the prevailing trend. Many holders are of course taking profits in this run up (dont forget the crowd behind the pattern). Eventually the pressure of profit taking halts the mark up and prices churn. Rallies within the pattern fail to reach previous highs and the bottoms fall. Classically for a share volume falls as the pattern advances but obviously we do not have that information in fx. Overall it is called a flag because the run up forms the pole and the consolidation which is roughly parallel top and bottom looks like a flying flag. Suddenly prices erupt with a new wave of buying and practically duplicates the original 'mast' atop which the flag was constructed. There are many ways of trading these. Aggressive traders will look for an entry signal along the support line while more conservative ones will buy the marked break out positions

[tonymand]

When you read about these things in Babypips school it is important to recognise that they are more than just theoretical constructs. An understanding of them allows you to plan a trade, make reasonable stops and put the odds a little more in your favour. Again using GY last night there is a very nice example of resistance becoming support at a round number and if you were in a trade or trading this the trendline would have been a nice warning that the move was coming to an end. In the longer term of course looking into next week we will be looking to see if this round number becomes an important area where the forces of supply and demand continue their never ending battle

[tonymand]

An early upside break in the Europe open may be premature or even a fake out. It would best be traded on a retest above 2.0220 but given the previously demonstrated supply in the area of 2.0220 - 2.0300 I would need a lot of convincing to take such a trade without it being driven by some fundamental fuel. Any trade would be short term for limited profits (say 1R) in the absence of convincing upside momentum


Wish I had Tess' ability to stay with the trend longer. Anyway for what its worth here is my take on this morning. There was significant momentum in the Asian session (if you doubt this look at a 5 min chart) and a temporary floor was found above 2.0220. This therefore met my broad requirements to take this long. At this point there were a number of ways to trade this. I took the Asian breakout strategy and was out at 1R. I was concerned about the break into the 2.0270 area and this is where Tess has so many advantages in her approach. However James got in earlier at the OB and is still in as we backtrack below 300. The round number strategy was also successful. Pound is clearly bullish but with significant overbought levels on all timeframes there is due to be a retracement at the very least. We are 20 mins prior to London coming into the game and it is not unknown for them to reverse direction. There has been an ib permitting a retracement trade but if this is going to keep going up will look for an ib entry off the retracement

[Tess]

Originally Posted by Tess

2.0270 is definitely the next interim target for the Bulls

I guess as London ambles into the close & prices hold steady up here, you can begin to consider juggling any remaining stops up around the 2.0100-20 zone.

Those stops were well & truly safe as events closed down of Friday. Tokyo offered a leg up last night, by shunting price a further half cent up from Friday's close, to pester that next s&r @ 2.0270. And prices have continued thru as Frankfurt kicks into gear for the week.

I'd expect this level to be re-tested, but it again offers the opportunity to trail the remaining stakes (stops) up to rest underneath the 2.0200 round number, securing 200 pips profit on the remainders.

The 4hr chart highlights the upcoming likely battle zones on Cable's trek, where more concerted resistance will be waiting (the months highs/stiff supply traffic).

[tonymand]

Originally Posted by Tess

Those stops were well & truly safe as events closed down of Friday. Tokyo offered a leg up last night, by shunting price a further half cent up from Friday's close, to pester that next s&r @ 2.0270. And prices have continued thru as Frankfurt kicks into gear for the week.

I'd expect this level to be re-tested, but it again offers the opportunity to trail the remaining stakes (stops) up to rest underneath the 2.0200 round number, securing 200 pips profit on the remainders.

The 4hr chart highlights the upcoming likely battle zones on Cable's trek, where more concerted resistance will be waiting (the months highs/stiff supply traffic).

Hi Tess, when you are using this sort of strategy over several days do you tend to just stay with it and wait eventually for your trailing stop to be taken or as with shorter term approaches will you look at upcoming areas of supply and make an exit then?

[Tess]

Originally Posted by tonymand

[b]

Pound is clearly bullish but with significant overbought levels on all timeframes there is due to be a retracement at the very least. We are 20 mins prior to London coming into the game and it is not unknown for them to reverse direction.

There has been an ib permitting a retracement trade but if this is going to keep going up will look for an ib entry off the retracement

Once you catch a wave (in this instance to the bullish side) & you've booked profits/trailed up etc, the trade offers alternative options.

You can do as you've suggested in your post, & play the trade in the direction which offers the least path of resistance, ie: buy Cable on pullbacks, thus compounding your position & advantaging yourself as Cable racks up the handles.

You can simply do nothing but trail remaining stops up & passively manage the trade.

You can even play the pullbacks/retracements via a seperate acc't using your preferred set-up's (IB's or other strats), thus catching (extra) profit opportunities on the ebb & flow of price movements.

Although these multi handle runs don't occur as often as we'd wish, they do afford tremendous potential to rapidly compound an account. Trouble is, we never quite know when the next one is appearing

But....that's the pay-off to sticking rigidly to a defined set of rules.

The smaller timeframes (5/15m) can get you in near the beginning of a potential multi-cent run. Once you've established your base position (booked a little profit) & managed to slot your remaining stops into a suitable safety zone, you then zoom out to your hourlies & manage the trade.

It requires patience & immense discipline not to tinker & fiddle with the trade, & to be honest, only 2 or 3 out of 10 will sprint on to return above avg profits - but you don't need that many of these type of trades to make the venture worthwhile

And Cable, GBPJPY & EURJPY certainly provide adequate momentum & intra-week range potential to fulfill those criteria!!

[Tess]

Originally Posted by tonymand

Hi Tess, when you are using this sort of strategy over several days do you tend to just stay with it and wait eventually for your trailing stop to be taken or as with shorter term approaches will you look at upcoming areas of supply and make an exit then?

I think I might have partly answered this in the previous post Tony

But, essentially, yeah - I'll put my faith in my trailing stops.

They're situated where they lay for a reason.

Eventually when I get taken out, it's usually at an area on the technical map where I'm no longer interested in holding that particular position.

Sure, occasionally I'll mess up & get stopped out prematurely - but I'll usually get another opportunity to climb onboard again if the move is still genuine.

[Tess]

That nasty old inverted hammer on the hourly frame just prior to London waking up has stopped it in it's tracks for now.

The local s&r @ 2.0240 is offering a little cushion & for those seeking a crafty "long" running with the larger term flows, that's a good a place as any!

At least you got a (fulcrum) line in the sand to draw your stick with.

This area will be a good test to guage the commitment of the (Cable) Bulls into the early week activity. The stiffer resolve will be laying back at the support channel between 2.0190-0220

[Tess]

....And if things don't go exactly to plan - then have your back-up analysis ready to check the surroundings whilst preparing your options!