Guys…
And how about the GBP? Do we have any explanation for them? I mean, the data this morning was GOOD!
I don’t know about you but I chalk it up as someone (collectively) just wants it to go down. And we just might not know why. OK, better prices probably. And if it goes back up, then we should remember that that was the reason.
Right?
Talk to me.
Mike
Hi guys,
I agree with Mike that we need to take note of what have been happening, and I agree that we’d better look at it as a collection of symptoms. But I prefer us not to see them as “reasons”. To include things like dairy price, Scotland’s vote for independence, etc. in our analysis, we need to know their probability of affecting price. Adding them into our analysis without knowing their probability means adding more random factors into our analysis. How can we expect ourselves to be consistent?
Here’s an excerpt from the book [I]The Complete Turtle Trader[/I] by Michael Covel, which I hope give us a wider perspective.
Michael Gibbons, a trend- following trader, put using “news” for trading decisions in perspective: “I stopped looking at news as something important in 1978. A good friend of mine was employed as a reporter by the largest commodity news service at the time. One day his major ‘story’ was about sugar and what it was going to do. After I read his piece, I asked, ‘how do you know all of this?’ I will never forget his answer; he said, ‘I made it up.’ ”
Cheers,
Before I go off guys…
As tempting as USDJPY long setup may look now I would wait to go short on yen until the protest in Hong Kong calms down and that should take another week or so ‘just a prediction’ for things to get back where it was. Until then yen might strengthen further up. I’ll cover a bit on this tomorrow…
As I said its better to stay off trading today as it seems crazy. So what do I do? I short NZDUSD right US open, wish me luck.
I posted that on Friday past, and yes, I felt like a voice in the wilderness, yes USD/JPY did make the push for 110.00 -that was the high - and yes, I did see this all before.
What I saw before was the ‘hype’ from the banks, web sites and analysts all saying the same thing, it makes you feel kind of silly by not being on board.
Most recent case was in April 2013 - same scenario was with USD/JPY and the magical 100 - absolutely everyone was screaming to get on board, especially in the lead up to the number.
If you check back you’ll see what happened - twice - to within a pip.
The analysts were actually correct, but the banks are in charge of the short term price.
Philip is correct, it is a retracement, check again the pesky EUR/GBP and that silly line.
The good news is that I got pinched as well, so a lesson for us all.
L Williams explained how he became bullish on Hogs, he bought at 63, price went down to 50, he bought some more because it was now cheaper, price went down to 40, now it was a bargain so he bought some more - he exited at 32, with a loss of some 3 million.
In a few months hogs rocketed - without him.
Another one, may be an urban myth, a speculator was heavily long just before the crash of 1929, he exited days before the crash.
A reporter asked him what great insight he had, he explained that when the postman told him he had just bought shares in the market he realized it was time to get out.
The inference was that the ‘hype’ had caused the buying.
So like Williams, I’ll dust myself down and get on with it, NFP tomorrow, I’ll wait until the numbers are out.
Hi guys,
Rookie,
I think you can incorporate anything to the entry technique you wish. I do not use RSI, although funny, I also have it on my chart 
It is not in the system description. However, keep in mind the more indicators you use, the less likely of an entry signal. You are allowed to peek at any other thread until you do not hang out there too long. I have a good volume indicator for you though. Check out a COT report, there is one part in it about Open Interest. Then you only have to find a thread to discuss open interest issues! Dr. Rookie, I like your idea about JPY shorting. Actually it is very tempting to get in at these levels. But I punish myself for bad trading and I do not scale into large time to losers. So I sit it just through. As you are our analyst, can I give you a topic to research? I liked your idea on JPY because of Hong Kong. [I]Can you maybe give us a comparison between the Hong Kong and Ukraine/Russia tension with a comparison in the effect of JPY prices? That could give us some sense when we could expect the reversal and how large the pip effect was last time so we can predict from it this time.[/I]
Flows,
glad to hear you are doing good this week! You are the only one. So we will send you our bank account number so you can refill our account! Your example on news was awesome. At least something good is there for today!
Mike,
stats are good or bad but we still need them. Without the losses it has no value. I do not know if this is the reason for explanation but I give it to you: BOE’s Broadbent says UK is still not ready for rate hike 2 Oct | ForexLive
Philip,
I also did not close all the positions yet. I have to sleep on it. I closed during the Draghi speech (which did not bring new things much)my EUR/USD when it started the strong retracing. I made a big mistake with closing it. I do not want to make fast and bad decisions. Sometimes I feel like rookie to close it fast, but this is not that moment. I go running long today and think about what was going on. I am still in it with most positions.
Peter,
as always, you were right and wise. I wish I heard on you. With USD/JPY I took a profit with scalping and entered now on low prices, but with GBP/JPY I am in trouble. I was away the whole time from JPY and had to enter the market exactly this week… Your experience and examples are great. Made me laugh the second time today (after flows example).
I actually miss some likes for Mike’s post as it has a crucial meaning also if it is short. So I agree, we are together in bad and in good times, we all remember on this lesson and remember ourselves when we get hyped next time about getting into a huge rally with a potential of giving hundreds of pips.
FE
Hi FE,
Yes, this seems to be my week. But I’m hardly happy seeing what happened to everyone’s trades…
JPY and NZD really shocks the market this week. I took a look at my COT analysis and my indices indicator, and found that maybe we can use these to warn us for retracements in JPY in the future. As for the NZD, I think last week I posted that I might buy NZD because if there would be a retracement for USD, selling USD and buying NZD was I thought the best choice…
That has to be the most prophetic post ever written. I don’t think I’m trading until I see the report on Friday. I love how the market reminds me of your ignorance just as you think I’m getting my hang.
Yes I lost this week. But if does turn out to be the end of the dollar rally for now I will look back and say I made 50% increase out of it.
You got that from Jesse Livermore I believe, great lines though, makes me laugh every time.
Hi everyone,
Philip,
you spoke from my heart. It is an honor to have Peter here. I still do not believe it. He actually forecasted basically “pip exactly” the top and reversal. I have to drink something tonight. It is too much for me to digest.
Flows,
I mostly like in your analysis that you always visualize it. That is a lot of work and I respect that. I guess you learned it from Dr. Rookie. Can you maybe take some time on the weekend to make a bit longer post and analyse exactly what you do with these differences? I mean how long do you look back, what do you calculate, how do you make conclusions, what does it mean to you etc. As I said, it is something that no one else analysis, you are the master there, we cannot say much about it. So a detailed description with some pictures as you always do might help us to understand everything because we have some difficulty to comment your posts. We just rely on what you say Keep it up! About your NZD/USD long trade: you had a great forecast, could have worked on short-term. I still would not have traded. Not because I do not think it is possible, I just do not like trading vs. my bias. I feel uncomfortable.
I just wanted to mention I shorted EUR/USD an hour ago at 1.2696. Looked a good opportunity.
You know, when I first read the Williams story (I actually got the commodity wrong, it was cattle) the first thing that struck me was that could be any one of us, indeed probably has been most of us (def has been me).
The Williams fiasco occurred in 1974, it took less than 30 days to lose the 3 million. In his own words, first do not add, and secondly, more importantly, manage your account - (he was blew out of the skyrocket 2 months later, no funds).
Not sure where the urban myth came from, could have been Livermore - one of the best traders of all time, he actually came into my thoughts yesterday.
What I was marvelling about his character is that when be blew his account he still believed so much in himself that he was prepared to borrow to start again, zero sign of fear.
Hi Peter,
if you lend me some money, I assure you, you can marvel me too how ice cold I will trade with it without a single sign of fear!
Yeah, somehow the scaling in into losers is familiar to me. I do not remember why.
Good night guys!
Hey guys!
Well we have an interesting Thursday.
NZD: +7 -0 0///+5 -0 0
AUD: +5 -1 1///+4 -0 1
JPY : +5 -1 1///+1 -1 1
EUR: +4 -3 0///+1 -2 0
CHF: +3 -4 0///+1 -2 0
USD: +1 -5 1///+0 -2 1
CAD: +1 -5 1///+1 -3 1
GBP: +0 -7 0///+0 -3 0
Comms took it. +7
Talk about something interesting. I must get you guys up to speed. Look closely…to the NZD.
Monday////////Tuesday/////Wednesday//////
EUR: +4 -0 3//NZD: +7 -0 0//JPY : +6 -0 1
CHF: +3 -0 4//AUD: +6 -1 0//CAD: +6 -0 1
CAD: +2 -0 5//USD: +5 -2 0//AUD: +4 -2 1
GBP: +2 -0 5//GBP: +4 -3 0//USD: +2 -2 3
USD: +2 -1 4//JPY : +3 -4 0//EUR: +2 -3 2
JPY : +2 -2 3//CAD: +1 -5 1//GBP: +1 -4 2
AUD: +1 -6 0//CHF: +0 -5 2//CHF: +1 -4 2
NZD: +0 -7 0//EUR: +0 -6 1//NZD: +0 -7 0
And look at the AUD in conjunction with the NZD. With them Monday, Tuesday, Wednesday they were split up.
Together on Thursday.
It just seems like there’s a game being played with the NZD. Someone must be making a lot of money going back and forth like that.
I have a feeling that Friday the AUD will correct back down. Look at the progression of them. So, that means if they drop, then it will be a Major day.
Well, that would be good for me, cause I still have 2 NZD’s running, CAD, JPY. Losing my shirt, but still have an account though. I dropped at about 50% this week.
I’m not worried, cause it’s gonna be a long month. I will be successful.
Ok guys…see ya in the morning.
I know it’s a couple minutes early, but I got to run. This is about 8 minutes till 00 GMT.
Good post Mike, I was looking into longing GBPNZD. We’ll see how that goes. I managed to get out at break even of my NZDUSD short. It was hard to get anything out of longing USD in the previous trades so I was very happy with my set up
Morning guys!
Before I write up what I promised /Draghi’s speech/ I couldn’t just sit aside on whats happening with NZD and in times like this I’m learning to appreciate your stats Mike, it may be history but not only it provides us an opportunity to learn but also to use this as a guide in the future.
Looking at your stats I can’t help but to notice how NZD climbed all the way up and down in a matter of single trading day. It may well could have been just a correction but something was off about this correction. I don’t have anything solid to prove as to why I’m seeing it that way as I don’t have much experience. But I tried and here’s my findings.
On my quest to find any explanation behind this massive buying momentum the first thing that came to my mind was CRB index so I ran the numbers
– Mon 29th where NZD lost against everyone CRB index range 280.41-282.29 / open: 280.63 / close: 283.14
– Tues 30th where NZD gained against everyone CRB index range 278.95-283.14 / open: 282.18 / close: 278.55
– Wed 1st where NZD lost against everyone CRB index range 278.55-280.43 / open: 278.94 / close: 277.91
– Thurs 2nd where NZD gained against everyone CRB index range 276.16-278.74 / open: 276.49 / close: 277.32
I compiled the range from 1H chart and daily candlesticks for open and close. While CRB index range managed to stay afloat if you look at daily open from 1st of wed and onwards there’s been a decline except for 30th tuesday where the index has managed to open higher than the previous days open. And the closing prices have been on the decline as well since monday through thursday. On wednesday where the index failed to open higher than a previous days open NZD lost against everyone makes sense right ?/Mikes stats/ same story continued through thursday however NZD not only managed to make decent gains it went up quite a bit if you guys open up your daily charts that surge was on thursday or yesterday - there’s a big bullish candle.
So lets move on to fundamental factors just in case we don’t miss anything significant. On 1st of Oct twice a month dairy auction printed its latest GDP index and it was down -7.3% from previous months reading quite bad actually. Again despite such bad reading kiwi stayed resilient as if something bad was going to happen.
I browsed through the economic calendar and there wasn’t much happening besides GDT index.
I’m thinking someone was behind all this it could be the banks or the specs /funds/ see everything was all set for NZD to fall down and crash after all this confluence factors aligned against NZD but NZD not only managed to stay afloat but made big gains . The big guys probably had something up in their sleeves - they may have been marking the price up prior riding it down. Someone obviously didn’t want a free fall. What we could do now is to analyze the next COT report - past tuesdays COT won’t be that much of a help as COT is cut by every tuesday. By analyzing the non commercials and commercials positioning we might be able to tell who was behind all this - specs themselves ? they sure didn’t go short on NZD this week.
I think this was a great lesson for all of us as much helpful as it is to follow the COT it still is a few days old data and things can change and that change can be quite drastic if we don’t have the necessary tools or the ability to foresee change coming. We’ll have to work on ways to resolve and overcome this shortcoming of trading with COT now we’ve got the analyzing part.
I’m waiting on your weekly analysis flows! That difference and extreme… got to have that on my excel sheet it seems to be quite accurate. We will appreciate your input flows! 
As for yen strengthening on the back of risk aversion I think Mike’s screenshot should provide a better outlook and I could look at economic indicators so far this week they printed pretty decent numbers that probably had something to do its recent gains. Purely from technical point of view it was about time for a correction. Lessons learned. I think you and I may have got lost in fundamentals and dismissed the technical signals , so lets not ignore that all together FE! we’ve got things to work on… we’re going to get there.
Services pmi out this morning for UK, this can be a mover for GPB given the UK’s reliance on the services sector.
Good morning guys! Doc!
Man, you did some good work on trying to find what’s up with the NZD. You took one for the team. All that work does not go unnoticed! And I think your right, they had something up their sleeve. (All of them together)
We just need to remember this tactic they play, for the future.
Well, I have the 0730 shot.
Ok guys.
I’m here.
Hi Peter,
it is good that GBP/USD is at an important suppport level, might increase the chance that the pair cannot move too much down with a bad news. However at the current GBP sentiment I also find it possible that a good news upward move would be faded.
I will answer soon to all other posts too.
Good morning to everyone and I wish many pips with NFP (for those who are still in the market)
Hi FE,
What I do is what I’ve learned from the school here. The calculation should’ve been made into an indicator like RSI, but, since programming is not my thing, I just use the raw number and add the index indicator for visuals. An “extreme”, as explained there and as how I understand it, is where almost everyone has gone short/long. If, for example, everyone has gone short, then price will stuck there because no one is buying. This is where some players start reducing their short positions or even buying to let the price go up a bit before they begin shorting it again.
I currently use data from January this year. If we look at the JPY table here, we may want to exercise caution when the difference is around 250,000++ and 120,000++. These are observations I’ve made so far.
