Inner Circle Trader's Pro Traders Club 2012 - 2013 Series

[Kuzia]

Here u go fellas

[IyaJenkei]

Figure lines up with OTE. High of the week anyone? Just calling it. People won’t remember if Im wrong. But I’ll make sure they do if I’m right

[IyaJenkei]

High of the week anyone? OTE and figure. No one will remember if I’m wrong. but I’ll make sure they do if I’m right

[Fuzzbuggy]

Haha Iya, lets see what happens. 38% and 50% look like strong resistance levels though.

[IyaJenkei]

yea in all honesty i think it might just go down. if it get up there market structure would be bullish on 4H. but not on daily. we ll see. I just \like seeing if i can call stuff lol

that .35 figure is strong. i wouldnt be suprised to see it retested as resistance

Haha Iya, lets see what happens. 38% and 50% look like strong resistance levels though.

[TopFroxx]

looks like ict is going to continue with the account. lets see what the account balance will be at the end of the month (he said 30% gain). so, that’s the next checkpoint to throw more stones but until then it would be nice for everybody to not talk about ICT the person in this thread anymore, but about trading setups based on ICT’s concepts. like it has been for almost the whole thread.

not just directed at you MG, you just happened to have the last post regarding that matter.

thank you

i can only repeat myself…

[jonnycab]

Short @ 1.3390, OTE from swing high during NYO Friday, to swing low formed during LC. 1.3390 Is also the OTE level of the current trading range.

Targeting 1.3350, 79% retracement of current trading range.

[Fuzzbuggy]

Very nice OTE. Another OTE was low of friday with current high @ 1.33631 (where it found support), can scalp a few pips there. Now I think we will either see a retest of your OTE @ 1.3390 or pivot 1.33810 and prefer to go short from there… lets see what happens.

[jonnycab]

The interesting PA I was referring to last night:

The black line has been on the charts for a long time now, higher time frame S&R level.

The blue lines are the 62%, OTE, and 79% retracement levels of the current trading range. Notice the rejection we get at the 62% level on Friday. Similar sort of thing playing out this morning around the OTE sweet spot. Nested OTEs seem to be rather powerful.

Seeing as I’m bearish at the minute, I will be trying to limit my bias towards Longs, but we’ve got a bit of SMT divergence going on at the minute. If we dont hit the 79% level, I may end up looking to get Long, possibly creating the high by Tuesday/Wednesday, rather than the low forming by then.

[jonnycab]

Short @ 1.3390, OTE from swing high during NYO Friday, to swing low formed during LC. 1.3390 Is also the OTE level of the current trading range.

Targeting 1.3350, 79% retracement of current trading range.

Remaining portion stopped out @ BE.

If we do push higher and this isnt a Z-day, I’d be looking at the stops around 1.3410 to be raided (also OTE zone for shorts from high on Friday just after LO to low on Friday LC). I’d like to see 1.3430 maintained, otherwise I think we’re going to fill in the price inefficiency from last week…

[jonnycab]

Definitely in the wrong short this morning, look at that Cable go!

[sKratch1989]

From what I now understand, the stock market lags in relationship to the rest.

Consider the relationships between the four main actors: Currencies, Commodities, Bonds, Stocks, and yes you should be looking at commodities too.

Then you have to first understand whether we are in an inflationary or a deflationary environment because it affects the correlation between these.
Commodities and USDX are opposite. Weak dollar increases value of commodities.

Inflationary Environment:
If Bond price falls and commodities rise, this confirms that there is an inflationary environment. In an inflationary environment, relationships are as follows, and they proceed from left to right.

1. Value of USDX falls
2. Price of Commodities Increases (Inflation)
3. Bond Prices fall,
4. Stock Prices will then follow (Lagging). (As price of doing business rises, it costs more for companies to finance so that sooner or later their stock price suffers)

Applications:

1. If USDX is falling, Commodities are increasing and Bonds are falling, and stocks are still rising, we can concur that sooner or later there will be a crash in the stock market.

Deflationary Environment:
In a deflationary environment, Bonds and Stocks become negatively correlated.

1. Value of USD Increases
2. Commodity Prices fall
3. I.R. fall (Bond Prices Increase)
4. Stocks cannot increase because of lack of growth so they often fall.

I would appreciate comments about these relationships but from what I have read and understood, this is pretty close to accurate.
Thanks!!!

Question regarding the relationships above. Please do correct me. If the dollar index is strong, I’d expect that bond yields are down, bond prices are up and the stock marktes are in risk off - bearish.

Usually, the bond markets and the dollar are bullish when the stock markets are bearish.

[B]STOCKS
Market structure is bullish on DJI, SP500 and NQCOMP, equals to Bullish USDX if I remember corectly[/B]

It’s this statement that is confusing me, because I thought that bullish stocks means bearish USDX.

Apologies if I’m messing this up.

Now I have to practice my speech for public speaking class.

[IbePippin]

Reading Price Action

there’s quite a bit of discussion about fractals and how market is fractal in nature and what that means. One way this concept has been useful to me, is when a certain visible pattern replicates down to the smallest time frame. Price is then free to reverse, in a similar way to “the 5th of the 5th of the 5th” concept in Eliott wave theory. still using stops and probability and looking for this to happen around a swing point or SR line on higher frame.

it takes some time to getting used to scanning the charts this way, but the nice part is the eye learns quickly, and one is not tied to a specific well known pattern such as - double top, head and shoulder, etc. It can be anything, so more flexibility for entries. attaching an example from fiber:

pic hosting

[sKratch1989]

edit: NVM this post now i’m confused. heh.

If bond prices are BEARISH, this means i.r. are bullish, therefore we should project an increase in value of USDX?

Still new but starting to enjoy all this analysis heheh.

Question - Do you think GBPUSD is bullish in MS?

[longechoes]

by the way I’m still Bullish on foreign currencies, I see that Bond Prices still have a bullish market structure, meaning USDX should fall, and stock prices will soon fall, and commodities are increasing still. This means long-term Risk On scenario, even if we are temporarily looking at a retracement, just have to wait for an entry to get long again on foreign currencies.

IMO.
I will wait until there is bullish MS on US Bonds before i become bearish on foreign currencies for now.

Still new but starting to enjoy all this analysis heheh.

Question - Do you think GBPUSD is bullish in MS?

Hope you aren’t getting muddled with bond prices and bond yields.
Bond prices up (Yields Down) = Rising Dollar
Bond prices down (Yields Up) = Falling Dollar

Your earlier post seems right enough, below is the relationships as stated in Murphy’s intermarket analysis book

Inflationary Environment

The Intermarket relationships depend on the forces of inflation or deflation. In a “normal” inflationary environment, stocks and bonds are positively correlated. This means they both move in the same direction. The world was in an inflationary environment from the 1970’s to the late 1990’s. These are the key Intermarket relationships in a inflationary environment:

• A POSTIVE relationship between bonds and stocks
• An INVERSE relationship between interest rates and stocks
• Bonds usually change direction ahead of stocks
• An INVERSE relationship between commodities and bonds
• A POSITIVE relationship between commodities and interest rates
• A POSITIVE relationship between stocks and commodities
• Commodities usually change direction after stocks
• An INVERSE relationship between the US Dollar and commodities

In an inflationary environment, stocks react positively to falling interest rates (rising bond prices). Low interest rates stimulate economic activity and boost corporate profits. Ad interest rates fall and the economy strengthens, demand for commodities increases and commodity prices rise. Keep in mind that an “inflationary environment” does not mean runaway inflation. It simply means that the inflationary forces are stronger than the deflationary forces.

Deflationary Environment

Obviously, deflationary forces change the whole dynamic. Deflation is negative for stocks and commodities, but positive for bonds. A rise in bond prices and fall in interest rates increases the deflationary threat and this puts downward pressure on stocks. Conversely, a decline in bond prices and rise in interest rates decreases the deflationary threat and this is positive for stocks.

The list below summarizes the key Intermarket relationships during deflationary environment.

• An INVERSE relationship between bonds and stocks
• A POSITIVE relationship between interest rates and stocks
• An INVERSE relationship between commodities and bonds
• A POSITIVE relationship between commodities and interest rates
• A POSITIVE relationship between stocks and commodities
• An INVERSE relationship between the US Dollar and commodities

[Richard87]

Commodities, I guess these are
Corn,Wheat,Soybean,Rice,Sugar,Cotton,Coffee and Cocoa,
And of all those, all of them are in a bearish market structure except from Cotton and Rice wich are bearish…

Also, NatGas, USOil and Silver is in a bearish Marketstructure…

Inflationary Environment:
If Bond price falls and commodities rise, this confirms that there is an inflationary environment.

So how does that work when Bond prices are bullish and Commodities falls?

[longechoes]

Question - Do you think GBPUSD is bullish in MS?

The break of the high on the 5th February might indicate a break in market structure, the hourly and 4 hour confirm this but for the daily really i’d like to see a move above the high made on the 1st Feb.
NYO today might give some insight, as I look at it now 11.10 GMT we’ve moved into OTE around the 80 institutional level, bit early for NYO but not out of the question.
Not a lot of News today so could be a good trade.
Just to put it out there I wouldn’t be surprised if the cable ranges for a little, we had a very strong slide all through January and it looks like consolidation for most of February so far.

[longechoes]

So how does that work when Bond prices are bullish and Commodities falls?

Think about it, rising bonds = falling yields = rising dollar, so rising dollar (risk off) = falling commodities.

Main thing is commodities are usually priced in dollars so I’ve always seen it as price re-balancing.
If the dollar falls you want to get the same money for you copper so it goes up. Obviously demand has something to do with it but that’s how I’ve got it in my head.

[Richard87]

Seems that the Bonds are bearish and falling on the higher timeframe(Daily), except for UK(still dont know whats their deal )

Stocks are still on a bullish market flow on Daily, and it seems USDX is still in a bearish Market FLow on daily?

Still dont understand if we are in a deflationary envirement or not, I think so, but the stocks are rising?

Need to dig out my videos and start watching… Isnt there a book that talks about this in detail to?

[longechoes]

John J. Murphy, Intermarket Analysis: Profiting From Global Market Relationships

It’s a bit heavy in places but generally a good read.