Pure Price Action

[FOREXunlimited]

Yeah I’m still doing the old stuff.
So were you trading off the DOM on the futures market? How did it go?

Hope in this thread you’re still going to throw some macro and udx in the mix.

To a good year!

Best
Kas

Good to hear.

Yup- I was using a tool created by Peter Davies called “Jigsaw”. Check it out if you’re interested b/c it’s really unique. Most brokers offer a few levels of market depth, but Peter took it further by creating a price ladder that accounts for order stacking/pulling and visualization of market orders hitting the bid/offer (two MAJOR components not really offered by any other broker in a single tool- at least in my experience).

You simply can not trade off a “standard” DOM on it’s own- you need to see the deeper flow. Honestly, it was very, very challenging. I’m still licking my wounds, if you know what I mean. The e-mini is no place to try and go up against algo’s and HFT scalping; it’s very difficult and you need to be lightning fast. Not only in your analysis, but, in your data feed, CPU, etc etc. The bond market was a bit more forgiving, but overall, my conclusion was that it is just too difficult to compete on such a short timeframe. You need to have deep pockets…as we know: “The market can remain irrational much, much longer than you or I can remain solvent…”

Macro is a major theme right now across the board. Oil and the S&P are on the top of my watchlist; which is really a no brainer. I don’t see volatility dying down, and one of my best plays for 2016 so far has been the ETN “VXX”. As far as the USD is concerned…man, there are a lot of things lining up right now for some serious volatility. The FED is on their heels, and I think 2016 is going to be one bumpy ride for everyone…

[FOREXunlimited]

Newer member here. How do you follow people?

Hey Nick- thanks for the interest. You can subscribe to a thread @ the top of the thread’s page. The subscription can be set to receive emails whenever posts are made. Personally, I just bookmark a few threads in my IExplorer.

[Kasravi]

That sounds very deep.

I agree 2016 will be a juicy year. January definitely delivered!

What’s your view on the yen mid term? Pros-cons-opportunities and threats?

[FOREXunlimited]

That sounds very deep.

I agree 2016 will be a juicy year. January definitely delivered!

What’s your view on the yen mid term? Pros-cons-opportunities and threats?

It still “feels” like there is more shaking out to do. To me, it seems no-one really knows what’s going to happen next, but the markets appear wound up and primed to move.

With the BOJ end-of-Jan shocker to negative interest rates, plus further commitment to ease, the JPY got sold-off across the board; not a surprise. However, what stands out to me is the rate @ which those JPY losses have been recovered in the immediate near-term. In other words, how quickly money was shifted back into JPY.

Below is roughly the retracement %'s from the spike last month when the BOJ moved.

USDJPY- 62%
GBPJPY- 50%
EURJPY- 55%
AUDJPY- 90%
NZDJPY- 50%

We all know markets don’t move straight up and down, and that pullbacks are ‘natural’. Also, the JPY doesn’t trade in a vacuum. To me, the underlying theme is risk appetite…

Couple this with Chinese fundamentals, Oil, the stock market printing a significant lower high, volatility increasing, and heck, even the fact that we’re in an election year- and I just think we need to stay on our toes.

The JPY crosses are a good measure of global risk. When market participants are “risk-on”, you typically will see JPY-based-selling, equities rallying, etc. When risk aversion sets in, traders move to safe-haven assets and bring their money home (i.e. JPY buying). The USD has long since been seen as the safest haven of all; the reserve currency of the world. However, America is in big trouble. Primarily, our stock market and its’ participants have been hung up on cheap money and an almost risk-free bet buying the S&P.

As Peter Schiff says- the market since the GFC is like a heroin junkie, w/ the FED dosing just to keep the high. Remove the fix, and the junkie starts craving- eventually leading to either 1 of 2 things:

1. A crash that will make '08 look like a pebble in the ocean
2. The FED to re-introduce another round of QE to further artificially prop the market

I know this is simplistic, but it’s also illustrative.

The first scenario is actually the healthier one. Leverage is @ all time highs, and US-based fundamentals are appearing bleaker and bleaker as we move into the second half of this decade. Look what happened when the FED raised rates. Can this market / economy really survive 3 4 5 more hikes?

For the JPY…it’s pretty straightforward from a tech perspective. If USDJPY @ 116.00 is threatened, we can see some serious unwinding. In the interim, I’d take an approach to the tune of selling rallies, and being very cautious, precise and QUICK TO EXIT on any long side activities. Not crying wolf, but when “things” start the way they have this year, you need to be extra careful when your money is out there. Watch Oil, watch the VIX, watch the DJ Transports and get out of the way if something doesn’t feel right.

[Kasravi]

It still “feels” like there is more shaking out to do. To me, it seems no-one really knows what’s going to happen next, but the markets appear wound up and primed to move.

With the BOJ end-of-Jan shocker to negative interest rates, plus further commitment to ease, the JPY got sold-off across the board; not a surprise. However, what stands out to me is the rate @ which those JPY losses have been recovered in the immediate near-term. In other words, how quickly money was shifted back into JPY.

Below is roughly the retracement %'s from the spike last month when the BOJ moved.

USDJPY- 62%
GBPJPY- 50%
EURJPY- 55%
AUDJPY- 90%
NZDJPY- 50%

We all know markets don’t move straight up and down, and that pullbacks are ‘natural’. Also, the JPY doesn’t trade in a vacuum. To me, the underlying theme is risk appetite…

Couple this with Chinese fundamentals, Oil, the stock market printing a significant lower high, volatility increasing, and heck, even the fact that we’re in an election year- and I just think we need to stay on our toes.

The JPY crosses are a good measure of global risk. When market participants are “risk-on”, you typically will see JPY-based-selling, equities rallying, etc. When risk aversion sets in, traders move to safe-haven assets and bring their money home (i.e. JPY buying). The USD has long since been seen as the safest haven of all; the reserve currency of the world. However, America is in big trouble. Primarily, our stock market and its’ participants have been hung up on cheap money and an almost risk-free bet buying the S&P.

As Peter Schiff says- the market since the GFC is like a heroin junkie, w/ the FED dosing just to keep the high. Remove the fix, and the junkie starts craving- eventually leading to either 1 of 2 things:

1. A crash that will make '08 look like a pebble in the ocean
2. The FED to re-introduce another round of QE to further artificially prop the market

I know this is simplistic, but it’s also illustrative.

The first scenario is actually the healthier one. Leverage is @ all time highs, and US-based fundamentals are appearing bleaker and bleaker as we move into the second half of this decade. Look what happened when the FED raised rates. Can this market / economy really survive 3 4 5 more hikes?

For the JPY…it’s pretty straightforward from a tech perspective. If USDJPY @ 116.00 is threatened, we can see some serious unwinding. In the interim, I’d take an approach to the tune of selling rallies, and being very cautious, precise and QUICK TO EXIT on any long side activities. Not crying wolf, but when “things” start the way they have this year, you need to be extra careful when your money is out there. Watch Oil, watch the VIX, watch the DJ Transports and get out of the way if something doesn’t feel right.

That’s when the truth hurts. I was speculating that the fx market becomes less and less pressured by the stock market selloff and oil too. Therefore flight to safety over. Especially with negative interest rates u/j should be sitting @ 125.00 not dropping . Usually I would see this is as a bull trap but sentiment is getting fed with fear regardless of consensus.

I am bawsdeep long average from around 117.80 u/j and already closed out e/j longs. If NFP doesn’t sweep the market tomorrow then my only bias is to tp at the best price.

But great analysis Jake.

Best
Kas

[FOREXunlimited]

EURUSD H4 chart

Analyzing the technical environment:
-May 2014 high to Dec 2014 retest of established 5 year trendline; Roughly 1700P leg. Market bounces, then breaks, with sellers aggressively pushing down another 1800P. Short covering ensues @ 1.05, forming the first “bottom”, May 2015.
-Sellers attempt to push 1 month later but get stopped- channel formation.
-Consolidation phase “correction” (bear flag / ascending channel off the lows) until Oct 2015 break of floor.
-Sellers make another (very weak) run @ 1.05, stopped Dec 2015.
-Sellers unable to print a lower low and/or threaten 1.05 with conviction.
-Market winds up (symmetrical triangle)- this is corrective price action; no real “direction”, whipsaw price action, no conviction from either side, etc.
-200P pattern breakout today (2/3/2016)

Contextually speaking, the market moved 1,700P off a high w/ little-to-no counter-trend buyers. Paused @ a 5 year floor, then broke w/ 2x as much strength, carving out a near perfect 100% extension to 1.05. Sellers tried to quickly break back down but were stopped, thus entering “correction phase” (the channel). Price broke down (which is typical in a corrective ascending channel following heavy one-sided price action) but we didn’t see a new low print. Enter our triple bottom.

Buyers need to clear out 1.11 for a shot @ 1.1450. Failure to keep the highs may result in a near-term test of 1.0750, w/ 1.05 back in the sights.

FXCM’s SSI adds a bit more color to the break, in that their data shows retail accounts net-short the EURUSD @ a 2:1 clip. Not fool-proof, but, typically the overwhelming majority of FX retailers are pretty good @ confirming moves, from a contrarian’s stand point that is.

[FOREXunlimited]

Booking 118P profit on EURUSD. Bias still to upside as previously mentioned. Need to be vigilant when markets are volatile as you can easily get whipped out of a position.

Here’s the trade contextuallized from a price action stand point. Notice how there was no need to wait for a candlestick signal on this:

One of the main drivers why this position seemed lucrative was the price action on the USDCHF. How many people on this forum got trapped buying into that pinbar after a main channel break? This is why context trumps candlesticks.

[FOREXunlimited]

To those of you new to trading, be sure to aire on the side of caution in terms of entering into any newfound [B][U]substantial position[/U][/B] via NY overnight. NFP hits tomorrow, and this release typically has if not the biggest, one the most effectual impacts on the markets.

Don’t know how many times I’ve seen newer folks on this very forum post a chart on the first FRI of a month asking: [B][U]WHY???[/U][/B] :33: :44: :34:

Google [I]’‘US NFP’’[/I] and brush up if necessary.

Here’s how I traded in APR 2014. It’s an old post and a [I]slightly [/I]different strategy than what I’m doing here, but the meat is there and is worth digesting, in my opinion, if you’re interested.

[FOREXunlimited]

Going to keep this one short & sweet, although it appears that we may be on the verge of an absolutely explosive move. 116 is a big deal for USDJPY. Here’s why.

First let’s look @ the M1.

USDJPY M1

Of significance:
-Horizontal is 116.
-Exhaustive price action @ the top of this leg up; followed by volatility (correction) @ 7+ year highs.
-M1 20EMA is 116.63

USDJPY H4

-Horizontal is 116.
-116 broken NOV '14 (Yellow circle)
-Since that topside break, we’ve carved out 3 major pullbacks to 116. With the subsequent attempt @ higher prices, sellers have been able to contain higher highs. In other words: Each time the pair pulled back to 116, the subsequent trading off that level led to 3 consecutive lower highs.
-Of further importance, is the fact that buyers are becoming more and more frustrated as shown by the distance between swing points (1 - 1, 2 - 2, 3 - 3). Each swing is decreasing in size, showing an increased presence of volatility. Volatility that can typically lead to a reversal.

It can be argued that major price support sub-116 doesn’t come in for at least another 500 - 1100P.

This tech snapshot aligns w/ everything I’ve been touting for quite some time now. These markets are starting to signal the potential for a major shift in sentiment.

More to come, as many pairs are lining up heading into next week…

Jake

[Kasravi]

Hi Jake,

so did you trade it?

best
kas

[FOREXunlimited]

Hi Jake,

so did you trade it?

best
kas

In terms of strategies I’d [I]normally[/I] employ, I didn’t get what I wanted to trade the break of 116. I’m going to be a bit more aggressive toward the mid/end of this week, seeing that we’ve now traded below it, but am looking for a rally to sell into. If we can’t get a higher price, then I’d like to see some more conviction on the sell side to get short.

Unfortunately, I’m travelling this week so I don’t have “home field advantage”- but look, even as I’m typing this I’m having a very tough time trying to communicate what I’ve seen happening on a global scale. There are major issues right now and I feel that Oil needs to be watched like an absolute hawk, as it apparently is the leading indicator for any subsequent move anywhere.

I’m still long VXX, and can easily see an S&P rally tomorrow getting sold into very heavily as traders seemingly run for the exits. What can the FED possibly do next? QE4? Go negative? The FED cannot raise rates during a recession.

Tomorrow will be key, but I’m projecting:
Long XAU
Long volatility
Long JPY
Short USD
Short financials
Stay away from oil

[Kasravi]

Yen is playing hard to get.

I heard rumours that china is offloading EM currency reserves into the majors causing yen and eur to appreciate same goes for gold . Whatcha think?

Why do you think eur is gaining so hard?

[FOREXunlimited]

Here’s essentially what’s happening w/ the S&P

-We’ve sold off hard to start the year; very one sided momentum with volatility (counter trend buyers) increasing toward the middle of JAN.
-A key near-term-bottoming pattern forms on the H4 chart- low, lower low, higher low.
-Market breaks the neckline, trades in a tight range, and sellers absorb.
-Buyers try to prevent the third low (“higher low” - 3rd blue curve) from being taken out, and fail (long stops triggered).
-1820 is now under pressure.

From a purely tech standpoint, the bias is neutral-downside, with more emphasis on the latter. The fact that buyers couldn’t A) rally above the neckline for higher prices and b) prevent the neckline break to the downside, followed by further selling, is very revealing to order flow. The failed bottoming pattern is bearish- anyone buying that neckline break, which is a very common bullish setup, is now trapped with stops likely sub-1820. 1820 is on deck for sellers, but who is trying to catch the knife there?

Jake
:38:

[Kasravi]

The fact that buyers couldn’t A) rally above the neckline for higher prices

Jake
:38:

George Soros revealed he is short spx. So good luck bulls trying to catch that falling knife…
My gut says price will crumble lower and run 1800 over, no sweat no retrace.

[FOREXunlimited]

Yen is playing hard to get.

I heard rumours that china is offloading EM currency reserves into the majors causing yen and eur to appreciate same goes for gold . Whatcha think?

Why do you think eur is gaining so hard?

Interesting- Didn’t hear that about China.

Fundamentals really only play a key component to my trading when times appear to be very uncertain. Given the levels global markets are currently trading @, I’d say it’s safe to conclude no one is safe right now. This is why I’ve been urging fellow traders to keep an eye on the newswire nowadays, more-so-than-ever.

I can’t tell you why the EUR caught a bid.
Not because I don’t want to, but because I simply don’t know!

We know these markets move up and down, up and down, up and down. Honestly, it looks like the EUR just [B][I][U]wanted [/U][/I][/B]to carve out a near-term bottom (as I was writing about last week) and market participants are continuing to drive higher prices.

That’s the great thing about reading price action- [B][U]the only component I care about is who is in control[/U][/B]. Once we catch the direction of the [U]wind[/U], we know where to [B]set our sails[/B].

[FOREXunlimited]

Watch the [B]Nikkei[/B]- 15800 under [U][I]serious[/I][/U] pressure.

Very similar intraday bottoming pattern here that I analyzed earlier on the S&P. The only difference is that sellers have been much more aggressive, leading one to ask if 15800 could even be defended…

[FOREXunlimited]

@FOREXunlimited

Going to keep this one short & sweet, although it appears that we may be on the verge of an absolutely explosive move. 116 is a big deal for USDJPY. Here’s why.

First let’s look @ the M1.

USDJPY M1


Of significance:
-Horizontal is 116.
-Exhaustive price action @ the top of this leg up; followed by volatility (correction) @ 7+ year highs.
-M1 20EMA is 116.63

USDJPY H4


-Horizontal is 116.
-116 broken NOV '14 (Yellow circle)
-Since that topside break, we’ve carved out 3 major pullbacks to 116. With the subsequent attempt @ higher prices, sellers have been able to contain higher highs. In other words: Each time the pair pulled back to 116, the subsequent trading off that level led to 3 consecutive lower highs.
-Of further importance, is the fact that buyers are becoming more and more frustrated as shown by the distance between swing points (1 - 1, 2 - 2, 3 - 3). Each swing is decreasing in size, showing an increased presence of volatility. Volatility that can typically lead to a reversal.

It can be argued that major price support sub-116 doesn’t come in for at least another 500 - 1100P.

This tech snapshot aligns w/ everything I’ve been touting for quite some time now. These markets are starting to signal the potential for a major shift in sentiment.

More to come, as many pairs are lining up heading into next week…

Jake

Took an aggressive USDJPY short today seeing that macro conditions are not improving for risk trends.
Oil, the Yen, and Nikkei are all highly correlated right now.
XAU is catching a serious bid.

Where will WTI bottom out? I don’t know if serious buyers will step up until $18.

Who’s ready to make a fortune?

[FOREXunlimited]

Booking 150P on USDJPY short.

Been talking all week about JPY strength and this is an example of a great continuation trade w/ momentum clearly on our side.

As mentioned, this was an aggressive entry, but our stop was never threatened above 115.
Downside bias still continues to exist, but these moves to start FEB may be a bit extended right now.

Really looking to get even more aggressive to round out this week, as there are opportunities everywhere.
Global markets are on edge, and the trend is very macro right now.

Aside from reading my previous analysis, can anyone figure out my entry/exit logic?
Hint- stops and limits are tightened b/c of market-wide volatility.

Jake

[FOREXunlimited]

@FOREXunlimited

EURUSD H4 chart

Analyzing the technical environment:
-May 2014 high to Dec 2014 retest of established 5 year trendline; Roughly 1700P leg. Market bounces, then breaks, with sellers aggressively pushing down another 1800P. Short covering ensues @ 1.05, forming the first “bottom”, May 2015.
-Sellers attempt to push 1 month later but get stopped- channel formation.
-Consolidation phase “correction” (bear flag / ascending channel off the lows) until Oct 2015 break of floor.
-Sellers make another (very weak) run @ 1.05, stopped Dec 2015.
-Sellers unable to print a lower low and/or threaten 1.05 with conviction.
-Market winds up (symmetrical triangle)- this is corrective price action; no real “direction”, whipsaw price action, no conviction from either side, etc.
-200P pattern breakout today (2/3/2016)

Contextually speaking, the market moved 1,700P off a high w/ little-to-no counter-trend buyers. Paused @ a 5 year floor, then broke w/ 2x as much strength, carving out a near perfect 100% extension to 1.05. Sellers tried to quickly break back down but were stopped, thus entering “correction phase” (the channel). Price broke down (which is typical in a corrective ascending channel following heavy one-sided price action) but we didn’t see a new low print. Enter our triple bottom.

Buyers need to clear out 1.11 for a shot @ 1.1450. Failure to keep the highs may result in a near-term test of 1.0750, w/ 1.05 back in the sights.

FXCM’s SSI adds a bit more color to the break, in that their data shows retail accounts net-short the EURUSD @ a 2:1 clip. Not fool-proof, but, typically the overwhelming majority of FX retailers are pretty good @ confirming moves, from a contrarian’s stand point that is.

A picture is worth a 1,000 words, so, here are 2:

-Failure to get back above this key trendline may force breakout buyers who are trapped to sell.
-Those who sat on the sidelines and waited for a reason to sell the USD have had many all February.
-Now, seeing late-comers trapped @ the top, aggressive selling can lead to bulls puking-out, further fueling downside momentum.
-A single trendline break is meaningless w/o a contextual backdrop, and is never a signal in-and-of-itself to take a position.
-This does however provide a simple bias against the majors.
-Retail traders maintain net-long-USD positions.

JPY traders- keep a close eye on the Nikkei (*JPN225) and WTI (*USOIL).
Risk sentiment is holding hands with every single $0.01 fluctuation in WTI.

Is this a major shift away from the USD as the safe-haven currency of the world?
Where do investors seek yield if that’s the case? JPN? EUR? Equities??
Is there an opportunity in 3x leveraged XAU ETFs?!

Keep on your toes.
Jake

[Kasravi]

I just feel like someone flashed that ‘flashy temp memory eraser’ from man in black at me, nevermind.

Any thoughts on Aud? short term