Some of my thoughts + Trading System

elang · January 30, 2007, 3:29am

Good morning Guys,

Yesterday, didn’t go much as planned, rather the price bounced of 50% not reaching 61.8% nor the ascending trendline Support.

If you are not already long you may long after the break of .9679 with targets: .9734 > .9913 > 2.000 Psy-R

We have a clear EMA/SMA Cross Over on M30, H1 and H4 so its all good.

You will notice that RSI didn’t mange to close / break below 50, rather it bounced, this is very common when the price action is confirmed by RSI as Corrective, you will notice this on small as well as large time frames.

STOP LOSSES should be around .9613 or .9547 depending on your targets.

We may have an awkward possibilty of the price meeting R at .9734 and then bouncing back down to test 50% or .9547, in any other case its .9913 next.

For now the facts have us assume that bearish price action from .9913 to .9547 is a corrective decline to 50% of the Rally started at .9260 with High of .9913 - Since it is corrective, it is in the OPPOSITE direction of the trend, hence the main trend is upwards.

The intraday trend is Bullish - So we look ONLY for long opportunities today, do not sell corrections today, rather buy on dip of the retracement as today will mostly be Higher Highs and Lower Lows (Supposedly) > There are no guarantees.

Regards,
E. Lang

GBP/USD

After failing to stay firmly below 1.9588 cluster support (50% retracement of 1.9261 to 1.9913 at 1.9587), cable stages a strong rebound today, breaking above 1.9769 resistance with 4 hours MACD pushed back above signal line. The fall from 1.9913 should have already completed at 1.9547. At this point, further rebound is expected to follow as long as cable stays above 1.9614 support. Break of 1.9735 resistance will encourage a retest of 1.9913 high. On the downside, below 1.9614 again will put 1.9547 low back into focus and bring will indicate fall from 1.9913 has resumed for rising trend line (1.8517 to 1.8834, now at 1.9471) support.

In the bigger picture, a strong break above 1.9679 resistance will that case that rally from 1.9261 is still in progress. In such case, further rise could be seen to retest 1.9913 high and break will confirm whole rally from 1.8517 has resumed. But still, close attention will be paid to sign of loss of upside momentum and reversal pattern formation as cable approaches key 2.0106 cluster resistance (1992 high, 100% projection of 17047 to 1.9024 from 1.8090 at 2.0067) as the whole medium term up trend from 1.7047 could complete at or below this level.

Right now, we already have bearish divergence conditions in weekly RSI, daily MACD and RSI. Sustained break of 1.9588 cluster support will be the a warning that whole rise from 1.8517 has completed earlier than we thought. Break of mentioned rising trend line support will confirm such case and bring much deeper decline towards 1.9237/61 cluster support (23.6% retracement of 1.7047 to 1.9913 at 1.9237). Decisive break of this 1.9237/61 cluster support will add much weight to the case that whole medium term up trend from 1.7047 has already completed and much deeper decline should be seen towards next cluster support at 1.8834 (38.2% retracement of 1.7047 to 1.9913 at 1.8818).

elang · January 30, 2007, 4:40am

[B]Sterling Rebounds, Dollar Retreats [/B]

Sterling staged a strong rebound across the board after the National Institute of Economic and Social Research, whose clients include UK Treasury and BoE, raised its forecast for U.K. economic growth to 2.75% this year, from Oct’s 2.5% forecast. Also, one more rate hike is needed to bring inflation back to BoE’s target of 2%. Sterling remains firm despite a weaker than expected housing report showing Nationwide House Price Index slowed to 0.3% mom, 9.3% yoy growth in Jan. Meanwhile, dollar retreats today ahead of Jan conference board consumer confidence which is expected to rise slightly from 109.0 to 109.1.

Just so you know why what happened… happened.

elang · January 30, 2007, 7:36am

The price action today can give any trader a headache.

Don’t put yourself down if you had a trade go bad, occasions like these take the steam out of everyone, the key here is to be patient.

The bias is still bullish and we’re looking to break over 9665 to resume.

On the downside, if we break 9630 we may hit a few losses that will trigger a sell downwards and if we break 9613 it all bearish from there on.

For now though we are still keeping our heads up, don’t forget to place your Stop Losses!

Regards,
E. Lang

elang · January 30, 2007, 9:17am

The bears are obviously not taking any crap today.

They did not allow one candle to close above .9679 and everyone was waiting for a break there, no luck.

On the low next targets are 9613 then 9547.
However if 9613 holds we may see a retest of 9695 today and if we have an upbreak of that, THEN we may consider looking forward to 9734 > 9913

If we break below 9547 then we will consider 9547 to 9695 a correction, and corrections are in the opposite direction of the main trend.

The bulls traded with confidence today, but only till the point when they had to show what they were good for… and they bannana peel slipped right where they shouldnt have.

The upward trend line on H1 has been broken and thats bearish enough as an intent, at the moment its all a little confusing. H4 says long, H1 says short, D1 has mixed signals… it is difficult to trade right now, your best bet is to trade solely S and R at this point. The bears have shown their superiority today so im putting my chips on them for the day. Tomorrow however could be another story.

Once more don’t put your self down, today was a whacky and whiplashy trading day. Take a look at the PRO Trading forums and even some of the biggest brokers out there, you will notice everyone is frustrated today with this pair… talk less about EUR/USD.

Trade carefully and set your stop losses!!

Regards,
E. Lang

elang · January 31, 2007, 2:17am

Good Morning Guys,

For the moment the bears are still in control of the price.
London hasn’t opened yet, so we may see some buying / selling when that happens.

Under 9610 may push us down to 9588 > 9545
Over 9640 may push us up to test 9695

H4 Has gone consolidative for now, so we may see a break up or down, it depends on what the bias proves to be. At the moment i am more inclined towards a test of the Lows rather than the Highs.

Good trading

Regards,
E. Lang

elang · January 31, 2007, 2:23am

I will be happy to communicate with all and any of you on a daily basis.

I use Yahoo Messenger: [email protected]

You may download it from here: Yahoo! Messenger - Chat, Instant message, SMS, PC Calls and More

Regards,
E. Lang
PS: Check the post before this for new chart updates.

elang · January 31, 2007, 2:57am

My Limit order was hit for my Short .9624 @ .9564 for 60 Pips profit

For now i am going to wait and see how the market reacts to .9547.
I will most likely short again after i see some more comfirmatory bearish action.

I will be looking to short on a retracement spike.

Regards,
E. Lang

[B]GBP/USD[/B]

[B]Daily Pivots: (S1) 1.9583; § 1.9638; (R1) 1.9682; [/B]
Cable is also bounded in tight range today. Rebound from 1.9547 lacked decisive momentum and was limited at 1.9695. Nevertheless, with 4 hours MACD pushed back above signal line, a short term top could be formed at 1.9547 low and hence, further rebound is still in favor to come as long as cable stays above this low. On the upside, Break of 1.9735 resistance will encourage a retest of 1.9913 high. Meanwhile, break of 1.9547 low will indicate fall from 1.9913 has resumed for rising trend line support (1.8517 to 1.8834, now at 1.9480).

In the bigger picture, a strong break above 1.9679 resistance will save the case that rally from 1.9261 is still in progress. In such case, further rise could be seen to retest 1.9913 high and break will confirm whole rally from 1.8517 has resumed. But still, close attention will be paid to sign of loss of upside momentum and reversal pattern formation as cable approaches key 2.0106 cluster resistance (1992 high, 100% projection of 17047 to 1.9024 from 1.8090 at 2.0067) as the whole medium term up trend from 1.7047 could complete at or below this level.

Right now, we already have bearish divergence conditions in weekly RSI, daily MACD and RSI. Sustained break of 1.9588 cluster support will be the a warning that whole rise from 1.8517 has completed earlier than we thought. Break of mentioned rising trend line support will confirm such case and bring much deeper decline towards 1.9237/61 cluster support (23.6% retracement of 1.7047 to 1.9913 at 1.9237). Decisive break of this 1.9237/61 cluster support will add much weight to the case that whole medium term up trend from 1.7047 has already completed and much deeper decline should be seen towards next cluster support at 1.8834 (38.2% retracement of 1.7047 to 1.9913 at 1.8818).

[B]Markets Look Forward to US GDP and FOMC Statement [/B]

Dollar remains bounded in tight range ahead of FOMC announcement and a handful of economic data today. Markets will likely remain quiet before US Q4 GDP data where volatility should jump up. A solid 2.9% growth is expected in the Q4 GDP and if that’s confirmed, dollar will likely be boosted as expectation will then be built up for a more upbeat FOMC statement that reflect recent improvements of growth outlook.

Fed is widely expected to keep its target rate unchanged at 5.25% today. Once again the focus will be on the accompanying statement. There were three major developments since last meeting in Dec. Economic indicators has be resilient and showed that the US economy grew near potential in the fourth quarter. Inflation eased moderately but the pace certainly slow. More importantly, Fed members has shifted to a more hawkish stance in their speeches, saying that growth outside housing sector remains firm and inflation pressure may moderate slower than they would like to see. Hence, the statement’s wordings on inflation is not expected to change but the wordings about “recent indicators have been mixed” could be modified to reflect the current growth outlook, leaving the statement a slightly more hawkish statement than the prior one.

A series of better than expected key economic data, in particular the retails sales and trade balance, pointed to a stronger growth in the US economy in the last quarter of 2006. Consensus expects that US GDP has grown at a quicker pace of 2.9% in Q4, comparing to prior quarter’s 2.0%. GDP price index growth is expected to drop from 1.9% to 1.7% while core PCE rise is expected to stay at 2.2%, suggesting that price pressure continues to moderate slowly. Chicago PMI is expected to rise slightly from 51.6 to 52.0 in Jan while construction spending is expected to rebound from Nov’s -0.2% to 0.1% rise in Dec. ADP employment data, which is used as preview to Non-farm payroll, is expected to 122k job growths in Jan.

Euro was steady after yesterday’s Germany CPI data which saw a surprised drop of -0.1% mom in Jan. Just released, Germany retail sales rose much more than expected by 2.4% in Dec, comparing to prior - 0.7% and expectation of 1.3%. More data from the Eurozone will be featured today including Germany and Eurozone unemployment, Eurozone consumer confidence. HICP inflation is expected to accelerate from Dec’s 1.9% to Jan’s 2.1%.

Swiss franc remains pressured on carry trade and is pressing record low against euro with EUR/CHF at 1.6253. KOF Leading indicator, which serves as a predictor of further economic activities, is expected to continues it’s downtrend that started last Jul and fell further from 1.6 to 1.56 in Jan. UK Gfk consumer confidence is expected to drop further from -8 to -9 in Jan.

elang · January 31, 2007, 3:56am

Since the trend is bearish we accept that we must have:

Lower Lows
Lower Highs
All movements in the opposite direction of the trend are corrections as long as the level of correction does not exceed critical levels of its wave eg. 61.8% - 75%

As i mentioned before, i had my Limit order set above S of .9547 as i didn’t want to loose pips in a possible whiplashing bounce.

There are only two ways i consider R or S broken:

The price violates the level then retraces to confirm it before continuing with the trend.
The price breaks through so decisively that the earliest or first level of correction is far below that of the R / S level broken.

In this case what happened is #1, the price broke…
At this point i was waiting for a retrace, preferable a test of the S so i could buy on the tip of the correction.

Considering that the trend is bearish i assume that the correction should start latest around the 75% level. However seeing as 50% - 61.8% was also R/S of .9547 it was logical to accept that as a good retracement entry point.

My second short for today was made at .9542 on the M1 chart so i could surgically pin point the entry.

I am hoping for a break of.9524 now, then 61.8% on H4 @ .9509 > .9452 > 75% @ .9424 > .9315 etc.

On the upside we will need a break of .9550 > .9696 to confirm a resumption of the uptrend.

Regards,
E. Lang

pipsareus · January 31, 2007, 7:57am

hello elang,
this is a great thread and i loved reading it ,your outlook on life is very mature and your information really helped me, looking forward to reading more
cheers and good luck

elang · January 31, 2007, 8:46am

langAs per my post today:

“I am hoping for a break of .9524 B[/B] now, then 61.8% on H4 @ .9509 B[/B] > .9452 (To Come) > 75% @ .9424 (To Come) > .9315 (To Come)etc.”

From here onwards its pretty clean.
Redraw your Fibonaccis on every retrace and move your stop loss.

Regards,
E. Lang

Your comments are much appreciated Pipsareaus,

I am happy i’ve been able to help you with anything.
Stick around.
Regards,
E. Lang

elang · January 31, 2007, 9:17am

I’ve got to go to work again so i’ll see you guys tomorrow.
Over all today we’ve had two trades, all documented.

You’ll notice i only used MA crosses and short term trend lines for Entry, Exit and Stop Loss determination.

Trades for today:

TRADE 1

Entry: .9624
Limit: .9564
Stop Loss: .9655

Status: CLOSED
Profit: +60

TRADE 2

Entry: .9542
Limit: .9457
Stop Loss: .9561

Status: LIVE
Profit: +27

Todays reports start from Post #185 onwards.
Looking at them in order you will be able to introduce yourself to my decision making process and specullative theory.

Regards,
E. Lang

pipsareus · January 31, 2007, 9:21am

man ,if i did not know get to meet you personaly, i would never have believed that this thread is written by someone who just turned 20 years of age.
well done ,for your age you thoughts flow like a naturaly gifted person,keep writting and helping all of us we appriciate it

elang · February 1, 2007, 2:01am

Good morning guys,

My second short trade yesterday was stopped out:

TRADE 2

Entry: .9542
Limit: .9457
Stop Loss: .9561

Status: CLOSED
P/L: B[/B]

I’m not sure if it was GDP that came out, frankly i have no idea, but i didn’t care much since i had set my stop loss, which was very reasonable at 19 pips, with a possible profit of much larger proportions.

For some reason my Daily Trendlines on my chart had dissappeared and i totaly forgot and couldn’t see the ascending trend line, which i was going on about the other day, hence why i was bold and in this case deluded enough to place an ambitious Target of .9457 a whole 20+ pips under the trend line…

I admit that was my bad, but these things happen, if my trend line hadn’t dissappeared on me i would have logically set my Target a few pips above it and i’d be in profit on the second trade now.

Overall yesterday was a very profitable day.

Let’s see how things are looking today.

The fall from .9913 took us as far as .9480, where it met the Daily Ascending Trendline and bounced off taking us back as far as .9668, respecting the previously existent short term trend line which you will notice on the chart i’ve attached.

Our General Bias is long, so we will only be looking for long trades today.
We will consider bearish price action from .9913 to .9480 as a correction of the rally started at .9260 with a High of .9913. Since it is a correction, it is in the opposite direction of the trend, hence… BULLISH.

Trend Determination D1:

*Stochastics are around the 20 area and they seem to be reversing
*RSI is > 50
Rating: Bullish

Trend Determination H4:
*We have a perfect morning star candlestick formation off .9480
*Bullish MA crossover is visible
Rating: Bullish

Targets / R on the Upside In Order of Violation:

.9668 > 9696 > .9734 > .9913 > 2.000

Targets / S on the Downside In Order of Violation:

.9625 > 9598 > .9574 > .9480 > .9455 > .9315 > .9260

Play it safe and set your Stop Losses!

I will update more throughout the day

Regards,
E. Lang

GDP
Consider the potentially damaging events of the past six months: a government induced housing market collapse, $4.00 a gallon gasoline prices, the effect on businesses of almost two years of Federal Reserve rate increases, an unresolved and unpopular foreign war and a dramatic and divisive national election. In an economy as heavily dependent on consumer spending as the American, any one of these developments could have seriously undermined consumer sentiment. If consumer sentiment and consequently spending had fallen last fall it is possible that we would today be drifting toward recession. In retrospect, it is understandable why speculative interest turned against the dollar in the last quarter of 2006. With the initial reading on 3rd quarter growth 1.6%, the USD looked set to follow the economy down. Beginning in the week after Christmas, reports on the American housing market, consumer confidence and purchasing managers scored solid and, to many observers, surprising gains. The improvement in US statistics was capped this week by the 4th quarter GDP number which outstripped even the optimistic expectation of 3.1% with a reading of 3.5%. Historically the trend level American economic growth is between 3% and 3.5%. Can the US economy sustain its historical trend in today’s difficult economic and political environment and if so what will that bode for the Dollar?

NFP
In the 4th quarter of 2006 the US economy created an average of 136,000 new jobs per month. The January Non-Farm Payrolls (NFP) due at 8:30 am Friday is anticipated to have added 160,000 jobs. The December the reading was +167,000. January’s estimate is almost two thirds higher than the expectation had been for December, +100,000. The NFP statistic has consistently surprised the market with better than predicted outcomes. Baseline revisions added over 800,000 total jobs in 2006. Last year economists speculated that as the housing market fell it would drag down consumer spending, maybe tipping the US in recession. Consumer spending, however remained strong, supported, I would argue by a buoyant job market. Does the NFP report bear more directly on consumer spending than the housing market and what does that mean for the Dollar?

elang · February 1, 2007, 2:25am

In Red i will highlight targets that have been violated and in Blue those that haven’t.

BULLS -In Order of Violation:
* .9668
* .9696
* .9734
* .9913
* 2.000

BEARS - In Order of Violation:
* .9625 - This is a good bearish signal, however it looks best to consider shorts only under .9598
* .9598
* .9574
* .9480
* .9455
* .9315
* .9260

Regards,
E. Lang

GBP/USD

Cable rebounded strongly after the fall from 1.9913 was supported by mentioned rising trend line support (1.8517 to 1.8834, now at 1.9490) and reached 1.9480 only. At this point, intraday bias remains on the upside as long as cable stays above 1.9597 minor support and further rally might still follow. Focus remains on 1.9695 cluster resistance (50% retracement of 1.9913 to 1.9480 at 1.9697) and mentioned trend line support.

As long as 1.9695 resistance holds, the fall from 1.9913 is still in favor to extend further. And sustained break of the trend line support will confirm that whole rise from 1.8517 has completed at 1.9913 and deeper decline is expected to follow towards 1.9237/61 cluster support (23.6% retracement of 1.7047 to 1.9913 at 1.9237). However, decisive break of 1.9695 resistance will indicate the fall from 1.9913 has completed after failing to break through mentioned trend line support. In such case further really should be seen to retest 1.9913 high.

In the bigger picture, we already have bearish divergence conditions in weekly RSI, daily MACD and RSI. Decisive break of 1.9237/61 cluster support will add much weight to the case that whole medium term up trend from 1.7047 has already completed earlier than we thought and much deeper decline should be seen towards next cluster support at 1.8834 (38.2% retracement of 1.7047 to 1.9913 at 1.8818).

And in case of further rise, close attention will be paid to sign of loss of upside momentum and reversal pattern formation as cable approaches key 2.0106 cluster resistance (1992 high, 100% projection of 17047 to 1.9024 from 1.8090 at 2.0067) as the whole medium term
up trend from 1.7047 should complete at or below this level.

Forex Elliott Wave Analysis - GBP/USD

65% confidence - First leg of major correction from 1.9917 has ended at 1.9483 and consolidation would be seen but upside should be capped at 1.9772, bring another selloff.
Despite yesterday’s selloff to 1.9483, lack of downside follow through and subsequent reversal indicate the first leg of major correction from 1.9917 top has indeed ended at 1.9483 and consolidation in minor wave b would be seen for few days. Above 1.9697 resistance would add credence to this view and extend gain to 1.9734 and possibly 1.9750 but reckon 1.9772/75 would limit upside.

On the bigger picture, wave v from 1.8517 is labelled as (1): 1.8859, (2): 1.8674, (i) : 1.9180, (ii): 1.8835 and (iii): 1.9849 and wave (iv) has ended at 1.9260 and wave (v)has either ended at 1.9917 or would extend marginally to 1.9950 but 2.0000 would cap upside.

On the downside, pullback should be limited to 1.9577 (50% of 1.9483-1.9671) and 1.9548/55 would hold and bring another strong rebound later.

elang · February 1, 2007, 3:12am

Keep your eyes on GBP/JPY - it is looking very juicy right now.

Regards,
E. Lang

elang · February 1, 2007, 4:12am

Just to re-cap on the Elliot Waves for those of you who use them as a guide:

.9177
.8835
.9846
.9263 (Correction: abc X abc) with X @ .9747
.9913

There are 2 scenarios from here onwards.

The decline from .9913 is Corrective wave A in the forming

OR

The decline from .9913 is a small correction after which wave 5 will resume for a possible break of .9913 with a target of 2.000 (AFTER WHICH, we will have a logical correction take place in the form of ABC or another variation.

If you are following this thread and you are trading with me i recommend you set up your charts.

EMA 6
SMA 13
EMA 50/55
MACD 12,26,9
RSI 14
Stochastics 10,3,3
RVI 14

You may also add EMAs 5 and 10 if you wish for further optimization.
I trade mainly E/S MA crosses, Fibonaccis and Trend Lines

I’ve been getting a lot of great feedback from users who implemented the system i had detailed in Post 1 of this thread, i’m very happy people have been getting such great results. Keep up the good work guys, you know who you are.

Regards,

E. Lang

PS: even though the bias is/was Bullish, the bears seem to be taking over things.

So far they are the first to score a point by taking out * .9625, If they want to continue dominating they need to take out their next target of * .9598. So far the Bears are in the lead.

BULLS -In Order of Violation:
* .9668
* .9696
* .9734
* .9913
* 2.000

BEARS - In Order of Violation:
* .9625 - This is a good bearish signal, however it looks best to consider shorts only under .9598
* .9598
* .9574
* .9480
* .9455
* .9315
* .9260

elang · February 1, 2007, 5:54am

The game score is tied 1 to 1 at the moment with the Bulls taking out their first target of .9668

You can long after a whole candle closes above .9668 on M5, targets are below in blue.

BULLS -In Order of Violation:
* .9668
* .9696
* .9734
* .9913
* 2.000

BEARS - In Order of Violation:
* .9625 - This is a good bearish signal, however it looks best to consider shorts only under .9598

* .9598
* .9574
* .9480
* .9455
* .9315
* .9260

Regards,
E. Lang

elang · February 1, 2007, 9:08am

I’ve been waiting here for the past 40 minutes with this message just to hit Submit Reply, lol.

The game score is 2 to 1 at the moment with the Bulls taking out their second target of * .9696

Even though the price had quite a battle at this R, being rejected a solid 3 times, the bulls overwhealmed for a while and more buyers came in. Frankly i was expecting a clean break here rather than the sloppy cabbage throwing contest it turned out to be.

You can long after we see good bulish play and a whole candle close above * .9696 on M5, targets are below in blue.

Keep your eyes and ears open for the next set of news in about 46 minutes (Current time: 16:14 GMT+2)

US ISM Man. - Forecast: 51.9 | Previous: 51.4

BULLS -In Order of Violation:

* .9668
* .9696
* .9734
* .9913
* 2.000

BEARS - In Order of Violation:

* .9625
* .9598
* .9574
* .9480
* .9455
* .9315
* .9260

Regards,
E. Lang

elang · February 1, 2007, 9:14am

The statement below could have been the reason for the break we just had, but the bears are showing no sympathy here:

“Rumours flowing in that ISM Numbers will be coming in weaker than expected”

Regards,
E. Lang

elang · February 1, 2007, 9:44am

As long as we have higher highs and higher lows everything is ok.

Don’t exepect the difference to be too large now from H to L as we are pre news, but things are looking bullish for now.

Please, don’t forget to set your Stop Losses, use M30, H1, H4 to determine the best previous Lows on the chart for a Stop Loss execution.

I’m off to work. See you guys tomorrow.

Regards,
E. Lang