I can predict the markets based on the strength of buyers and sellers during a retracement.
My analysis can be applied to the higher time frames were it is more accurate. However, my higher time frame analysis takes a week plus to set up (daily/4hr time frame)
Therefore, I am happy to post a daily trade idea that you guys can follow in the format of a trade journal.
Give me a chance and follow my posts, which will include discussion of how I carry out my analysis.
For example if USD is strong on the 4hr time frames I look for it to retrace on my 1hr time frame in a swing fashion of 2/3 pushes, telling me that USD strength is ready to continue on my higher time frame. If it retraces too strong I just scrap the trade.
When this analysis is coupled with correlation where I can see the retracement motions in unison with other pairs it becomes very accurate.
For me to become an exceptional trader I know I need to create a journal. By having a correspondence I will be more motivated, so let me know if your interested in growing as a trader with me.
I trade USD,GBP,CAD,CHF,JPY,AUD,NZD. I rely on cross comparing currencies, as it gives me an edge over the vast majority of traders who neglect how useful this can be.
[QUOTE=“forexsubscriber;612977”]I rely on cross comparing currencies, as it gives me an edge over the vast majority of traders who neglect how useful this can be.[/QUOTE]
The JPY pairs are showing weakness on my 4hr timeframe.
If buyers start retracing in a swing motion of 2/3 pushes on my 1hr timeframe I will start getting interested in trading JPY.
For example here is EURJPY. If it retraces to where my circle is drawn on the chart shot with weakness I will consider trading it. If it does not swing down in motions of 2/3 I will scrap this trade.
In my opinion. Whenever you decide to take a trade, it is vital that you check how the pair you are trading is performing across the market.
If your trading EURUSD for a buy and USD is looking very strong (people are pouring lots of money into USD across a number of currencies). Your pattern analysis will be at a lot greater risk of failure, as your USD will struggle to weaken on your EURUSD buy.
Therein, you can reverse the logic on this and find USD pairs that are showing strength, and look to trade them by waiting for temporary weakness on a smaller timeframe.
Not only will correlation help you trade the pairs that are strongest respective to whether your buying or selling, but you will be able to enter your trades with greater accuracy by counting the retracement motions in unison on your cross pairs.
I started another thread for higher time frame analysis yesterday where GBP has been weak across the board (indicating lots of people with mega capital are selling GBP).
I want temporary GBP strength where I can see the buyers push back up and then fail to get any higher. It is where the buyers fail that I want to grab and sell back down to where the retracement began.
This area of failure is almost impossible to identify from pattern analysis on one pair alone. Therefore, for me correlation is key in allowing me to be where the money is (giving me the best chance of being with the banks and institutions) and allowing me to spot where my most likely area is. (counting the 2/3 swing motions of my retracement)
Hope this makes some sense, and if it does not just persevere with me here this is imo the best way to trade forex hands down.
Hi. I’m very interested in hearing more about your method. Will you be posting your trades as you place them? I have been trading for a couple of years now with mixed success and would find it helpful to follow trades as they unfold. Thank you for sharing this.
It is funny how the people making the most amount of pips generally don’t post trades as they unfold isn’t it?
I will be posting the price I take on my trades as it unfolds and explaining how I came to that conclusion, and why I entered where I did.
If you want a bit more info about what I am doing check out my higher time frame analysis thread (Please judge me by my actions and results.)
I apply the same concepts to my analysis on this thread but the only difference being I apply them to a higher time frame.
The level of certainty increases on the higher time frame that the trade is going to work.
So what you’re saying is that you’re waiting for pairs w/ USD as the base to have near perfect inverse correlations to pairs with USD as the quote to enhance your trade setups (and vice versa)?
Follow up on above analysis EURJPY, i see the retracement has happened as expected…down to the circle marked with 3 candles(1hr)… did you take the trade as planned ?
You don’t always need confirmation from a different pair it is only sometimes this is the case. Keeping tabs on correlating pairs gives you an extra indication with regards to whether you want to take the trade its not always necessary.
Not sure what event risk is sorry. Please explain this for me?
I will get into how I work out my risk reward ratio as I go.
So, what objective set of rules do you apply to determine when you need confirmation and when you don’t?
Event risk is just another term for major market moving economic releases.
So, in other words -
Say you found a bullish setup on the USDCAD.
And, you “confirm” your bias via the EURUSD (just typing that sentence and seeing it on a screen doesn’t sit right with me- just my opinion).
So, the USD is looking strong against the CAD = the pair is moving upward
The USD is looking strong against the EUR = the pair is moving downward
What if there was French & German PMI figure releases which were better than expected, thus boosting the EUR while you await a fill to go long on the USDCAD?
How do you factor that into your trading plan?
The answer to your question is simple.
I do not factor in the news whatsoever.
I was hoping to not have to explain this so as not to put people off before judging my performance.
The news in my opinion and experience merely caters for the vast majority of traders. Whereas the people who are
shifting the large capital (the tiny winning percentage who actually make money are not trading based on the news)
Now I completely respect any objections you have to this statement as admittedly it does not appear to make rational sense.
But if you follow my updates which are based on analysis that has nothing to do with the news I am sure your perception of the forex market will be different.
When I first heard what I have just explained I did not believe it.
But when I was taught the analysis I am trying to get across here I was shocked.
[QUOTE=“forexsubscriber;613264”]Thanks for the question FOREXunlimited The answer to your question is simple. I do not factor in the news whatsoever. I was hoping to not have to explain this so as not to put people off before judging my performance. The news in my opinion and experience merely caters for the vast majority of traders. Whereas the people who are shifting the large capital (the tiny winning percentage who actually make money are not trading based on the news) Now I completely respect any objections you have to this statement as admittedly it does not appear to make rational sense. But if you follow my updates which are based on analysis that has nothing to do with the news I am sure your perception of the forex market will be different. When I first heard what I have just explained I did not believe it. But when I was taught the analysis I am trying to get across here I was shocked. Cheers and always remember to keep an open mind.[/QUOTE]
Thanks for the reply and clarification.
However, are you able to answer my first question? Do you have an objective way to determine when a correlation should be weighed on and when one shouldn’t?
Correlation and causation are two different things.
And correlations (for the most part) across many asset classes change all the time. How do you adapt to that?
Sometimes two “competing” instruments move in lockstep, other times they inverse, and even more, sometimes it’s just completely random.
It sounds like a very large part of your strategy is based on correlating movements in currency pairs - is that an accurate statement?
Your right vijaim GBP is weak. (I have just edited this sentence 'Your right vijaim JPY is weak I meant GBPY sorry vijaim lol)
But we wanted temporary JPY strength to come down to the circled area so we could catch it for a GBPJPY buy.
Unfortunately the retracement came down too strong for my liking making this trade very risky. As you can see on the 1hr it came down nearly 100% telling me that the buyers may not have the strength to push this back up to its recent highs.
Nevertheless for the sake of example, I can see we have come down in a swing motion of 2 so if we get an upwards v formation or a big exhaustion candle on the 1hr you might be able to take this trade long to its recent high.
Personally this trade is not ideal enough for me to take, but follow it and look how it correlates with USDJPY. If you forced me into this one I would have my stops at 167.7 targeting 169.2. Looking at it I would preference a USDJPY buy on this one as the sellers have come down weaker compared to GBPJPY.
I will get back to you on this tomorrow FOREXunlimited I have to rush for drinks sorry lol.
For now keep tabs on my reply to vijaim. And look how USDJPY and GBPJPY correlated on the downward movement on our 1hr charts. You know a lot more about causation than but trust me it is not relevant to what I am doing.
I will try and get you a more satisfactory answer tomorrow. Tbh I think the best way for me to explain is in analysing the charts for you and explain my entries as the weeks go on. This is the best way for you to gain a true understanding of what I am trying to explain cheers have a good night.
When I measure the strength of a currency it is always relative to the time frame I am looking at.
So lets take the GBPJPY trade for example. When I looked at my 4hr charts I could see that we had significant JPY weakness across at least 5/7 of my cross pairs at the same time. With this information I know that there are institutions or banks or whatever who think JPY is at a good price to sell. This is actually really easy to do it just takes practice.
By waiting for JPY strength on my timeframe below, in this case my 1hr, I can assess the strength of the retracement and plan my trade accordingly. On the GBPJPY trade I posted I considered this a risky buy with stops at 167.7 targeting recent highs.
The reason why I considered this risky was because the retracement came down a little bit further than I wanted. Nevertheless, as predicted it came down in motions of 2 before it turned around where I posted and is now on its way up to recent highs.
If I was looking at trading GBPJPY on my daily time frame I would go down to my 4hr charts and look for swing motions back up for what would be a potential sell.
If you would like me to post a chart shot explaining this please let me know cheers.
