It’s been really stressing me out, I’ve been trying to find the answer and/or logic to this but I never get it right and it has been bugging me. I’m always checking out the economic calendar but most of the time when I see a release and it’s supposed to be bullish or bearish, it turns the other way. I know some geopolitical factors do come in place but, take for example wednesday’s eur cpi, it was slightly better than expected, nonetheless it had a bearish force.
I know about Trump’s comments and I’ve seen the stock markets reaction but still, this index had no bullish reaction, and I thought it would have.
Just as well as cad and oil. I though it should correlate but I’ve noticed that as oil come down so does cad where it should be opposite as we learn at babypips school.
Am I getting it all wrong? I mean, and this is a true story, I had been getting my trades (demo account) all negative, so I decide to do my trade analysis and decided to the the opposite of what my gut told me and VOILA! they all went green and got some nice pips from it. So did I understood everything backwards? is my analysis actually right but backwards?
Please I need some help
You have to look at the big picture
An economic release is just a small piece of the puzzle. There are numerous fundamental factors in play and a single bullish or bearish economic release doesnt always correlate to a price movement in the same direction as the release.
A release might not be strong enough to overcome the other underlying fundamentals involved and might be insignificant when viewed from a larger perspective.
You also have to contend with institutional traders that will fade the economic release in an attempt to whipsaw as many traders out of position as possible.
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And what´s the deal with oil and usdcad. I thought they should have a negative correlation ?
I understand about the big picture, I’d like to think I do at least, I don’t isolate single releases and keep in mind previous ones. Nonetheless it still seems to play backwards.
I follow several news sites and read a handful of articles per day, is there a one who just kind of condense everything and give you that big picture all together ?
Your right about the negative correlation between usd/cad and oil. The negative correlation is 90%+ I believe, but there are certainly times when you’ll see a divergence in the correlation.
As far as economic releases are concerned, I think its also important to understand that there is a difference between interpreting a release and understanding the subsequent impact on price as a result of the release.
You have to be knowledgable about the other fundamentals and correlations involved to be able to determine impact on price and to be able to trade releases. Simply keeping up with releases and reading articles isnt enough.
Do you use any technicals at all?
Yes, thanks for your responses BTW Pancho, I’m not merely a fundamental trader, I do price action, I’m not fond of many indicators, I just stick with pivot points and watch for resistance and support levels, plus trend lines.
I look to make a price mapping for each currency I trade and determine any bias from news, from then on my technical analysis tells me how much should I tp and when to enter.
I used to rely plainly on indicators and technical analysis (and just overlooked the economic calendar), but I was whipsawed by fundamentals. Since then I upped my fundamentals and it’s been positive for most times; and I rarely do hedging as opposed to when I heavily relied on technicals; but it stresses me out when I can’t quite grasp how certain releases should be affecting the price and it doesn’t do so, even if several releases conjoin.
I guess markets are really unpredictable and they just tend to make tantrums at times. I believe though you can grasp their next move if you play their game, that’s what I meant when I decided to do the opposite of what my analysis and gut told me to, when doing so I had 90% success rate. But it really annoyed me since I thought I was maybe doing everything right but reading it wrong.
There is a valid case for doing the opposite of what the news idiots are doing. Incidentally, when these pundits get brave enough to make a prediction, they are using technical analysis, not some fundamental data or news story.
The only reason I ever look at an economic calendar is to know when to stay out. For example, I want to know when Janet Yellen is going to open her fat trap again. At the point when she’s hobbling into the room with all her over-bloated-banker buddies, to the time when all the dust settles from her latest B.S., I go flat. I’m out of the market-- on all pairs.
Instead of spending what precious little time you have on this earth reading news articles, do this instead. Pull up a Daily chart with only candles on it-- no indicators, no moving averages, fib lines, nothing. Look at your screen from left to right. Are the candles going in an upward direction? That means you are in an uptrend. Take a market order to go long with your stop below the previous higher low. Are the candles progressing in a downward direction? That means you are in a downtrend. Take a market order to go short with your stop loss above the previous lower high. Are the candles moving in a chaotic, sideways manner? Then stay the heck out.
When trading daily charts, be sure to use smaller position sizes so you can feel comfortable with the wider stops. Go for at least a 1:1 risk/reward (better is 1:2). Write back and let us know what it feels like to win using a common sense approach.
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Ignore the pic on the right, it’s my second monitor. This is nzd, would you go long?
I did try this in the past, based on my own logic, maybe I was wrong then but it was a lost account (demo)
I’m really interested in your point of view with this so I can grasp better at this trading style.
Pretty H&S pattern. Too much bearish momentum to go long. Place sell stop below last candle. Stop well above left shoulder. Take 1/2 profit at neckline, trailing stop to break even at that point. Swing the rest of position to the bottom.
Do you follow chart patterns in your analysis, hs, wedges, pennants, etc?
I thought it was just looking at where the price was moving. And I’m not looking at any resistance levels, I’m just looking at my screen “left to right”, overall recent candles are moving downwards, so short would be norm here, but the overall trend has been upwards for the past couple of weeks
Looking at eurusd would you say it’s going up?
Yes, definitely in an uptrend, even with current bearish momentum. We have to assume that this is just a bull flag in a very strong trend. The best way to trade this is to place a buy-stop order 5 pips above the previous candle’s high. This way, if the market continues down, your trade will not be triggered and you will be safe. Stop loss is 5 pips below the previous candle’s low. Remember, a trend will keep going-- until it doesn’t. Don’t ever try to predict it. One thing to consider, is price at weekly resistance? If it is, I probably would not take the trade. If it isn’t, take it on up and bank some nice profits.
If you get stopped out, look for a trading range, a breakout to the downside, retest of new resistance and then an opportunity to reverse.
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Nice quote, thanks for the tip, Weekly looks good no resistance. Jackson Hole symposium is coming up though and that might stir up the market and who knows what will happen to this trend
onus is on the trader to determine which headline indicators will carry the most impact relative to the current underlying economic landscape ie what the big boys are focusing on whether it’s the performance of economies, political risks, the climate etc to then manage their exposed risk or future risk.
IF you can identify what is being closely watched at the time (with the EUR CPI data coming in slightly better than expected, to the best of my memory the same day a article was released by reuters indicating Draghi will not adjust his assessment or mention reducing euro APP which essentially pours water on any potential impact from a uptick in inflation) which is constantly evolving as more and more data is released, it will start to make sense why certain indicators carry such an impact or why what would normally be perceived as bullish for a underlying currency turned out to be the opposite.
Reuters article mentioned above ECB's Draghi will not deliver fresh policy steer at Jackson Hole - sources | Reuters
Indeed I did saw that release on Draghi’s speech. I forgot about it. All in all I do think it all correlates, usd had a good start on some strong numbers and it the went south due to Trump’s advisors resigning. I guess that was the moving force across the market in all pairs related, and they ended up ignoring any other release. Bannon left on Friday, it will be interesting to see how markets react this week.
I’m still trying to identify and pinpoint which news events are the real driving forces and that’s whats been stressing me out, btw livesquawk has been helpful.
Still trying to decode usdcad and oil though, i’m still not sure why it’s not showing a negative correlation.
I think you may of talked me into taking a long position on the EUR/USD. The profit potential is just too strong to ignore. I had actually forgotten about this pair since I have other trades running. Thanks to you, I saw the big breakout to the upside. For some reason, the Euro has been rallying, and I really don’t care why. Traders and investors are really optimistic about it.
I will let you know how I enter. It will probably be sometime today during the Asian session. However, I don’t expect a breakout of the current pullback until after the London open.
Thanks for the correspondence, and best of luck on the charts.
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Awesome, I’m looking to go long myself as well in the short term but then I’ll go short. I’m looking to lock in some pips before going short, I believe this week we should see some strength in the US economy which will pullback down and get usd on the bulls side, probably for the next couple of weeks. I might be looking towards a 1.1450 mid term. There is a nice trend line going up but if all goes as expected on the fundamental side it might be broken down towards that point. Unless we get more North Korea threats or more instability in the white house then it’s shooting up. But who knows, it’s all speculation. Best of luck to you too, cheers.
Buy stop order entered at 1715 EST.
Price- 1,18009
SL- 1.16509
TP- 1.35000
Target risk/reward is 1:11
Hope this helps
I raised my buy stop order to 1.18450 this morning to allow price to hit a lower high. Stop loss automatically set to 1.16950. The way I had it set before I may have had it trigger too early. That’s the nice thing about trading the daily charts. It gives you time to make adjustments if needed.
the markets look differently at Trump announcements from announcements by other officials, and differently from announcements by previous presidents also, he has less effect really because people learned not to take his announcements very seriously
he changes his mind often and contradicts earlier things he said, and so people don’t really trust his announcements and this means they have less effect
It’s probably best not to look at any announcements. Just read the charts. Price will tell you what it wants to do next.
