I’m not sure if rising gold will favor AUD, NZD especially the aussie when Chinese PMI came at 50.10 lowest in 18 months - unless there’s a shift - a shift where Australia isn’t as much as reliant on its commodity export to China - I read there was a talk of beef export from Australia to China.
Or rising gold higher AUD but there’s chance that further demand and price decline of other commodities that it exports to China may offset whatever it gains from gold as China slows down. It could be a balance out scenario.
Yeah I get you. For certain pairs even daily is very choppy. I’ve finally got myself a table. The idea is similar to yours. That I’m going to be keeping tracks of all pairs on daily and weekly. It feels like a world of difference to get it all down whether be it once a piece of paper or an excel sheet. I’m finally at peace now lol. For the last few weeks I have lost my mind - its been easy to get lost. I’ve often talked about the big picture - but flipping through the charts and having it all down is a two very different things. Now I see. Thanks to you. I got my inspiration from yours.
You mentioned that you rather trade from weekly and higher. But I was wondering how you enter , I mean on which TF do you enter your trades if you set weekly and monthly your main ?
Well I just started the longer term trading strategy. And so far I have entered at the open of the market for the week. And just have been letting it go. (The AUD a week and a half ago)
So my entries are at the open.
And my exits are still to be determined. I let them all go some more for this second week. But I surely don’t plan on exiting before the week ends. So I guess you can say I go on a weekly basis. I really feel I will get better results leaving trades open much longer, in the long run.
I’m still not too worried about the AUD trades. Sure they have corrected, but I’m not seeing a return to trending low.
Big data is coming for the AUD, and that will tell the tale, around Thursday’s open. Employment figures. It could make me or break me. I’ll have to see their progression that leads up it. Hopefully I have some good cushion before a possible disaster happens. I do have some now. Still up from over a week ago. We’ll see.
As Philip opened a discussion on Nat Gas and as Peter always updates us, I thought I also add something. Yesterday there was a W/S buy signal and I entered the trade because there is a clear divergence on the Daily Nat Gas W/S indicator too. The trade just shot up strongly.
Now the question is of course to convert realized profit keep rolling or cash it in. The W/S daily divergence says it can be a big hit and I should start scaling in, the ETFs do not support this! I checked XNG, no signal at all for a reversal, I checked UNG, well this one was more interesting. We hit a major support zone and yesterday was a strong day.
Opinions?
FE
PS: forgot to add, the SL is 20 pips (?) above my entry. Before you laugh, 20 pips does make a difference at Nat Gas, especially if the lot sizes are not the same as in currencies (at least at my broker). Altogether the trade is up 120 pips. My pip counting at Nat Gas goes until 3. decimal only, there is no fourth decimal.
Just a little heads up, the 4 big ‘offensive’ sector fallers are showing a late turnaround with some vol, will help FE’s long on nat gas plus sell on gold, buy on wti and long on usd/jpy.
yes, the amazing NAT GAS trade is just keep going, giving some good opportunities lately to add to it.
What you said about what will increase and decrease are all right.
There is one thing I do not get. For this one I suppose NAT GAS is either in Energy or Materials. So, if NAT GAS is increasing so much, how come these are the weakest and not the strongest sectors of the S&P?
Yeah Nat gas is in XLE, the 4 sectors I listed are offensive because they are speculative. Nat gas is rising because of anticipated demand for home heating in the NE of US, it’s bucking the trend only for that reason.
Offensive sectors rise when there is buying (speculating) and fall first when the fear creeps in.
Defensives like healthcare, staples and utilities are non speculative, they are needed regardless of the economy, so if you are feeling greedy you are not really interested in “Steady Eddy”, you want the flash guy.
But when filled with fear you ditch the fast guy and run back to dependable old “steady Eddy” - the defensives
It’ll all quieten down now, maybe some risk on tomorrow after that little flurry.
You could be a 2. Murphy Yeah, I remember reading those risk on/off sectors, just didn’t get home come gas is rising and the sector is falling so strong. But the explanation combining with weather was good. So I guess this all means if the cold weather is over then we can expect the old trend continue to the downside. But now it makes sense to me to go long, protect profit and watch those daily weather forecast in NE of US if I put the puzzle together right.
Funny question, because I trade good the turnaround from what I learned from you So you shouldn’t ask, but I share your knowledge with you. No prob And if it doesn’t work, a tight SL is there to protect me.
If I think there should be a turnaround or end of a retracement here is what I am looking for:
Either W/S crossing the zero line or turning up from an extreme point.
The indicator has to break through the 50SMA and stay above it (for a long trade).
If they both occur then we already have a good possibility to win. Of course that is only the technical part. I only enter the trade when I find that fundamentals and intermarket (+ COT) are on my side. Besides that I do not even look for trading the other direction. With commodities anyway I do not like to short them too much. Especially at these levels.
If we have some good scale in system, then it also helps
Did you see the EUR/JPY Daily TF long setup W/S divergence which starts to slowly develop? What do you think of that? I like W/S divergences the most, they seems to have good winning rates.
Hey FE, unfortunately I don’t trade on the lower time frames…but I thought a bigger time frame picture will help you.
The above image is a daily chart of Natural Gas. We notice three things:
Price (the candles) is moving below both the 100 and 200 moving averages (the two black lines). This is bearish for Natural Gas.
On December 8, the 20 EMA crossed below the 50 EMA (the blue line crossed below the yellow line), the stochastic was oversold. As we discussed before, this to me says there is a further fall down in NG in the future
When you bought Natural Gas, it coincided perfectly with the pullback that you’d normally expect from this pattern. You see that the stochastic moved above the 20 line and is now in overbought territory. A stochastic crossover to the downside Is an important sell signal in NG.
Now it could be that your system actually picked up a turning point and Natural Gas will now go on to rally in the future, especially that commercials are long. But given that you trade on the 1Hr time frame, I would still warn you of at least a pullback in NG if not a collapse.
I’m not suggesting you take the trade off immediately, but you should start thinking of a technical signal for an exit.
EUR/JPY and USD/JPY cannot hold on above the 1H W/S. We will see if they can hold onto it today and turn the trend.
[B]Philip[/B],
thanks a lot the very nice analysis. I do not know of course if it is a retracemet or a turning point. Because of almost all commodities are falling this suggests a retracement. Although I said I trade the direction of the trend and I plan to do that, this time all reasons lined up for a long trade.
As you described, I entered the trade on the shorter TF and your points with the chart is awesome. What a pity you do not share such real time analysis more often. I will be ready to exit if the time comes, but I rather leave some profit on the table and ride it up until I can. When I am conviced it turned then I exit, but TP is already above SL so everything is ok. After that, I do not mind if it collapses
[I]Guys, when I think about where the thread was in June-July and where we are now, I happy a good feeling.[/I] Just have to tell this every once in a while.
I suppose when you think about it, what it is that causes the divergence on w/s, if the supporting market is on the bond market.
So yesterday evening when I noticed all the ‘risk’ markets turning around - the bond market had already been turning some hours beforehand - thus the divergence.
Some commentators explained the turnaround as a short squeeze, by implication ‘manipulation’ either in bringing prices down or by turning them around. (imo extending down)
Manipulation is argued about, mostly by those that don’t understand the correct meaning - it’s probably the wrong word but it’s an old word used by Richard Wyckoff 100 years ago and it has stuck.
Divergence in correlated risk markets is sometimes an early indicator of a squeeze, especially when there is no apparent economic reason for the divergence.
The divergence that you spotted on Nat Gas was probably caused by the fact that price was rising contrary to expected risk, this time an economic reason - the anticipated rise in demand for home heating.
Anyways, just thinking out loud as usual, now back to some work
After the Swiss National Bank crashed the markets and my brokers do not allow me to trade CHF at the moment, maybe Peter can make a write up what we can expect to happen. I am not sure of the possible effects and why at a rate cut CHF gained hundreds of pips.
Remember our talk about CHF commercials? hahahaha.
Anyways I’m in a USDCHF long, I will have to close it at 1 GMT. Such a shame, I was +350 pips on the trade now I’m only +136.
EDIT: Wow I’m actually not allowed to close the trade, well let’s see how this works out…
EDIT: I’m now down 968 pips. I’m so happy I use very good money management, my account will actually survive this trade. I’m also happy because we can now look at CHF independently from EUR. Having said that I’ll probably buy USDCHF when I get the chance hahaha.
