Do you really think, EUR/USD worth going long after IG client sentiments ?
Iām the wrong person to ask. I have my opinions on this, sure, but I am only taking trades following long-term trends. So I wouldnāt consider buying EUR/USD until at least the 50EMA is sloping upwards. Some way off yet. even them, this pair is one of the least reliable trenders in the pack, I donāt often get a good set-up for it.
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As expected, normality in the last week has been negative. The score was just 44%, the lowest in the last 8 weeks. Obviously weāre in a time of strong caution in trend-following strategies. Myself I donāt have any forex positions open and no pending orders, just the constant Buy order on the Dow waiting for a recovery.
I have taken a look at the best movers of the week - these were USD pairs as might have been expected - AUD/USD. USD/CHF, NZD/USD and USD/CAD.
I have also scanned the most trending pairs across the last 4 weeks. Obviously, this has been a period with low normality so most pairs had low scores. EUR/NZD was the most positive with 13 positive days out of the last 20, followed by USD/JPY and EUR/AUD, then AUD/CAD, CHF/JPY, EUR/GBP, GBP/AUD, GBP/NZD, NZD/CAD, NZDUSD. EUR/USD managed only 8/20.
Take care. Literally.
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Thanks for your response buddy, this period i think will only for going longs.
Donāt forget that fundamental analysis moves the market too
You could say that fundamentals make price move, and the TA of price movements makes the trader move.
Market normality this week only got as high as 39%, as far away from trend-following behaviour as I have seen for a long time.
This remains a time for caution from trend-followers. Donāt be taken by surprise when your normal long-term trend-following strategies fail more than they succeed and donāt be forced to pay the price.
right now I have a long on the Dow with a pyramid waiting, plus a couple of entry orders on the most trend-following forex pairs, but with no pyramids - and no great hopes for these either - more trying to avoid being caught out by missing a short-duration bounce than seeking great long-term holds.
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Hi Tommor.
I really enjoy your thread here. I definitely get what youāre uncovering here.
Cause I do the same thing. We might be using different techniques, but in the end we are coming up with the same outcomes.
Which is, How much of the market is trending compared to counter trending?
The light bulb went off a couple years ago, for me. I would always wonder why my trades were not working. But I always had the feeling that it wasnāt necessarily my fault. I could never figure out, for the longest time, what I was missing.
But then, I got to understanding, and realizing that if you can actually find out what the market trend is (to begin with), and then find out whether the market followed that or not, therein lies a major reason why the trades did not go in the way I thought it should.
Look. Even knowing this information doesnāt turn a bad trade good. Cause itās all after-the-fact. But at least knowing the reason why, whether it was with the trend or not, does get you closer to understanding whatās happening.
But closer to the present time, I definitely agree with you that this past week was a real anomaly. I hope you donāt mind, but I would like to show you why I think that. I combined my data, for this year, and took a pic.
Below every day is either green or red. Green for trended day. Red for counter trended day. Each has a %. Letās just say that if itās a large number, then it went deep. Thatās all. And then, below every Friday is that weeks total (just the last 5 days added up).
Well, itās all relative. But you can see that this past weeks figure has been the largest counter trended week. -41.23%
The next worst week (this year) was the week of April 9th. That came out to be -20.06%. Basically, thatās half of what this past week turned out to be. So, weāre talking about a real backwards flowing week.
We agree.
Like I said, we come to the same conclusion, just in different manners.
I would like to know exactly how your numbers look, though. But itās not that big of a deal. You did touch on that early on. But I donāt think you gave the specifics.
Anyway. Tommor, I would love to join you on this, subject.
What we do with this particular data is a whole different thing. But I do think we trade that same style. Swing trading. Right?
I definitely agree with you on this also. We need to remember that weāre heading into the last 3 days of the month. And quarter. So I think we can very possibly have another messed up week. Oh and by the way, ends with NFP Friday.
Thanks Tommor.
Iāll definitely be watching you here.
Mike
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Many thanks Mike, its very encouraging for me that my theory of market behaviour echoes what your thoughts are also. Thereās lots to think about here so Iāll get back to you in more depth soon, but meantime my results quite completely match yours - I made last weekās normality 39%: the previous week with such a low score was indeed w/e 09 April, also with 39%.
I think weāre onto something.
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Hi Mike -
Thanks for your appreciation and detailed contribution here. Very happy to get into details.
Iāve been playing with what I call normality for a couple of years but havenāt taken advantage of it to moderate my trading tactics. I do now. What I define as normal means when price closes in the direction of its recent long-term trend. I define the trend using the sequence of the 20 and 50 EMAās, so if the 20 is above the 50, the trend is up, if its below the trend is down. Using the 28 primary forex pairs I tally how many closed each night towards their long-term trend and this is the normal score, which I convert to a percentage.
What I hope this will allow me to do is be bold with tactics when the score is high and cautious when it is low: or avoid my usual trading style altogether. My long-term forex positions are all trend-following and I can most often hold them 2-9 days. I use 6 to 8 criteria to gauge the strength of the trend and go for as many as possible as long as they donāt correlate. The entry is a classic swing trade entry technique - buy on the breach of the high of a day with a lower range, sell on the breach of the low of a day with a higher range. All entries are via pre-set orders.
If normality does only one good thing - keeping me out when I am over-focused on one isolated great-looking chart which is actually an atypical outlier - I will be happy.
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Hi Tommor.
Thanks for that. Is interesting.
But, for me to really get it, I need to ask some questions. Iām trying to understand.
I just went to the live market now, and took the JPY pairs. For a start.
Hereās the daily time frame shots of all their pairs. 20 EMA = yellow.
50 EMA = green.
Letās see if I got this right. Oh, and forget about that bottom one on the right.
But we have 5 of them trending high against the JPY. Meaning, the JPY is trending low against those 5 (USD,EUR,GBP,CHF,CAD). Right?
And the AUD, NZD are too close to call.
And you say that at every EOD you ā¦
Specifically, what are you looking at, at the EOD? The current price? Or the price of the 20 EMA?
And thenā¦are you saying whether that is simply above or below the 50?
For example, above. The USD/JPY. The last EOD, Friday. This is all of what I see.
- The 20 EMA price is above the 50 EMA price. Signifying what trend.
- The 20 EMA price is slanted higher. Is this whatās normal? Going up and not down?
- The current EOD price is higher than the 20 EMA. Is this whatās considered normal?
- But the current EOD price ended lower (down candle). Does this mean anything?
Now look over at the EUR/JPY pair.
- Itās an uptrend. 20 above the 50.
- The EOD price ended below the 50. What does this mean? Anything?
- The 20 EMA is slanted downward. Mean anything?
- The EOD price is a down candle.
Well, I guess thereās a lot of questions in there. I guess I just would like to know exactly what constitutes normal. Is it just the 20 and 50 lines (prices)?
And what the current price is, whether itās a factor or not?
And whether the direction, or slant means anything.
I get the fact that all you do is add up how many pairs were considered normal. Which equates to them following their respective trends.
Iām sorry Tommor. I know we are probably speaking different languages here.
Iām sure youāre seeing the market a little differently than me. I tend to subdivide the currencies into their own entities. And I guess you are seeing all of the 28 pairs on the same level?
But it is funny how we meet with the same conclusions, at the end.
Which is whether the market (taking everybody into consideration) went by way of the prevailing trend. Which is considered normal. I get it.
I would like to explore, together, whether we see change happening. I think this is important to know. Or at least be aware of, when itās happening.
I think thatās why I picked the JPY. I canāt figure them out yet, Tommor.
Sure. We all know the trend is down for them. It has been for such a long time now. But, do you think, we can determine when this will change (if it does)?
You know that at sometime in the future, it has to. Even if it comes in the form of a very short term, quick, strong trend. And then go back.
Know what I mean?
Therefore, I would like to ask you what you think about the topic of how, and when do trends change?
You keep track of the market.
So do I.
Shouldnāt we be able to see this stuff, when it happens?
And how about taking the opportunities when it comes, in the form of trading?
We might as well forget about this week. Everything else is going on instead of the prevailing trend.
But at least I know that me and you are paying attention.
Letās keep comparing notes Tommor.
Mike
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Hi Mike - Many thanks for your reply and comments and questions. As for the questions, well -
Specifically, what are you looking at, at the EOD? The current price? Or the price of the 20 EMA?
And thenā¦are you saying whether that is simply above or below the 50?
At EOD, I simply look at the 28 primary pairs and see the closing price. If that is up on the previous close and the 20EMA is above the 50EMA, that is a ānormalā close. If the closing price is down on the previous close and the 20EMA is below the 50EMA, that is also a ānormalā close.
For the normality score I pay no attention to the slope of the EMAās or the level of the EOD price compared to the two EMAās.
All this is just to give me the normality of the market, It says nothing about specific currencies or pairs, its context.
Elsewhere I do pay attention to the 50EMA slope direction on each pair and other chart features but that is to confirm trend and help gauge trend strength on the individual pairs - I only need to do that if normality is so positive or is rising that Iām looking to open or maintain a position. If normality is low or falling day by day, I aim to be in cash, now or soon.
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Hi Tommor.
Well, I donāt know if you caught it, but yesterday came out quite normal.
I found that the numbers all went according to the prevailing trend. Did you?
Iāll give you a short, concise explanation of how I do it. Iāll spare a lot of the details, unless anyone wants to know exactly how I derive them. Then Iāll spill it.
I look at the market subdivided by each currency. Actually, those 28 pairs you look at, I do too. But, I combined all of those 28 pairs with their respective common denominator to come up with the 8 aggregate currencies. USD,EUR,GBP,CHF,JPY,AUD,NZD,CAD.
By me combining them, gives me one result for each currency. And that result will either be trending high, or trending low. Another way to call that is simply their aggregate result.
I can understand why you look at all of the 28 pairs. Cause weāre in the business of trading. And there are 28 tradable assets there. And isnāt that the reason why youāre doing this, to begin with? Of course. I understand.
I look at the market differently. Iām coming from the perspective of an economist. I need the big picture. Iām just putting the individual parts together. Thatās all.
So. For each currency, Iāll have them labeled either trending high or trending low.
And so, whatās my current assessment of each of these?
Green means trending high. Red means trending low.
The latest assessments are: (as shown above)
- USD trending high
- EUR trending high
- GBP trending high
- CHF trending low
- JPY trending high
- AUD trending low
- NZD trending low
- CAD trending low
This is important to me. I have a lot hinging upon this assessment. See, Iām not dealing with any individual pair. If anytime I would (look at any one pair) then itās way on down the line, after many other factors and indicators (like you).
And so.
The only other thing I need now is what the market has done. Daily result.
And then, all I do is compare the two. The more the market moved according to their trending assessment, the more the market flowed normally. Just as you have done it.
This is what yesterday turned out to be.
That is the line up of how all the currencies resulted (just disregard the CNY green).
So, Iāll go down the line, from top to bottom. All Iām doing is adding them up.
The GBP. Their status is trending high, therefore we start out with a +2.17%. That is normal. Their trending high and had a positive resulting day.
The JPY. Their status is trending high, therefore we add 1.72% to the total. Being positive is normal. So the total now is +3.89%.
The EUR. Their status is trending high, therefore we add their +1.41% to the total. Again, they went with their trend, which is normal. Total now is +5.30%.
The USD. Their status is trending high, therefore we add their +.84% to the total. Total now is +6.14%.
The AUD. Their status is trending low, therefore we will add their -.92% onto the total. Cause trending low matches a negative daily result. Thatās normal. The total now is +7.06%.
The CHF. Their status is trending low, therefore we will add their -1.98% onto the total. Again, trending low should result in a negative daily result. The total now is +9.04%.
The NZD. Their status is trending low. Therefore, we will add their -2.24% daily result onto the total. The total now is +11.28%.
The CAD. Their status is trending low. Therefore, we will add their -2.45% daily result onto the total. The total now is +13.73%.
Thatās all of them. In fact, each and every one of them had a daily result in their respective directions. Thatās quite uncommon.
But me and you both, are looking at whether the positive or negative resulting day matched their current trending assessment. Right?
Well Tommor, if youāre paying attention to whatās happening today in the market, the same thing is occurring. This is definitely boding well for me. My week is off to a killer start. Weāll just have to see how it ends, though.
See, I trade a basket of trades. 16 pairs.
I wonāt go into that. But just know, that if the market is trending, my trades are running well. And just like last week, if the market is going the other way, my trades are losing. And yes, I did lose a lot. But this week my trades made up so very much of what I lost last week. Letās just hope this continues.
Hereās what last week looked like.
All these numbers are relative. But you should be able to see that what happened on Monday was better than last Thurs and Fri combined (see the totals?).
Well, todayās results are gonna add onto my cause. Itāll be green. Maybe even more than today. Weāll see.
I am surprised. Weāre at quarters end. Things usually go screwy at this time.
But then again, maybe thatās all what happened last week (cause I got murdered).
Be careful out there.
Mike
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Hi Mike - yes, I marked yesterday (Monday) as a positive day with a score of 57%, which is respectable, so s decent start to the week.
Yes I did think you were looking at the markets as a market economist, and I agree, my outlook is as a trader, and I donāt aim to hold positions long-term, it will be in the days, not the weeks for me.
But I do also look at currencies and I use a simple visual check on a daily basis. I get very similar results to Dennis. I again refer to the 28 primary charts and note the slope of the 50EMA at EOD. If it is upwards, that is a bullish point for the base currency and a bearish point for the counter currency. Obviously the reverse applies if its a downwards slope. This gives me a score of anything between 7-0 for maximum bullish and 0-7 for maximum bearish for each of the 8 currencies. As of last night I have USD as 7-0 and AUD as 0-7. This in theory gives an optimum trade of short AUD/USD. In practice this does not give me an automatic trade but its another cross-check before I take a position.
Mike are you always in the market?
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Hi Tommor.
Well, yes.
I am always in the market.
With the basket of trades strategy that I have. It runs perpetually.
Now I do have another strategy that, believe it or not, is a one pair trade. I only use this when a big opportunity presents itself. And well, itās funny, cause I just closed this trade out today (4 days ran). With a nice profit. But now, itāll sit on the side lines for a while, until I see another great opportunity come my way.
Mike
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It sounds so simple when you say it!!
KC
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Market normality this week up until Wednesday night has been very positive - 3 positive days scoring 57%, 57% and 64%. Havenāt seen 3 consecutive positive days since 24/05 and that had a weekend in the run, havenāt seen 3 consecutive positive days in the same week since I donāt know when.
This starts to look positive.
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Hey Tommor.
It is interesting stuff, isnāt it?
We do come to the same conclusions, as noted before.
But how about this. Maybe this perspective can put us on a similar page.
I consolidated all my daily numbers, for this year.
I made a running total. So basically, all weāre doing is adding every day onto the next. Just to be able to see where weāre coming from.
This is this years running totals.
I subdivided all the months.
And well, that chart can answer a lot of questions.
- This year has been trending, which is more normal, than not.
- The month of Feb was the best month.
- The drop in this past month of June was simply a retracement of where it came from in May.
- The first quarter was a monster quarter.
- The second quarter did end up in the positive.
This is no doubt that this year has been trending a lot. All you have to know is if that chart is moving up, then itās continuing with itās trend. Moving lower means itās counter trending. Not normal.
I do have all of this for last year. And what a year it was.
I even have this data for 2019. What a bad year that was. You wouldnāt believe it.
Well, hopefully this puts us on a similar page.
Perspective is everything.
Mike
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This is a beauty Mike, Iāve never even thought of graphing my results over a long period like this. The predominant action and overall direction is upwards - so much for the anti-trend following brigade who insist that prices only trend for a small minority of the time.
Mike, isnāt your chart similar to the Dow?