Just adding another view of GY here to that posted by Tess. Either way looks like we could be in for some interesting action with the mounting overhead supply
Just thought I would add to this idea I started earlier in the thread. In addition to the first breakout of the day after Europe open further moves to a new H/L can be taken after a retrace as long as that retrace has at least touched the 60 SMA. For GU in this situation the requirement for a reasonable stop stays in place although this can be at a reasonable spot technically, other than the 60 SMA. Yesterday the strategy had 2 wins and a loss. Why the frustration? Well I couldnt trade GY as I was already in a trade from the previous day and I have certain rules re maximum commitment to a pair although I am now reviewing these since my trade was already well past break even (we never stop learning and adjusting do we?). For GU I took the limit order out as we ran towards the UK news. Not only did it break out in the 10 mins before news it also reached its target before the release. The market has a very warped sense of humour! Note for GU I considered the 60SMA to be too close to the breakout to be a reasonable stop so used the last swing high (or would have done if still in the trade!)
Important to show examples of this that didnt work. It has had a great run recently so you cant win them all. This was reasonable momentum running into the 15 area. The news is out of the way and that caused the slight push back up to test the breakout. Incidentally that was a good place to get into a short trade (wish I had) as the technicals reassirted themselves after the news. As a rule of thumb after a break of the days low I consider the trend down for the day irrespective of other timeframes until something happens to challenge that. All looked good as it headed down to the limit order then some nob puts on the brakes!
Nice when it all comes together. The asian breakout strategy and round number have both worked. Wish I had still been in GY from monday so worth reflecting on Tess’ comments especially letting the market prove you wrong. That has had a profound impact on me. You should now be short on GY given the major 4H resistance but at the moment no way of telling whether this is a retrace and we are going to ride back down or whether the 4H is going to crumble . My approach is to take profits on half at 1R, get the stop to be and see what happens. If it turns round and we break to a new high I will certainly be in that.
We are at some important levels on both GU and GY this morning. ‘Resistance is useless’ - or is it? Will watch the Asian session with interest to try and discerne the likely next move. As I look at the screen GY has moved back to test 234 and GU is sat on 260
Another amazing day yesterday. If you failed to get on board the GU breakout above the days high earlier in the session this typical flag with the strong upside breakout candle was the cue for a long. I had just extricated myself from a short (+2 pips!) since at the time it looked like profit taking was in play and GY also began a big but temporary fall. The recognition of this pattern even though it was fairly late in the session allows an entry with a tight stop. Profit target are an equal vertical distance from the breakout as occurred in the formation of the initial pole
I have posted a number of charts that I have used to come up with my thoughts for next week. First some general observations. There was a timely reminder from Tess (post 64) that fundamentals are important. Sometimes we can get so embroiled in the technicals that we overlook the fact that longer term the fundamentals drive the market. Viewed from this perspective technical set ups are our “call to action”. There seems to be an overwhelming case that the US dollar will remain under pressure and the lowering of the fed rate can be seen to be reflected in the ongoing fall in value of the dollar (therefore rise in the GU pair). The market is consumed by the state of housing and this is not an isolated US phenomena. Reports I have read suggest that the UK and NZ are at least as overpriced with their housing stock and who would bet on Northern Rock being an isolated example of problems in the UK. I am currently negotiating a house swap with a guy in Bristol who lives in a house divided into 3 flats and which he tells me has just been valued at over 500,000 sterling for his flat - I am gobsmacked! As an expat ‘pom’ I was somewhat surprised to learn that bank guarantees in Britain by the BoE are not quite as watertight as I believed them to be. We therefore have to be vigilant at all times with news coming out of Britain as well as the US and there is a growing consensus that the UK will also lower rates. For those, like me, that are strictly amateurs I find Kathy Liens pieces on the FXCM site to be very informative on this big picture fundamental ‘stuff’.
It is also important to realise just how good the professionals are at understanding and trading the market. My own mentor picked the fall off the highs in Gu to within 48 hrs of it happening and told those of us in his trading group to get short (on legitimate technical entries) and leave some of our stake for a longer term run. I think a number of us made a great deal of money from this which represented an adjustment (at least for me) from my normal strategy. He also picked equally well the carry trade issues late last year (another nice little earner as they say back home). The market is not always as chaotic and unpredictable as some would think although each trade certainly does have its unpredictability hence the need for strict money management AT ALL TIMES. Within our own forum I have noted that both Tess and Captain Currency in their different ways have their trade set ups informed by their overall view of the market. They patiently await their favoured triggers within an overall understanding of what the market is doing and is likely to do next. The concept of area of interest have been put forward by both of them and is something that I have certainly taken on board as I seek to get better at this
First to my longer term daily chart. I wanted to highlight the way that the RSI stayed in overbought territory for almost 3 weeks after the break of 2.0000. This is a characteristic of oscillators in strongly trending markets as we have now. I find the RSI and ATR useful on the daily timeframe. ATR gives you a quick look at how likely it is that trend following techniques will work (the higher the better) and when they were down at 60 earlier this year (almost an historical low according to my charts) it was very difficult. Now of course it is much easier although it is also important to remember that it is a lagging indicator
Focussing down my 4H bar chart shows the 3 key levels currently in play (in my opinion). We have got through 2.0365 with that fantastic run on Friday but can now expect that level to be retested. I like the analogy of a floor and the bulls need to know how strong it is before we proceed higher. We closed right at a previous high at 2.0462 (have you noticed how often this happens, price action really does denote the actions of buyers and sellers). Of course the other key level is the 14 year high at 2.0654 which is within striking range
The last 2 charts are 2 of my trading charts. They show that stochastics are overbought (though remember what I said above) and this might suggest (as does commonsense) some pullback and testing before we move higher
So what does all this mean. I usually trade the Asian H/L strategy on a monday because we dont have a direction set for the week. I would trade it in either direction (unless we get strong trending action in the Asian session) but would feel more comfortable if it moved short initially. I know that this is counterintuitive to some extent in a strong uptrend. My target would be in the 2.0365 area. If the break is long I will take half if there is any sign of stalling and certainly at 1R. Sooner or later we are after all going to get consolidation at the very least. We cannot afford to stay out of the market just because we expect a pullback since markets can go on for much longer and to much greater extremes than any of us could guess and had we have done so at the break of 2.0000 we would have failed to take advantage of good trending action for 3 weeks although I do admit that at that time I was relieved when the pullback started. At 2.0204 or 2.0365 I would be looking for signs that the support is strong giving an entry long. If the support fails and is then retested from the downside and this holds as resistance I would then go short. In my mind 2.0462 is not such a strong level and would be unlikely to enter a trade off a test of this. Perhaps later this week or next week we will see the highs tested in which case I would look for a break then a retest from the upside before going long or the formation of a double top with a fall back initially to the 2.0462 level
As always the price action tomorrow morning may render my thoughts redundant. The 600 pip move up in little more than a week certainly shows that this thing is rocket propelled at the moment and of course all trend following techniques should have been doing well. Any unexpected news (tape bombs as JY likes to call them) can, as always, have a profound effect so if you are trading short term it is imperative that you have at least one good, reliable, news service on at all times
Well the GU was obliging enough to follow the script. I took the break to the high but got out with little damage with a double top and divergence on a 5 min chart. Then took the new low (no real entry signal for me before that). The inside bar just above the 65 area provided an entry long for the retracement and exit on the 50% retracement level as I didnt expect the 65 level to hold.
Very nice opportunity off the GY as it retested its breakout at 235. Still in this trade at 236.40 and will take half at the days high or on any serious reversal then look to trail on the troughs. A number of possible entry techniques. There are candles showing hesitancy, inside bars, trendline breaks, higher peaks and troughs on the lower timeframes, whatever is your own poison really! At the end of the day it is what your familiar with and reflects your risk tolerance. There is also stochastic divergence for those that use an oscillator. I reckon it was screaming ‘buy me’ and have a bet with myself that it was one of Tess’ areas of interest
Just taken half at the high of the day (at least so far it is the high!) - feels good. Move my stop to be and ‘will let the market prove me wrong’. My reading of various timeframes, state of the dollar, NFP later this week etc says this might be a good position to see if I can hold with plenty of upside potential. May be stopped out by the time I get up tomorrow morning but its time to try something a little different in pursuit of a greater goal. As usual time for bed here. I have also been playing with the round number strategy on GU tonight and my latest trade is at -1 so may close and get out but it has produced a couple of good winners and 1 loser tonight
Break above the asian session high and resistance. Now time to get out as we run into overhead supply. EY chosen today as there is very ragged action on both pound pairs whereas the ranging action in EY was clear then a clear higher low at 163.90 ie just below the round number. Dropping to the 5 min chart showed hesitation at the days high then a bullish candle to break through that so entry above 164.30
Hi Tess. Yes, a bit new for me to stay back and I kid you not it has challenged my comfort zone for sure. However have left the pair alone and looked at EY instead which looked clearer to me for a quick trade this pm, although now I look at the GY not sure why I thought EY was clearer (a couple of candles makes a big difference sometimes). I have now moved my stop to 235.80 on GY and think I might head into the garden for a cigar in order to stop myself fiddling and again run the risk of overtrading. EY I am now at be for my second half and will also try and stay with it for awhile. Never ceases to amaze me the difference between knowing what you ‘should’ do (based on your tactics as opposed to necessarily being right) and doing it. Just seeing the shooting star right now on EY has got me itching to pull out altogether but that runs against the overall plan I had at the beginning of the afternoon which was to see if we could get through 165. In fact just thinking while I am writing I am beginning to see thats what Jocelyn was talking about in terms of getting set in advance - mmm need to think more about this
Well so far so good with this. Stop is tucked away safely (I hope - if I have moved too quickly then would welcome comments on that). Probably the first time I have allowed such a big move against me and stayed with it so very happy with this. That hammer was a possibility for anyone on a shorter time frame to hitch a ride back towards the high of the day. I am currently long GY and EY and hoping for big things but happy that they are now entirely risk free. Will now try and practice what you talk about Tess and Jocelyn and try and think this through as we proceed through the week without the immediate emotional hassles of getting in and protecting the trade during those first few steps. Hopefully will help me to get a new perspective and take me another step towards my current goals
First & foremost, well done…that’s [U]great trading [/U]& management!
If the stop feels comfortable to [B]you[/B] & [B]you[/B] feel you’ve placed it in a technically efficient slot, then that’s all that matters. Keep [B]your aims [/B]& expectations for this specific trade foremost in your mind & written down on your trade jotter. By doing so, you’re constantly being reminded what you’re gunning for & where you need to look with regards technical geography.
Never mind what Tess or I think, or anybody else come to that.
It’s [B]your [/B]trade, you’re managing it with your aims, expectations & unique money management & awareness. We can encourage alternative thought & trade practices, but essentially the trade longevity decisions are yours to own.
If this zone satisfies your current decision process, then this is where you should either scale out further or close the trade out.
Remember, this is all new to you. The object of the exercise is to instill confidence in your thought & decision processes. By practicing what (we) have been preaching, you can determine whether it’s something you wish to persue now or bookmark it for further investigation at a latter stage?
You’ve certainly demonstrated you possess the required discipline to engage this type of execution model for sure - it takes a lot of mettle to put your money where your mouth is…you should be proud of your achievements on this trade!
Thanks Jocelyn, really appreciate that and I have sure got the message that at the end of the day I have to be comfortable with what I have done. Been a really fantastic couple of months since I joined bpips and learnt so much. I certainly feel like I am progressing. Long way to go of course and still make a number of trades that in retrospect I wonder what I was doing and yes I diligently keep my trade log and diary so I can review. Got another couple of weeks before I take the family to Phuket for a fortnight so as Tess said after she came back from Cyprus it will be good to be away from flickering screens for awhile and maybe all that I have learnt will ferment while we play in the sun!
Well we are at the 237.80 area that you highlighted earlier today Jocelyn. I now have 238.30 as the next target. Dont see any better place for my stop at the moment. So time for me to leave it overnight and see what breakfast brings
OK this is a good test for me (as well as GY!). Not so freaked as I would normally be on a pullback like this. GY now challenging the minor support area at 237. But trying to put in place ‘let the market prove you wrong’ and so this is still a bullish chart. Indeed there is divergence forming here which might present an intraday opportunity if there was a convincing turn signal though I was surprised to hear from JY that so little trade in the Asian session is GY. I shall watch with interest what happens at 236.60 which is yesterdays breakout area
This thread is terrific. I skimmed it a couple of days back and uh… none of it made sense because it’s so involved ;), so I’ve just slowly gone through the whole thread again to get to grips with the wise words of advice on here.
Couple of questions:
Tony - I like your trading of the Asian H/L using 60SMA as a stop. I use a flat 30pt SL on GU and have always thought that could be improved. But reading through you say you take profit at 1R, but I notice on later posts you’re letting it ride. Do you just take partial profit at 1R and then take a view on the rest of the trade?
Tony\Tess\Jocelyn - with any strategy, be it Asian H/L or fitting in with set S&R lines or what have you, how does news affect you? If you’ve determined a good time to technically enter in a trade but you know there’s a significant news release do you hold off until it’s played out?
Just to reiterate other posters too - thank you so much for all this useful info. It’s top notch, really is.
