Hey folks. I have been looking at several trade ideas for the coming week. A lot of people forecast that the USD will turn bearish this week. I partially agree. These forecasts are great and I believe they are correct for now but they also discount what is actually happening now. There are a lot of pips to made this week on a bullish USD before we should even think about it turning bearish. My rationale is mainly from looking at fib levels on the 4H, daily, and weekly charts. I’ve looked at GBPUSD, AUDUSD, EURUSD, USDCHF, and USDCAD. Most of the trade rationales I’ve seen for trading a bearish dollar have to do with overbought/oversold oscillator readings from Stoch, RSI, etc. Mind you that these are very useful tools but for the most part they play second or third fiddle to fib levels on strongly trending pairs. All of the pairs mentioned above have just broken major fib levels in favor of a continued bullish dollar with the exception of USDCHF which is now approaching a new fib level (it is still bullish for the time being on the usd though). There may be a little jostling about (retracements or other movement from smaller time scales) but I can say with pretty high certainty that I believe each pair will eventually progress towards their next fib level respectively. That will be 60-150 pips depending on the pair. That makes for a lot of pips to be picked up. The pairs may hit these levels tomorrow or in two weeks but I think they’ll eventually get there. I’d like to point out that my theory may be trumped by good news about the eurozone and their whole debt debacle which may void my sentiment. Anyway, we can only think about a bearish USD after these fib levels are reached, but until then we should concentrate on crackin skulls.
Lucky…I like your enthusiasm…and your thinking process is sound… only problem is your tools are second class here.
When it comes to picking market turning points…at least for myself, my primary tools are a conceptual structure of orderflow in regards to where on a price chart do the large buy and sell orders sit right now…
and the other is supply and demand zones.
These concepts are really twin sisters of each other… one in the same, just I go about two slightly different ways to determine the same basic thing.
My point is… fib levels are mearly technical analysis tools that hold no direct correlation to where large limit orders currently reside on the charts.
If you can find out ways to measure where the ACTUAL orders are… this is MUCH MORE powerful of an indicator.
And right now… I’m with the other guys your talking about…I’m really very bearish USD.
I’m not saying we won’t hit your 60-150 pip distance… I’m just saying believing that because a fib level is there is why it must is… a very expensive way to think.
I have a lot of tools I use to do market analysis…well over 10. Fibs fall near 9 or 10 on my list there… they are the LEAST important to me, because of the tools I use, they are the least successful at predecting price change.
And as for things like RSI, stochastic…etc… they don’t make my list at all. they haven’t for years, and will never be on it again. I find they just arn’t strong enough, over enough market conditions, to ever make me any money.
Jay
Hello Jay,
it is a pleasure reading your article here. it would be great help for us, if u mention the indicator u follow in trading.
once again thanks for your post. will be waiting to hear from u.
masum
Abmasum, I don’t use any “indicator” in my trading. I base my trading off of a naked chart… and I have some methods I use to determine where there are going to be many more buyers than sellers, or many more sellers than buyers
here is a thread I have on this, including some videos.
I ALSO am going to be doing a live webinar in the next 24 hours. Read the details here:
Why won’t the market attempt to take out the stops at the 1.31 level? If it doesn’t come close to hitting it this week, then it may have to bounce higher before enough ammo to take them on. But who knows/
The golden question is: Where are more stops? Above or below? If you think what a small retail gambler was doing, he is probably in the hole since some pips and now hopes it will go down further. I’m not saying it will go up. Just what I think. 
I cant disagree that the dollar will become bearish. I am pretty sure that the USD will lose its shine soon. However, I can say with a high degree of certainty that the USD will remain strong for a little while longer. Personally, I think that the dollar strength will last until the respective fib levels are reached, others may not agree. My rationale is that longer time frames very often make major reversal on or near fib levels, so to blow it off as an unsophisticated tool would be objectionable at the very least. Do I think it is a coincidence that 4 of the 5 pairs that I mentioned in my first post crossed major fib levels at about the same time? Of course it isn’t! Its because many traders use the Fib levels on >4H time frames. Predicting supply and demand is an important concept but often it is superimposed by technical analysis when people use these tools to determine when they will switch from buying to selling or vice versa. This leaves windows where a lot of pips can be picked up solely on technical analysis. In other words, markets don’t spontaneously switch from bearish to bullish once sentiment changes. Usually, sentiment changes and then people start looking for good opportunities to enter trades on a reversal. What better tool to use for finding a good reversal point than fib levels. I guarantee that I am not alone in my thought process. Moreover, the main rationale of the analysis in my first post had to do with getting the same reading on 5 different, but related currency pairs. That is a key point I was trying to make, secondary to the fib levels! If a fib level breaks on 1 pair then its ho hum, if it breaks simultaneously on 5 different related pairs then it is probably a significant event. In the case of my analysis, most of the USD pairs broke fib levels last week roughly at the same time. Traders recognized these levels and still the dollar bulls overcame the bears at each respective fib level. Usually, if demand is high enough to break a fib level then it is strong enough to make it to the next fib level. The amount of pips I plan to collect is well within the average daily/bi-daily pip movement range, which means that it would not be difficult for each pair to make it to the next fib level and then become bearish even within the same day.
Another topic I’d like to broach is that there are different strokes for different folks. Criticizing other people’s opinions/analysis with condescension is obnoxious and only serves to boost one’s ego, while belittling another person’s ego. This is an open forum for exchanging ideas. I really enjoy hearing new and constructive ideas and seeing how other people do things. Please leave out anything that is nonconstructive or condescending. We all have ways of doing things and none of us want to hear how our strategy is “second rate” especially when it works pretty well.
Lastly, I am not arrogant enough to think that I or anyone else can predict the future so it is always best to use discretion when accepting anyone’s opinion. As always, it is best to go with your own analysis and use other people’s opinions as an adjunct to support or contradict your position. My opinion may be correct or incorrect but all we can do is our best.
Thanks folks.
Hey Lucky… I’ll tell you the truth, as Bucks said, the weak stops are above the market… And as of this typing, the eur/usd hit a high today almost 90 pips above teh close on friday.
I actually use fib levels from time to time to know where retail traders are putting their stop losses, because the market will always look for block of orders…and stops are orders. So, you may use them to predict turning points (and I do too…from time to time…), but more often I use them to help tell me where retail guys have their stops…so I can target those stops just like the larger institutions do.
And as you said…this is a forum for exchanging ideas. That’s what I thought I was doing. I would gently suggest you take a look at how often fib levels fail when the market coming into a significant previous market turning point… I can say from first hand experience that I have over a 60% win rate for the last couple years by targeting likely levels where retail guys are putting their stops… and fibs are one tool that helps me konw where that is.
And regardless of what method one uses to conduct market analysis… there is absolutely no arguing that if there is more demand than supply at a certain price level…that price will move up. in fact, this is the very engine that moves the market under any and all circumstances. I simply prefer to look at where actual buy and sell orders are likly to be, rather than where any tool or indicator says they should be.
Call me crazy, but the real orders seem to be a better predictor of what price will do than anything else.
Jay