Thanks for the well wishes. I don’t think this will become a battlefield as in the past…we thread starters have a few new “tools” to help prevent that
Yes my mt4pips account is empty because I just re-started it…as I mentioned I have a new laptop and didn’t bother copying the old demo account history over. It got to be a mixture of trades based on a few methods so it wasn’t very reflective of this thread at all anyways.
Life is well but still some issues with living with teenage boys whose only reason to live is focused on playing WOW, but we are dealing with it. Even though it does interfere with my focus, I do plan to go live again this year no matter what.
Hope your endeavors and website are still going strong? It would be nice to see you around more often in spite of your distaste of the way past incidents were handled.
Starting this week, now that the holiday season is over, it’s time to look for setups and begin the new trading year. I’m also going to look at GPBUSD too because I’m not too keen on using USDCHF as a SMT for USDJPY…I mean they can be correlated according to mataf.net, but perhaps not strongly enough or consistently enough.
So starting at 0:00 GMT I will be looking at converging S&R levels, COT, Bonds, etc… and try to make some sense of it all. ;)…and post a chart.
I’m following along with you on the gbp/usd I’ve been looking at the cable all along though not a diligently as you’ve done with the yen. But now I’ve got my charts all set up and ready to go!
how are you going to use the COT reports? It’s doesn’t seem to be quite as simple as going short generally when large specs are short and going long generally when large specs are long. Even in ICT’s latest video it doesn’t quite clear up exactly how he uses them. Just wondering how you’ve interpreted their usefulness as I seem to be quite confused.
Good question! Since the COT is weekly, it’s more for an overall directional bias for the week. From my own research on the subject, and I’m quoting here…
[B][I]“The primary way traders use the COT data is by identifying extreme positions either long or short by non commercial large speculators. Commercial traders have less of an impact on currencies as the majority of commercial hedging is done in the Spot Market not the futures”… [/I][/B](and I figure since we are in the Spot Market that’s why we want to follow the commercial traders)
To calculate extreme readings, I download the COT report data for a specific currency…ie if I’m trading USDJPY, then I get the JPY data… for the last year, and with some formulas come up with a “Composit COT” for the Yen, (or a Yen Cot Index?..lol) which gives me number between 0 & 100 for the Net long/short commercial positions. Then I put that into graph form…kinda like the one babypips school uses, only I haven’t gotten as far as to create an MT4 indicator out of it…yet
[B][I]“When readings hit an extreme, either long or short, the theory is the market is near a top or bottom since there is no one left to buy or sell”. [/I][/B]
For example, when the composit for the YEN is over 50 and rising to 100, that is bullish for the currency…100 is extreme and bullish, but when it’s at an extreme, it can also mean a bottom is coming for the USDJPY…vice versa for below 50 with 0 being extreme and bearish and a top is coming.
Why a USDJPY bottom for a bullish JPY?..because of it’s position in the pair. If it was an extreme bullish EUR reading, that would mean a top for the EURUSD.
Now don’t ask about cross currencies like EURJPY…
Anyways, I’m hoping if I’m using/reading it wrong, ICT will intervene
I haven’t finished my approach to COT data and explaination of trading with it… so it would be expected you would still have some fog… it will clear up soon. :o
In other words the amount of stops that will be hit by a reversal is maximized.
I don’t use COT, but this is a sound theory to me. Too bad it’s a weekly report. That’s why I like Oanda’s site, they give you a snap shot of clients every hour. It’s only one broker, but if people generally trade the same, AKA sheep, than it’s good data.
The ebook in which I found the information to derive the formulas from is called “Sentiments in the Forex Market…” by JAMIE SAETTELE (which you can probably still get free from 4shared.com).
I’m at work and can’t recall exactly the formulas, but in googling “composit cot formula” I found this site which seems to have the necessary info too… COT Reports, Part 3 | Winners Edge Trading
Composite COT Report:
80-100% - Look to go SHORT - Non-Commercials (speculators) are extremely long and Commercials (smart money) are extremely short.
0-20% - Look to go LONG - Non-Commercials (speculators) are extremely short and Commercials (smart money) are extremely long.
JPY: 46% = Stand aside
GBP: 19% = Long
Interest Rates:
USD = .25%
JPY = .1%
GBP = 1%
Bond Futures: Bearish divergence on highs…?
Looks like it’s saying buy GBPUSD this week.
Now for S&R lines on the chart:
hmmmm…Well price is making some higher highs & higher lows, although it looks more like it’s in a range…accumulation phase?. The Main Pivot is currently at the 38.2% fib retracement, and MS1 is at weekly Pivot (dashed yellow line) and between the 50 & 61.8% fibs, of the last upswing (yesterdays PDL & PDH), and although each one is a potential support area to go long from, it’s not the PDL which is the continued entry-area focus from the previous exercise for now.
Since I’ve interpreted a long bias, ideally we want to enter from the PDL. Today it’s converging with pivot midpoint MS2…I will put a pending long there @ 1.5473 with a 20 pip stop and target the previous session high at 1.5569.
GU is at a nice area of resistance at 1.5838-58…how strong is it? The PDH at 1.5838 is 20 pips below the Daily R1 and Weekly R1. Price has broken thru and closed above the PDH and a down trendline, and also broke thru the R1 pivot but not closed above. If the long bias is correct then wed want to wait for it to return to the PDH, but it hasnt really gone above it enough to look like a breakout for it to test it as if it turned into support… yet at this moment anyways… and the pivot resistance may still cause price to turn back down for awhile…hmmmm…and the H4 fractal direction is currently up (as per the arrow meter in the top right corner of the chart).
So Ill wait. If price does stay above the PDH then Ill put in a long when it retraces…perhaps at a fib retrace level if not the PDH turned support area. If it does go back down, then I`ll wait for another retest of the PDH to scalp a short from.
Turned out to be no trade for me yesterday unfortunately. I was a little too focused on entering at either the PDH or PDL and kinda missed a third scenario being the long opportunity after a retrace to the Main pivot which had a nice confluence with the 50% fib of the PDR (previous daily range). Ok, will keep that in mind for another opp…moving on.
So today the PDH is at the Weekly R2ish area. This just might be the next opp if price retraces again. The Main pivot is at the 38% fib of the PDR swing and at the “figure” 1.5700 area. If not there, then the other area I’d consider would be below that at the 61% area at 1.5660 area which is also Mid pivot 1 by my indicator, the Weekly R1 area, aaaaaand the prev weekly high…that’s 4 converging reasons.
Price retraced slightly by only 23.6%…a very shallow retrace… then blew up past the PDH. So now I’ve got a pending long at the PDH (resistance turned support), rounding up to 1.5780. It looks like price maybe trying to revisit a previous key high of 1.5900, but first it could retrace down from 1.5860 (MR2) resistance to the PDH which would be between 50-61.8% of todays range thus far, but even if it went straight to 1.59, a retrace to the PDH is still around the 61.8% level, which would seem a good area to go long for a retest of 1.59.
Turned out to be another no trade day yesterday too.The uptrend was just a little too strong and wouldn’t retrace far enough back down for me. However, still looking to go long today and hoping for a retrace down to 1.5785 which is at the 61.8% of yesterdays range, the MS1 pivot (buy zone), and possibly a previous resistance now being retested as support.
I have a 30 pip stop this time but I suppose ideally I should have a 70 pip stop to put it under the last swing low, or PDL, of 1.5716 and adjust my lot size to make a 70 pip loss work out to $20… which is 0.285 lots (or 2.8 micro lots).
My profit target is 1.5880 which is 95 pips, but the adjusted lot size would also calculate proportionately to just over $27.
Again price did not retrace down much past the 38.2% level…some strong trend! So that’s it for this week. A bit disappointing that I had the direction & target right, but just couldn’t find a place to get a foothold (trade) into it. I need to reread a post I recall ICT made about entering into strong trends which I’m still trying to locate.
At this point, it’s not about countertrend trades, which predictably did have a reaction at all the forseen resistance levels. However I was looking at it as if the downside potential was too limited in light of the bigger picture direction, except for scalping purposes which are not part of this exercise for the next little while, and because it’s not trading “with” smart money.
Later today the new COT should be released so looking forward to that and what it says. This weekend I will spend a little time reviewing how well my little custom Composite COT indicator matches with price historically, as well as review the S&R landscape for next week.
Bias: Looks like it’s saying sell USDJPY this week.
Now for S&R lines on the chart:
H4 flow is down. The PDH (83.06) is at the 61.8% of the previous week’s daily hi/low range (upper & lower red lines) and price action on that scale is making lower highs and lower lows. As far as the weekly & monthly pivots go, we are in the sell zone for the daily & monthly, but at the weekly mid pivot area which is neutral.
Since I’ve interpreted a short bias, ideally we want to enter from the PDH’s. Today it’s converging with pivot midpoint MR1 (83.01)…I will put a pending short there @ 83.06 with a 20 pip stop and target the previous session low at 82.49.
Good Job you predicted the direction perfectly, although I guess you missed your entry at 83.06. I gotta say this whole thing with bond rate bullish/bearish divergence is pretty dependent on how you look at it. In the picture the blue lines indicate bearish divergence but the red lines indicate bullish divergence, I wonder which one is more valid? :o
Also would you happen to have the COT data on the yen in excel format? I transcribed the COT data for the entire 2010 for the pound and it took a looonng time.
which is found on this page Historical Compressed - CFTC down in the [B]Futures-and-Options Combined Reports:[/B] section where it gives you a choice between text and excel.
Then I reverse sort so the most recent is at the bottom of the list which makes it easier to add the coming weeks.
Ya, my entry was missed…again. I’m considering a new tactic for that. However, don’t count my predictions as too perfect yet as it’s only been a week & a day…will wait for a few more weeks yet to see how it goes in that regard. I agree the divergence on both highs & lows is conflicting
