Hmmm… So it seems like both Eurozone and US are feeling the need for an increase in rates… As low rates are not doing its job (in terms of growing)… Seems like a concertation for increasing rates (both economies, maybe at the same time), so no one gets “hurt”.
thanks for the feedback paterma!
Interesting today, three days later, that price peaked exactly 400 pips above that level, exited all longs for now - will wait for price to either break above 1325 or else pull back - the break could be on Greek news or the pull back could be on US news - no buy stop orders tonight just in case that the Asian guys take me out - choppy waters ahead 
I hope this comes with experience. Trying to absorb in as much as I can
Hi Rookie,
The 1.0885 is a long story, comes from last week, maybe I’ll bore you guys with it at the weekend when I’m chilling
Hi Peter,
yeah, watch some football and bore us a littlebit of that wisdom on the weekend. If you give us some boring minutes with 400+ pips then it is okay we all forgive you :-)))))) Ok, a bit more serious, you made your analysis and turned out great. That is good that we discuss these issues as we all learn and can watch it live how it develops. Thanks a lot for sharing it!
FE
Hi Philip,
we have discussed a trillion times with Peter that we do not catch bottoms and tops and I take it seriously. BB even wrote it in his weekly goals. At the same time it does not mean we should have closed eyes.
This means I checked the very long-term charts and found 5 minor pairs which are almost at historical highs (or have reached). I thought I will wait on the weekly until the trend changes and get a signal and concentrate on these pairs as the potential is just huge on the long-term. I would like to ask you what is your experience on currency trading at historical levels and what you think about the following 5 pairs (as I said, I do not go vs. the trend but I will monitor all of them closely):
AUD/CHF, NZD/CHF, CAD/CHF, CHF/JPY and AUD/JPY. Besides technicals, I like to look at it from the fundamental perspective and I am only interested if fundamentals line up with my technical thinking. Based on fundamentals I have to sort out some of the mentioned pairs and I will only be interested at this moment for the trend change for [B]CAD/CHF[/B] and [B]AUD/JPY[/B]. The CHF/JPY is a maybe pair.
Thanks,
FE
Well in my experience a pair being at a historical level is not a trading system in itself. It is more of a confluence or a bias. So what I do is switch back to my regular time frame and wait for a signal in the direction of bias to develop. Then I take that trade with the risk of my regular trade, but trail my stops so that I’m taking the profit of the higher time frame.
Just remember that a historical level is just as likely to hold as it is to break so trust your system.
There is one thing I don’t understand Peterma. Now bund yields are increasing, doesn’t that mean that bunds are being sold? If they are shouldn’t the Euro be going down rather than up (not that I’m complaining, I’m still long EURCAD). I just wanted to understand the relationship.
I read earlier that whats going out of bunds are flowing into EUR, ETFs ? perhaps.
Hi Philip,
as I said I do not go against the trend, I have paid the price for that earlier. But there is a reason I asked you. Even if I completely agree with you about the break of historical highs and the bounces of back from them, I do make two main groups: 1. Commodities, Stocks and Indeces and 2. Currencies.
Let me explain how I see it and I would also like to read what Peter has to say. On one side if someone tells me S&P goes up in ten years to $5000 from $2000 I would say “Nice bull market”. If someone else tells me gold we be traded in x years at $3000 from the current $1200 I will say “Why not?”. And if Apple goes up to $2000 in a long-time we can say “It is an innovational company that managed to have long-term success”. I can imagine all this. [I]The point is, if stocks increase in value then they do not hurt anything else what we trade.[/I] I do not trade bonds, I have to say that though.
However it is a completely different story for me with Currencies.[I] If one currency gets very strong then it can give a competitive advantage for the other currencies for export and a too strong currency can hurt the own economy.[/I] This make it more improbable that historical highs will be broken an sustained in a multiyear hike where those highs can stay there for an extended time. An extreme example is the USD/RUB. In Russia something unexpected happened, but still it was not enough to hold the USD/RUB around 70 in the longer term. So with enough patience it gave a huge profit opportunity to trade it on the downside after a signal. That is how I see it. As I gave you examples what I can all imagine with Commodities, Stocks and Indeces, I do not have the imagination that USD/JPY will be traded at 500 after the current level of 125.
What do you think?
FE
I totally agree with you. I’m just saying, which is what you said earlier, that I’d wait for a technical manifestation on my bias. Unlike you I prefer that manifestation taking place on the short term (1HR, 4HR) rather than long term (weekly, monthly).
Yeah, there is talk that the bund selling money is staying in Euro, thus the thinking is that it is helping the Euro buying, or at least adding to bullish sentiment - the Bund investors maybe want some more risk/return so perhaps they believe that the currency is headed north after the Greek settlement that is.
Well I suppose with the headlines that I have linked to recently will not be off putting, nor today from the Central bank of the second largest EZ economy:
[B]France’s central bank said today that French growth would accelerate over the next two years[/B]
Pull back on US news - Greece will have to wait - have taken a speculative short, worth a bet (yes I’m gambling, but will exit before close - win or lose)
Ok I have something to report. Firstly, this will probably be the dollar rally I saw on my weekly chart and reported to you guys two or three weeks ago.
Secondly on that hedge idea, it seems to be working but not at exactly a 100% but it does work. Of course I couldn’t divide my lots properly due to lots. But before the NFP, I was up 350 pips while NZDCAD was down 24 pips.
After the numbers, I closed my position for 245 pips in EURCAD. But my NZDCAD position now is +93.5 pips.
More on this in the weekend as I’m sure plenty of you have to look at the charts and me too.
Not so sure re the USD rally.
We just had the largest increase in US jobs this year, renewed bickering on Greece released around the same time, and the best that the most traded currency cross can do is fall back to Tuesday’s Asian low.
Maybe the market is waiting until Monday, or is the only detractor - an increase in part-timers - and the fact that Yellen has previously noted that this is data that the Fed take on board rather than just the headline numbers.
I suppose next week will tell us more, in the meantime I just closed my short gamble for a 8 pip loss - serves me right for gambling
I still like the Euro, but may be against other currencies not the USD. Euro still remains the strongest based on my technical, but may be that will change next week. If not I can buy the dip in GBP or JPY. Plus 240 pips in three days is not bad
Hi [B]BB[/B],
what is your experience on the COT report when gold and silver diverge? These are the two commodities which got my attention from the COT report this week. Silver is close to sell signal or at least it is in that direction. Gold is for both net positions and COT index either very neutral or more like being close for a buy signal.
[B]Peter[/B], I am not sure if you have some special scenario when silver and gold can differ that much in COT. I know the double role and all of that but, it is still strange to have such large net position difference between the two because these positions are built in longer-term and not in a couple of days.
Have a great weekend everyone,
FE
[B]FE[/B], I honestly don’t know. I’d probably stick with Gold, as I think it’s role is more important as an inflation meter.
[B]Mike[/B], I’m sure you already explained it, but to be honest, I’m way too lazy to scroll back but I’d like to know more about your currency strength method. How do you calculate it?
Hey guys…BB
Well, I was just gonna get on here now to tell how my week went. But I see you BB got a question. So let me throw out the figures and I’ll give you a short summary of my method.
–13 total trades were open this week. (3 were already running from 1-2 weeks ago)(opened 10 new ones)
–11 trades closed. +215.2 pips
-----8 closed positive (+100)
-----3 closed negative (-200)
–2 still running now(am standing at -120.8 pips combined)(USD/CHF short at .9341)(EUR/AUD long 1.4662)
–Account dropped -.4%
–This week all my new trades opened with a 2k position size.
Summary: May = +17.1%
------------June = 1st week = -.4%
Before the open I’ll clue you in on what I’m thinking.
–BB–
In short…What I do is monitor every pair. (The top 8 currencies, 56 total, 28 different) Everyday.
I have a trend determination for each pair. One on the daily time frame. One on the weekly time frame. One on the monthly time frame.
What I do to determine the trend is simply fractals. Once a week (on the weekend) I look at all of the pairs. I will note the line (price) where the trend starts, and that will tell me if it drops below it, it will turn into ranging (for a trending high condition). If something is ranging I have 2 lines (prices) drawn where then if it goes above the top line it will trend high and likewise if goes below the bottom line it would be trending low, (for the base currency). And these are pretty much the S & R lines everyone would draw on their charts.
For trading purposes I will only consider the weekly time frame trends. I do have all this on ‘excel’.
Every pair will be either trending high (+), ranging ®, or trending low (-). I will only consider the ones trending high.
Conditions to get me in a trade is:
— it must be a + for at least 2 days in a row. Start on the third day, as the earliest.
— can trade it if it goes to an ranging ® condition, but only for one day. Basically I will count it out if it ranges for 2 days in a row. In case of a ‘railroad track’ candlestick condition.
—prefer buying on dips, and selling on rallies (corrections).
—I do discretionary trading. No hard set signals (at the moment).
—I mostly take into account the probabilities of hitting 100 pips, accepting the sacrifice of losing 200.
So, I’m mostly looking at the probabilities more than strength to weakness. I’m counting more on the fact of the market movement rather than a continued strength of a currency over a length of time.
But, since I do keep track of each currency, via trend determination, I can easily see who’s stronger down to the weaker. And that’s by seeing who has more trending highs (+)'s than the others, and who has less (-)'s. I do have a system in place by counting the +'s minusing the -'s. It’s a 3 digit number, counting the r’s also.
I’ve come to realize (after 2 full years of data) that things change so much. And the closer you move in, on the time frames, the more change happens.
I do have daily data (pips, and %'s) on each pair. But, I personally think that knowing the trends of a currency are more of a strength tale than how much of a % movement happens in a given pair. There is a difference.
I keep track of so much data. And I know it won’t be for nothing. Cause I can always go back and do my own back testing. I don’t think you can find this stuff out there. Sure, the daily and weekly %'s, but not so much on the trend determinations, on a daily/weekly time frame.
Ok BB. Got to run here.
Hope this helps some.
Mike
I hope this helps.
It does indeed. Thank you. Have you tried other methods to determine trends?