A brief share, questions around volume, any contribution welcome

emeraldorc · December 18, 2014, 8:42am

Advertising what? Information?

Hardly. Note I have no products and this thread has been running longer than 27 posts :). No offence intended… Merry Christmas Isabel!

emeraldorc · December 18, 2014, 8:44am

Thanks. I plan to be more reliable with updating content and make it more specific.

emeraldorc · December 18, 2014, 8:53am

"PipMeHappy":

Hello Emerald, and hello all fellow traders/Babypips peeps!

Here is an interesting bit of Volume Price Analysis for you, taking the NZD/USD as an example (and I declare,

once again, an interest, as I have been trading this pair for a few weeks/months)…

What is interesting is to look at the following two charts:

CHART ONE: Nzd/Usd Daily Chart:

<img src=“301 Moved Permanently”/>

CHART TWO: Nzd/Usd Monthly Chart:

<img src=“301 Moved Permanently”/>

What we notice in Chart One is that the daily volume peaked to 1.5 billion on the

29th September 2014, when this happened:

Kiwi collapse: Government and Central Bank send NZD/USD to a 13 month low | Forex Crunch

Since nothing has quite moved the Kiwi as much as that event, we have been left

with a Nzd/Usd falling in line with a quietly zig-zagging bearish mini-trend (within

a larger, months-long bearish trend), with the (orange) 50-day moving average

right on top of daily candles, indicating that price has not much strength to reverse

the fall…

What is interesting here is that if one squeezed the daily chart back in time, one

would find that the highlighted event (29th Sep. 2014) had the HIGHEST VOLUME

since the beginning of volume data from FXCM’s indicator, which is 2010… What

is significant, also, is that the orange-circled price action, corresponding with said

record volume, shows how the volume surge helped pushing the price and keeping

it below the very significant round-number level of 0.80, marked on this chart

screenshot as the upper of two solid red lines; high-to-low, the 29th Sep. candle

measured 161 pips… However, it was only on the 25th Sep. that a rather more

solid-looking candle, measuring 166 pips (high to low), pushed price below that

0.80 level, but with less volume, at 1.1 billion units… In other words, the highest

volume surge in four years did not correspond to a large-body, equally impressive

candle at the end of a three-day drop…

The bearish trend seems to have slowed down at that point, compared to the two-month

vertiginous descent of 800 pips since July’s heady heights around 0.88… While the high-volume

spike of 29th Sep. helped keeping price under the year-long significant level of 0.80, which had not

been breached for the entire year (2014), it certainly was not matched by an

equally impressive price action, given that 161 pips was, for example no match

for the 15th October candle, registering 189 pips with a much lesser volume

(just above 1 billion units)… However, the 15th October candle did nothing but

span (almost) the entire length between the two solid red lines on Chart One, namely

the 0.78 and the 0.80 level, and fail to break above the latter… and, indeed, price

has failed to break above 0.80 since…

Now, if we zoomed out onto a monthly chart, we notice something even more

interesting in terms of Volume Price Analysis… Let us move to Chart Two…

What we see on this second chart is that the monthly volume in August, September,

and October 2014 was increasing greater, peaking at about 17.5 Billion units in

October… However, did price match this volume swell? Clearly, if we look at

the orange-circled area in the chart, the September candle spanned (low-to-high)

and impressive 683 pips, and was an almost entirely solid candle: however, it was

not matched by the highest volume, as this achievement went to the following month,

and what is interesting to see is that in October there was not only a candle HALF

the size of September’s, but also one that was almost entirely body-less (call it

a Doji, if you wish)… So the month that gave us the highest DAILY volume on

those Kiwi/RBNZ news we spoke about in discussing Chart One was also the month

with a matching large, solid-bodied bearish candle… This candle, incidentally,

was almost a mirror version (bearish, rather than bullish) of the Sep. 2013 candle,

which also spanned around 700 pips… However, that candle had LESS THAN HALF

the volume of the Sep. 2014 candle, and yet it helped the NZD/USD past the 0.80

level and on to new highs…

So, which is less true… the Volume-Price relationship of Sep. 2013 or of Sep. 2014?

Well, both pushed price past the historically significant 0.80 level (respectively

above and below it): interestingly, on both occasions

it was the fundamentals to move price one way or the other… In the first instance,

it was the market talk of the RBNZ’s rate-hike bets

(http://www.bloomberg.com/news/2013-09-26/aussie-kiwi-hold-loss-versus-peers-amid-u-s-debt-limit-concern.html);

in the second instance, post-2014 RBNZ rate hikes, it was the realisation that those

rate hikes had been overdone and that the RBNZ had actually decided it had

nowhere to go (in terms of matching the market’s expectations of its rate hikes

continuing)… A typical example of the markets front-running an event (i.e. rate hikes)

and then crashing down once reality kicks in (think of the GBP/USD crazy run and

subsequent bomb-dive, all based on speculative front-running of ‘possible’ rate hikes

from the BoE, which never happened)!

So you can see that sometimes Volume Price Analysis can really throw some

interesting scenarios, with similar powerful price moves not matched by equal

volume… It is all about context, and about interpretation: as Anna Coulling would

say, it is an ART, not a science…

Finally, what we see in the Volume Price Analysis of the monthly Nzd/Usd chart

(Chart Two), is that in the months of October, November, and December 2014

there has been a falling monthly volume, accompanied by NOT ONE but THREE

Dojis on the chart!! Even more interesting is that while the massive September

candle brought the price to a close just about bang on top the 0.78 level (closing

at 0.7807, to be precise), thus failing to break it, the subsequent three months,

with three Dojis alternating a bearish, bullish, and bearish lean, all failed to do

anything about the 0.78 level, with the Oct. one closing at 0.7783, the Nov. one

at 0.7810, and the December one currently looking similar to the Oct. one at

0.7785 (at the time of writing this thread post)… In other words, price has

been compressing just below the 0.78 level FOR THREE CONSECUTIVE MONTHS

but failing to move past it or closing significantly lower…

What does this bode for the new year, 2015? Well, with the USD moving towards

its own first rate hike in a long time, and with the volume that it carries, both

as a global currency and a huge economic powerhouse, it would be tempting to

think that the NZD/USD’s fundamentals are looking rather less attractive on

the bullish side… Combined with this is the fact that, even without engaging

in a (dangerous) game of picking tops, the NZD/USD is at its highest levels of

two decades of price history, and has failed to break its 0.88 peak in three years

of price history (the level was tested and rejected in July 2011 and in June 2014).

On the downside, there is nearly a 3,000-pip run from current price to the low

of late-2008/early-2009, at the end of the global financial crash: while pushing higher cannot

be deemed impossible, the higher probability in a longer-term perspective seems

to be resting on the side of a Kiwi Dollar depreciation against its North American

counterpart…

Will the bearish thrust initiated in July 2014, paused in the last three months,

resume in the new year?

We shall see… in the mean time, I will be watching this pair with great interest,

and continue to hold short…

Happy trading.

Man of the kiwi I should call you. I am finally trading MT4 again. No CFDs on ctrader… Into a lot of commodities and equities. Closed my share account and moved into CFD. Short MSFT at the moment and doing well. Long S&P 500 since yesterday.

All fun and games.

PipMeHappy · December 18, 2014, 9:44am

Ah! Hello! Well, Christmas is coming up, as you say… so not much to do now except closing the books, etc.

Yes, you may call me ‘man of the Kiwi’… I like the simplicity of knowing one pair well… I am keeping my

eye out for NZD/JPY too but I have made NZD/USD my staple diet… This way, I can ‘see’ what is going on,

without too much noise… At the end of the day, although there may be the word ‘NZD’ in all them, pairs

like GBP/NZD, EUR/NZD, and AUD/NZD may all react differently to NZD/USD, depending on the correlation

strength to that pair at any given time… So it may be that the week of the 29th Sep., with the massive

drop in NZD/USD, all of them reacting in sync with this pair, but on other occasions, EUR/NZD may follow

more the EUR/USD than NZD/USD, GBP/NZD may be influenced more by GBP/USD than NZD/USD, and so on,

making one-directional currency baskets a very tricky thing to manage, because you would have to know how

different fundamentals interplay in a number of combinations, and you could end up really confused and losing

money.

Better, for me, to know how the fundamentals/technicals of one currency play against those of another, and

just be content with following that story, and follow it well…

So, for now, I am indeed a ‘Kiwi’ trader!

Happy days!

Good luck shorting Microsoft (my, has it not come a long way since 2010)! And, as for the S&P500,

in spite of all the talk of complacency, it …just keeps on rising…

emeraldorc · December 19, 2014, 2:41pm

PipMeHappy:

Ah! Hello! Well, Christmas is coming up, as you say… so not much to do now except closing the books, etc.

Yes, you may call me ‘man of the Kiwi’… I like the simplicity of knowing one pair well… I am keeping my

eye out for NZD/JPY too but I have made NZD/USD my staple diet… This way, I can ‘see’ what is going on,

without too much noise… At the end of the day, although there may be the word ‘NZD’ in all them, pairs

like GBP/NZD, EUR/NZD, and AUD/NZD may all react differently to NZD/USD, depending on the correlation

strength to that pair at any given time… So it may be that the week of the 29th Sep., with the massive

drop in NZD/USD, all of them reacting in sync with this pair, but on other occasions, EUR/NZD may follow

more the EUR/USD than NZD/USD, GBP/NZD may be influenced more by GBP/USD than NZD/USD, and so on,

making one-directional currency baskets a very tricky thing to manage, because you would have to know how

different fundamentals interplay in a number of combinations, and you could end up really confused and losing

money.

Better, for me, to know how the fundamentals/technicals of one currency play against those of another, and

just be content with following that story, and follow it well…

So, for now, I am indeed a ‘Kiwi’ trader!

Happy days!

Good luck shorting Microsoft (my, has it not come a long way since 2010)! And, as for the S&P500,

in spite of all the talk of complacency, it …just keeps on rising…

Closed MSFT yesterday on that gap open. S&P 500 is also closed today.

Merry Christmas!

emeraldorc · December 23, 2014, 4:54pm

[video=youtube_share;qPU9ShWqr5Y]YouTube

emeraldorc · December 23, 2014, 4:55pm

[video=youtube_share;lSxyoT9CH7I]YouTube

PipMeHappy · December 24, 2014, 1:22am

Great video!! Right back to V.P.A. basics! Excellent!!

emeraldorc · December 29, 2014, 9:55am

FxPro USDJPY D1 xsLwn | cTrader

I have this question a lot, when is Yen buying going to commence? In my opinion I think we are in a bull trap evident from the volume decline and we can see this is a potentially extended 5th wave correcting. My sell preference was at 121.79 and would have made for some tidy profits if managed well. We have structure at 124.05 and 121.87. So watch those levels. I still think longterm the Yen will correct to 111.12. A good chance we will see 123.60 at which point my sell order will be waiting. There is some serious confluence in that area and it so close to our 124.05 structure. Good luck if you take this trade into the New Year.

I am not doing any trading but I can never stay away from the markets. Anyway off to watch the new series Marco Polo which has consumed me.

emeraldorc · December 29, 2014, 10:37am

FxPro GBPUSD D1 DfLwn | cTrader

This was my last currency trade for the year still in it. I will be aggressively managing this trade, simply because the volume is falling so the move lower is weakening and the pending reversal will come without warning but this is a structure trade. Look at that 61.8 ext confluence with the support from January 2012. Good buy area, will consider a buy limit at that structure as well.

emeraldorc · December 30, 2014, 12:24pm

Worth a share. Would have gone to see him if I knew he was here. Very unique perspective on the
Market and he trades everything he teaches. One of the few educators that trades his account with his students. If I was going to pay to sit in a live trading room it will be his. Great guy!

eddieb · December 30, 2014, 2:07pm

Nice one, thanks

PipMeHappy · January 1, 2015, 3:42am

emeraldorc:

FxPro USDJPY D1 xsLwn | cTrader

I have this question a lot, when is Yen buying going to commence? In my opinion I think we are in a bull trap evident from the volume decline and we can see this is a potentially extended 5th wave correcting. My sell preference was at 121.79 and would have made for some tidy profits if managed well. We have structure at 124.05 and 121.87. So watch those levels. I still think longterm the Yen will correct to 111.12. A good chance we will see 123.60 at which point my sell order will be waiting. There is some serious confluence in that area and it so close to our 124.05 structure. Good luck if you take this trade into the New Year.

I am not doing any trading but I can never stay away from the markets. Anyway off to watch the new series Marco Polo which has consumed me.

Hi and happy 2015!
I just posted this about the USD/JPY:http://forums.babypips.com/forextown/65410-my-article-trading-nzd-jpy-long-term-reversal-downside-5.html

emeraldorc · January 1, 2015, 5:09pm

2015, time for the crash of the Euro the pattern that has formed normally sees a crash. The Dow Jones is now in a 5th wave from the 1931 low and will potentially top out at any point from now till 2020. I will be there to sell it no doubt when it does. Just need to make sure my broker is still standing when it does happen…

Much to look forward to…

PipMeHappy · January 1, 2015, 5:57pm

I like your thinking!!! Indeed, some of these markets have been around longer than our brokers, and may overrun them…

Some say that the Euro may run down to parity (1.00) against the UD Dollar… Who knows how long that will take…

As you say: a lot to look forward to!

emeraldorc · January 2, 2015, 5:19am

The support is at 0.89 so will not be suprised.

emeraldorc · January 3, 2015, 9:07am

Hey Pip do you remember this chart a few months ago? It looks like we continued to see a slide. I was wrong on the buy zones.

Fast forward…

It seems like we are now at that 1.27 fibonacci, no more shorting till that zone breaks. There is a reaction but will it hold? We shall see…

PipMeHappy · January 3, 2015, 9:24am

Hello Emerald,

it looks like your bat pattern was a correct forecast… Shorting the AUD/NZD would have given you a lot of smug pleasure, undoubtedly!

I was a bull for this pair for the first few months of 2014 but then I just focussed on shorting NZD/USD when I saw that the Aussie-Kiwi had started to struggle…

Given that it has broken the weak uptrend, and that it did so on the RBA’s dovish bid rather than on a more bullish RBNZ, going long for 2015 on this pair cannot be done on technical levels alone… Also, both Australia and New Zealand have a strong interconnectedness, given their dependency on Chinese trading, so the AUD/NZD’s fundamentals are not the most straightforward for gauging the pair’s future leaning, just like it could be said, to a lesser degree, for another pair whose currencies belong to strongly interdependent countries, namely USD/CAD.

Anyway, I am pleased to see that my patience has paid off and that NZD/USD has regained its bearish trend momentum after a few weeks of desperately scrambling back up to that accursed 0.78 level… This could have an interesting development for other Kiwi pairs, including our very own AUD/NZD…

Will you trade it, Emerald?

emeraldorc · January 3, 2015, 9:52am

PipMeHappy:

Hello Emerald,

it looks like your bat pattern was a correct forecast… Shorting the AUD/NZD would have given you a lot of smug pleasure, undoubtedly!

I was a bull for this pair for the first few months of 2014 but then I just focussed on shorting NZD/USD when I saw that the Aussie-Kiwi had started to struggle…

Given that it has broken the weak uptrend, and that it did so on the RBA’s dovish bid rather than on a more bullish RBNZ, going long for 2015 on this pair cannot be done on technical levels alone… Also, both Australia and New Zealand have a strong interconnectedness, given their dependency on Chinese trading, so the AUD/NZD’s fundamentals are not the most straightforward for gauging the pair’s future leaning, just like it could be said, to a lesser degree, for another pair whose currencies belong to strongly interdependent countries, namely USD/CAD.

Anyway, I am pleased to see that my patience has paid off and that NZD/USD has regained its bearish trend momentum after a few weeks of desperately scrambling back up to that accursed 0.78 level… This could have an interesting development for other Kiwi pairs, including our very own AUD/NZD…

Will you trade it, Emerald?

If a it breaks I will trade it but the big move has no doubt gone. I am adding this to my currency portfolio which I am trying to diversify because of this Dollar strength. So I am looking to limit Dollar exposure to maybe Euro and Cable and then start looking at more commodity dolls and crosses Sterling Krone and and Euro Yen.

2015 will be looking a lot at commodity futures and Indices and T Bonds, some strong moves expected and 4 to 5 Good currency pairs.

Jason_Rogers · January 9, 2015, 6:45pm

Talking Points from this week’s volume report:
[ul]
[li][I]Multi-year lows in the euro, but volume still lacking[/I]
[/li][li][I]USD/JPY consolidation occurring on low turnover[/I]
[/li][/ul]

[B]Daily Volume Chart: EUR/USD[/B]