Funny how we were talking just yesterday that we’ll stay on the sidelines. I couldn’t stay idle neither like FE this morning I jumped in on EURUSD short trade on a pullback, if PMI numbers turn out well which I highly doubt I’m going to add more to my positions as I consider that getting in on a better price having the bigger picture in mind.
I’m glad that Mike is testing the cross pairs on a demo, by doing this you’re making a huge contribution Mike! and Philip! In the mean time I’ll work on net position calculations on cross pairs FE and guys… Let’s keep it going like this !
FE, some older guys used to say ‘never buy cable on a Friday’ - I think maybe just an old saying, though often if it had a good run during the week then Friday could be a bad day for chasing it.
I just cannot see a good reason to go short on GBP, likewise have difficulty going short USD, so excepting that Mr Carney makes no comments I will wait for USD/UK news
The only thing that I could see on the short side on GBP was some downward momentum, that also seems to have stalled, so maybe a little range play for now.
Good reading! Well, from what you have presented us with, now I will definitely start looking at AUD/JPY.
It makes sense. I do know that the AUD have been diversifying their dependency (talking about it anyway) away from iron ore (mining). They know they need to develop more in the way of employment…etc.
But, one thing Rookie you might want to look at also. Russia. I read somewhere that they are starting to hook up with China. They made a huge oil deal with them for the next so many years. See, Russia has been trying to make deals with USA in that regards, but USA back pedaled and finally said no. I do know that to be true. But I don’t know if that has anything to do with the Australians. Maybe not.
Anyway, I appreciate the insight on AUD. Now I will be looking at them with the “underdog” feeling. Maybe they do need to be correcting now, for future possibilities. …Well, I just looked at their longer term charts. And as it is now, they have corrected a good bit. If they start demonstrating some strength again, they do have a lot of ground they can recoup.
That would be a good study to embark on.
Good stuff Doc!
Ok. So I have another view of the market. This was taken at 0725GMT. This would be the start (pretty much) of London session, Tuesday.
Look, I remember when I first got that app, about a year ago now. It took me a long time to wrap my head around it. I’m talking about just understanding what I’m looking at, let alone how to use it for any trades.
And just so you know I do not use that for any trading. I only look to get a view of who’s stronger than who.
So when you look at the daily chart there, you should be thinking this. This is the pips shake out between each other within the last complete day. You know how things are constantly changing. Money moves around so much. Someone will always be having a turn. So, when we look at the results, we need to remember to put it into perspective. The daily will show us that within the last 1,440 minutes this was the result. And in the 4hr chart we see that within the last 240 minutes this is what happened. So when we see that CAD is still the weakest currency within the last 1,440 minutes, BUT within the last 240 minutes they were the second strongest currency! So you have to think.
And don’t forget that the daily is just 1,440 minutes long. And as we move on throughout the week this changes. This is different than what I post up each night. I give you what has happened for each day. And that will include Asia, London, then US session. Rinse and repeat.
If you have any questions, let me know.
It is all history. What has already happened. Who’s stronger in the last so many minutes.
Yes and helping GBP up into the bargain, had gone long earlier but hedged it with USD/CAD - now exited the CAD trade and let cable run for a while - see how it goes.
Yeah, it might be premature to say this, but here goes.
I think the pound is on the upswing. Yeah, a correction has taken place, but they are moving on up now.
I’m not gonna keep on telling you the pip count, but it’s definitely higher now.
funny how long and deep this CAD discussion turned. It all started that I mentioned the US economy might pull the Canadian economy up so CAD should get stronger, and you said that Comms are going down because of China so CAD should get weaker. For sure you have the better points as I mostly try to put it just altogether and you come up with charts and numbers! Good writing again, as I see you make a good use of the site Peter suggested!
I am again behind the whole thread so 2 remarks. As you say, I try to concentrate on asking questions and giving some hard minutes, but only to improve ourselves! So after reading and enjoying the article here are the two remarks:
The charts. For sure AUD has risen a lot more than CAD with exports in the observed period. Still I was surprised that you did not use such a good tool in your favor to make a big hit on my CAD strength theory. Frankly, I do not see from your side a better chance to convince me about how all Comms are dependent on China than saying: “Look FE, US economy might go up or go down but look at the correlation between the two export charts! They show how interconnected these economies are!” But you did not mention this one. You said some reasons for choppiness and crisis but there is a huge relationship exactly in the crisis and after the crisis in both chart and also in the overall tendency.
The other thing, where you could not convince me is the 444%. I believe you it is like this but there is no $ numbers, neither for ore nor for meat. The 17% is already a better number to imagine how important it is, but there is no comparison to ore so how could I compare it how important these components were? I tried to find it also on the site, but did not find such chart with exact numbers. Actually I did not even find the chart you posted.
Last but not least, it is not a remark, more a surprise was your conclusion. At the moment I do not see any good signs in the Australian economy. Maybe what I find good (you wrote about it) is that I read in the couple of times more times that Australia want to diversify its economy, turn to inner consumption and do not only rely on its exports to China. But this is a very long shot for me, I cannot consider much it in the present.
As you see, your reports are already beating some known websites but our thread has a higher standard, so we just try to be as perfect as possible.
Rookie, AUD is doing very badly now. Watch out there! And although I said I stay on the sideline, it was only about entering new trades. I am in many USD long positions across the board but not against all currencies.
Today has to do with the US bombing on ISIS so we see JPY strength. Might be a good setup for re-entering JPY for you guys (as I still do not trade it).
By the way, I closed all USD/HUF positions! It is a huge thing with huge positions! There was a pullback and I pulled the trigger. Now there are some very small positions left from other exotic currencies. It will get me out of trouble from now on.
Mike, your short post on GBP is good. Shows GBP strength as it is very strong against non-safe haven currencies and it holds good on safe havens even if it is a risk off day.
Staying with USD long for a balancing Peter’s GBP long. It is not easy to change my thinking but if all of you think in GBP strength I might have to rethink my bias. I am in a surplus but not in a huge to think about it. Or I just call my Yellen and tell I need some help to rebalance all of you!
I’ve been playing around with the correlation indicator I showed you, and yes, I see that GBP is strong but so is USD. Just like Peter said, price may range for a while. Hum, from my reading, I think GBP/CAD is a good place to buy GBP. Also, the last COT report shows that specs begin shorting CAD. Perhaps we’ll see the difference go to negative in the next week report? Good luck and happy pipping, guys!
I second that call! I have been waiting for two weeks at the possibility of buying the pair. I think tomorrow will be the day for me, its getting very close.
I have been working on another entry strategy. This one is far more flexible than the moving average crossover system that I shared days ago. The new one can be used on different timeframes allowing for a day, swing or even a position trade depending on your preferences. Of course it goes without saying that this method works only in compliment to our COT reports. I tried the technique today and I made 87 pips on two day trades which I think is alright. I haven’t closed those trades though so the pip count could increase.
Now I will read up on the posts I missed and see if I have anything to add.
Well, it seems that GBP had difficulty getting breath above 6400 - but I remain heartened, EUR/GBP rose steadily early London - it is a pesky cross if ever there was one - now that it has caught itself on and realized that Euro is not the one to buy good old GBP may take another deep breath and push for 6400 … let’s see tomorrow
So I wanted to share with you guys an entry technique I have been working on in the past few days. I think you will like. It’s called “counter-trending with the trend.” I think you will find it more useful because it works on any time frame but all you will need is to have your biases on each currencies.
Here is what you need:
Sentiment on each currency according to your weekly COT report.
Apply an indicator called ‘Volatility Stop.’ The settings are length 20, multiplier 2. The style should be circle rather than line. It’s easier that way.
The percent R indicator. The settings should 4 for this one. Larry Williams recommends using 4 as the setting and he invented the indicator, so he should know best I guess :). The only tweak I made is I set overbought conditions starting from -5 and oversold from -95
Apply the average true range indicator (ATR)
[B]Step 1[/B]: Based on your COT report, find a pair that mixes a strong currency with a weak one. For the purposes of our example let’s say its EURUSD. Euro is weak and USD is strong. So we want to sell EURUSD
[B]Step 2[/B]: Switch your chart to the weekly time frame and check where the price is compared to the Volatility Stop circles. If price is below the volatility stop it is bearish, if price is above then the trend is bullish. In our case the price of EURUSD is indeed below the volatility stop circles on the weekly timeframe, which confirms our sentiment on the pair was correct.
[B]Step 3[/B]: You want to move to a lower time frame. What your looking for is to find price located on the opposite side of volatility stops compared to the weekly time frame. So in our case since the weekly chart sees price of EURUSD below volatility stops, we switch to a lower timeframe until we see price [B]ABOVE[/B] volatility stops. You move from the daily to 4H to 1H. If all of them are on the same side as weekly then you have no signal.
[B]Step4[/B]: You now turn to the percent R indicator. You want it to give you an extreme reading, as soon as it does wait for the candle to close on that extreme and take the trade on the next candle. So in our example we found that the EURUSD was above the volatility stops (which means EURUSD was bullish on the lower time frame and bearish on the longer time frame). We waited until the percent R gave us a reading between 0 and -5 and then we sold the pair at the next candle.
[B]Step 5[/B] Check the value of the ATR for the candle you entered the trade. Multiply that value by 2 and it will give you your stops in pips. If you want a technical stop then set your stop 1 pip above the volatility stop circle.
[B]Step 6[/B] Your target will be when the percent R reaches the other extreme. So in our example we sold EURUSD at an overbought extreme, we will close the trade on the next candle of reaching an oversold extreme.
I’ll show you a picture of a trade I took today in the next post.
This is the shorterm long GBPCHF I took today with the strategy. I’m holding a longer term buy in the pair that has already yielded more than 100 pips of unrealized profits.
Now the dots you see on the chart are the volatility stops. Green dots mean price is bullish, red dots mean price is bearish. On the weekly chart, price was bullish. Now look at this 1 HR chart at the vertical line I drew; This big red candle was the first one to be with a red dot. So at that candle price was bearish on the 1 HR while it was bullish on weekly. Now look at the percent R value of that candle. An extreme of -99. I bought at the green line and sold at the red line, when the percent R was at the other side of extreme.
Look at this one here, what an absolute beauty. Price is bullish on the weekly. At the vertical line price is bearish (opposite to the higher timeframe trend). The percent R gets to an extreme and I enter the trade and literally I was right on the money. Price just makes a complete turn around as soon as I enter making me 123 pips in a few hours. It is these kind of trades that helped me make 46% return in my September to remember (of course I didn’t close those trades yet.)
I still think this GBPCAD trade has some way to go and I’m looking to re-enter tomorrow.
I figure cable to be a good set up at it’s current price vs usd. - target is 6680
I’m mindful of USD/CAD 1100, a possible sell there would work against me on GBP/CAD - GBP/JPY too much geo political with Syria, EUR/GBP is a barometer - I do not trade it, GBP/CHF and I think - yes, CHF will be weak, intervention etc, but the daily tells me there is a hurdle up ahead, I’m trying to get clear space.
So back to cable I go.
Edit: I do have a buy stop on GBP/CHF at 5505 … looking 5700 and 5800 (weekly chart)
