BB… you’ve got a valid point. But Peter posted a good summary on all of my confusion. On COT for one I think I was a little disappointed to find out I couldn’t use it for timing in which I have been told early on. But I just had to try it out myself. And second off, I was expecting COT to aid me in on possible reversals but that again turned into a wishful thinking. In the end, my conclusion all it did was to show how the two big players were playing the field in which you could actually see it yourself with naked eyes on the chart the price action itself - move onto higher TFs daily its all there. Thats why I was slightly in favor of PA btw. When price was going up during a downtrend you’d know that commercials were selling off. Correction. And specs were riding the trend down.
I agree with you and FE however on Intermarket Analysis, and how powerful of a tool it can be.
That should be quote of the day ! well said Peter :35:
I find myself trying to over complicate simple things quite often. But to think of it thats a human nature. And in trading where’s everyones free to do so probably makes it the most challenging endevours of all, as far as career goes.
And Mike , your post was as elaborate as it could get ! I agree with most of what you’ve said I would like to see some live setups that would be great !
Good morning. Well, here we are. Monday morning, after vacation, and the start of the New Year. The market opens up on Sun night for me and I wake up at the beginning of London session. So, after MUCH contemplation, studying, and reading your responses (which I appreciate very much) I have placed my first trades. At market open. It is my original plan. I’m sharing it with you. This is all the reasons and details. So let’s see how it plays out.
I’m going AUD long. Across the board. No stop losses in place now. The plan is to keep this running between one week (minimum) and four weeks. I need to see results on the weekly numbers. So after the first week of results I will decide (if I’m on the right track with my reasoning) whether to continue for another week. I will have to determine if I’m in with the correct flow. If yes then continue on, week by week. And I have a brand new 1,000 account. I have position sizes of 2k on each one.
Reasons…I see a turn-around. You can see it on the charts. It’s not at the bottom, but has turned already. “Turn and burn”. It’s across the board, except against the USD. But that pair is at a major support level now. So that’s what I see. Fundamentally speaking, I don’t think COMPARATIVELY they are in trouble. The bad thing is their dependence on China. And the fact of being a commodity currency, which is the opposite of the USD. So given that fact, I think the ball will go back across the net. I think the USD will have to have some kind of correction soon. We will be finding out soon because this Friday is NFP day. This surely will set in motion something. Either a healthy correction for them, or not. And if that is the case, then I think the commodity currencies will benefit. And I think that they (AUD) are due! The charts and numbers have shown a correction already, and given how much they have lost lately, I just think it’s their turn. I don’t think they are in trouble like JPY and the EUR. They are not in any worse shape than NZD.
That’s all my reasons. And here’s the charts. All these are daily time frames. Forget about the bottom right (AUD gold)
If you squint you can see the trend (flow) turning. Well, has turned, in favor of the AUD . On all except on USD.
If you zoom into lower TFs 15M and 30M AUDUSD is also climbing up so does NZDUSD. You’ve mentioned that you’d be running them for a week without any hard SL. I’m just wondering how are you going to manage the losses which there will be in a live account ?
And for pairs like AUDJPY there’s little room to the upside for in certain combinations there’s more room. Are you going to take that into consideration at all ? And how about major S&R levels ?
Yeah, I see. Well, this is a forward test. So, I do have to see how it plays out. Can’t back test it, you know. And also I think that there is a lot of hedging involved also, so the bottom line can’t be too far off, if I’m at least not on the bottom of the entire pack. I’ll keep track of the bottom line and keep you guys up on any major notices.
Bottom line is this is a package deal. I’m looking at the whole. So we’ll see how they compare to the other 7.
with the average temperature it is not easy. I tried it some months ago. My goal was to find a site for the average US temperature/month. As the USA is a huge country I realized such a stat might not even exist. I do not remember but I think I have only found something like that for the city New York. That helps us not much though. Some sites seemed like to have good information but you have to pay. There has to be a solution but at the moment I do not know what. These studies would be great to all of us.
well, we do not know how things work out but at least you shared your fundamental views and live trades. So this is a good starting point and as you are on a demo account, you can afford a loss even if it is not good of course.
My problem is the same as Rookie’s, the risk for your trades without any SL. Hedging works good if the products are different. Here you only have AUD trades. If there is a bad fundamentals for AUD trades, you might be down let’s say 7x300 pips = 2 100 pips. So even if you have some good weeks, once comes a bad weeks and your account is erased.
And also as Rookie pointed out, I would consider the difference between pairs. It is hard to say how to trade AUD or in how many pairs should you be involved. But if we see that USD is clearly strong then I just do not see a reason to go long AUD vs. USD. If you definitely want to have 7 x 0.02 lot size open then invest the money in other pairs like EUR or JPY where you have a better chance.
I found a site which shows the average temperature for the whole region of the USA. Problem is, that it only goes back to 2005. Well, more than nothing.
Okay, I finished updating my database and got absolutely nothing to report. Although I have something for the more adventurous members
[B]Copper - Gold Intermarket play[/B]
Since I’m including Intermarket Analysis in my arsenal, I spotted a nice setup. Problem is, I won’t take it since it goes against the trend. I have a rule for 2015 to stop counter-trend trading.
Anyway, here’s the setup.
Gold and Copper (Mini) are highly correlated (positive). The thing is, Copper did not follow Gold’s rally, in fact, it was selling-off heavily. Anyway, I expect it to start climbing up. Commercials are buyers, which reinforce the theory. Plus, there’s a bullish Stochastic divergence.
you are the first with COT. Nice work. I do my analysis tonight or tomorrow.
I like also that you try not to go against main trend. This was our biggest mistake in 2014 although Peter and Rookie told us several times not to do. But we will learn from it. Rather miss the bottom and join later. So I like what you said.
So you still get a question. How do you decide if gold should follow copper or vice versa? We talked with Peter earlier about this problem, this is always tought to tell. But I think the main argument that you wrote from me is the Stoch divergence. It sounds good. Just like you, this time I rather observe it and if you got it right then might trade it the next time. We have plenty of opportunities. That is why I like the Russell and S&P correlation, it is one of the few correlations where it is clear.
Check Wheat on a technical basis. I like it on the long side. What do you think?
I would like to ask our GBP expert (Peter) to write his 2015 forecasts for the currency. It does seem like the GBP is due to a correction or a fall. I like their weakness story. Do you think it can be sustained? I watching the charts and if the current huge weakness has a retracement I might be ready to jump.
It’s difficult to be a 100% sure about the leader. Although if you take a look at the price of Gold & Mini Copper plotted on the chart, you can see that Gold has a tendency to lead Copper.
As for Wheat, I think long is a safer bet atm, but keep in mind that the long term trend is bearish. The COT related indicators are neutral, so you are free to buy
"GBP forecast ? Well, you see. It can go up. It can go down. But I can tell you for sure that it will do one of those 2 things. That’s the only thing I can be sure of. "
I’m sorry Peter. I just know you. See, every now and then we always will come back to you and ask about the future. And being the grandfather in the business, you know more than anyone that giving a prediction about the future is just guessing. It will always come down to that. We know.
But…we would like you to go out on a limb and give us something. We all will have it in our minds the fact that it is a guess. And not hold you to it. I promise. But, it is fun to at least hear everything you know on the subject, put it all together (your experiences) and give us an educated outcome guess.
Friday and yesterday’s action was what some guys call “safe haven flows” - just a fancy way of saying risk off.
Yen up, Precious metals up, US Bonds up , Stocks down - that’s classic risk off. Cause, probably oil and the 50 level caused selling of the energy stocks, led the S&P down. The scene set from Friday.
The risk off prevailed into the Nikkei overnight.
Remember I talked about the guy who said about the bulls trying to take it higher almost always fail - well you’ll see it there yesterday on the Nikkei h1, then imagine the fear of those bulls, their exits and stops (all sells.)
Anyways, remember the thing about Dr Copper, he wasn’t feeling too well yesterday because he is an industrial metal and stocks were falling
S&P sectors in action:
Mike, was reading how most of the well paid experts did on their forecasts for 2014, turns out vast majority were wrong - remember the weather forecast thing
Copper, being an industrial metal, is also positively correlated with stocks, especially the automobile industry.
On the other hand, Gold is negatively correlated with DJIA with a lead time of a few months (usually).
That leaves us with an interesting situation: How can Copper be correlated positively with Gold and Stocks at the same time if Gold and Stocks should generally move in the opposite direction? That particular part got me confused while I was reading Murphy’s book.
Yeah, Murphy explains how Gold has two market roles, it is a commodity but he describes it as also an “alternative currency”.
The “alternative currency” comes into play in risk situations, these are short term plays, otherwise it acts as another commodity just like copper.
Re the GBP thing, I often ask the real expert in these things, the market. I ask it what it currently has been thinking, often it guides me towards EUR/GBP, says if it is tight ranging then the US cannot tell the two sisters apart
