Technical Templates 2

[Tess]

Just the NFP�s left on the weeks menu after the expected re-calibration of european interest rates.

Last weeks low (on both Cable & EURUSD) has been a pretty decent ‘short’ barometer this week, maintaining the low risk play of executing with the flows.

BoE have chattered a bit more today (to the markets) regards their intention of adopting Quantitative Easing to assist with their interest rate reduction stimulus.

Structural (short) positions haven�t really been under threat this week/today & I�d be surprised if they got spooked tomorrow.

Sure, they�ll be some profit booking & squaring up of short-end orders into the NFP print & London fix between now & then, so it will probably cause a little swell out there as usual.

We�re not around now until Monday, so hope your end of week forays into the markets are successful ones

In case any of you are unfamiliar with the term & function of Quant Easing, I�ll leave you with a brief summary�…enjoy your weekends.

[B]Quantitative Easing:[/B]

It�s the means to which Central Banks resort to encourage lending by institutions & spending by consumers, when extremely low interest rates fail to sufficiently stimulate the economy.

So, what happens is the Central Bank (U.S Fed�BoE�ECB etc) buys up commercial banks assets, such as sovereign debt tickets/corporate bonds & other securities, & credits those commercial banks with increased funding. Or to put it another way � they flood the system with money!!

It�s meant to encourage those banks to once agian do business with each other, & also lend this increased funding out to consumers & end business users.

The risk is of course, that folks (including said banks) will merely hoard & save it rather than spend it. But that�s the risk they take with this type of activity.

In essence it�s a credit stimulation exercise designed to increase money supply.

[macc]

Thanks for the last two posts Tess.

The first was a good recap of the sound guidence you’ve dispensed on here many times previously (it doesn’t hurt for some of the more thick headed around here - that’ll be me then - to hear it more than once) and the snapshots always hit the message home.

Thanks too for the Quant easing snippet in your second post. I took a look at GU and EU set-ups this morning but ultimately decided to just sit things out and enjoy the interest rate show. Trichet certainly had to duck and dive a few questions on “towards zero” rates and Quant easing in the Q&A.

Thanks again,

Macc

[tonymand]

My entry for this trade was at 3. If you look at the weekly there are no support lines in the way for several hundred pips. I am therefore going to try to stay with this all the way down (may well take all week) and leg into it if possible. For now I have tucked my stop in above the round number and above a slight retracement and I am prepared to be stopped out at this point. However with the H4 now making a new low for the move then we could well have a big move underway. Not a lot of data out this week so it could all depend on the technicals, the stock market and the general sense of disaster in the market. I certainly favour GBP weakness especially while Brown continues to make a fool of himself

[tonymand]

Clear consolidation pattern through Asian session with the high constrained by one of yesterdays retracements. Entry here on the rejection, outside bar and divergence, at the break of the session low when that occurs or at a retest of that low after the break. Given that the session low is near yesterdays low I would wait for that on this occasion

[tonymand]

Exit for all trades. Time to stand aside and assess the markets next move

[tonymand]

Indeed, and for others following the action the 15 minute is showing higher high higher low behaviour so not the time for getting short. A rest after yesterdays spectacular move is not at all a surprise

[JimmyMac]

yeah looks like the European pairings are catching a little risk appetite flavor into the early week action huh?

they�ll be hanging fire to gauge to U.S equity flows I guess before staging a follow thru assault on these levels.

euro is banging up against common zones, with that prior weekly high amplifying the previous 2 way fulcrum zone from late January thru mid February.

one camp (Dollar) spit out their positive rhetoric, followed by the alternative camp attempting to reinforce their views onto the market players � and whilst they�re all considering their options, we get consolidation & 2 way play!

fun huh!

[Jocelyn]

@JimmyMac

yeah looks like the European pairings are catching a little risk appetite flavor into the early week action huh?

euro is banging up against common zones, with that prior weekly high amplifying the previous 2 way fulcrum zone from late January thru mid February.

That pop thru the resistance line failed to gain traction into the fix Jim. A smattering of profit taking pushing it back into the red.

If it can hold above that last higher low (c1.2550) then the speculative momentum could well push it thru the near-term ceiling towards that major resistance camp at 1.33. A lot depends on the risk appetite/aversion pendulum though!

It’s sure trying to impress with an attempt to cut out a temporary base huh?

Daily highlighting the upper activity zone

Hourly focusing the alternative bullish momentum attempt via the higher low prints

Quite a nice scenario for the smart intraday players equipped with a decent 2 way strategy to get to work with

[eduw]

Hello jimmy and jocelyn!

I was looking at your posts from today and thinking about that Euro tentative in bulding a bullish momentum… Let�s suppose you get a green light to get long eur/usd. In that case, would you consider it a “jobbing” exercise, as the main trend might still be to the downside, and therefore manage it (as far as objectives & longevity) in a different manner compared to, for example, a hipothetical short from your 1.3300 value zone? Or no, a trade is a trade?

Well, I�m not sure if I made my self clear… :o
Guess it�s time to hit the sack.

edu

[tonymand]

My second attempt to get a seat at the table this afternoon. The Asian action fits my definition of a trend but 3700 apart from being a round number is a low from 2001 and still appears active. With yesterdays low just under it the point of this entry is to be in position for another crack at the round number level. Exited break even on the first trade so we will see

[Jocelyn]

The common levels playing ball again this week on the Euro map.

Maintaining buoyancy above yesterdays low, around the 1.2600 figure keeps the bullish push honest. That will be the next challenge if you�re currently long off the higher low steps, as annotated on this hourly view.

Tokyo has offered decent trigger & trade management opportunities lately & again if you were looking to engage off the usual intraday-week markers, you got a lead into the early Frankfurt-London prints off yesterdays high barrier.

2 way flows still dictating the activity for now, with highly visible zones for both entry & management guides, referenced via the 15m frame.

[Ray_1]

I wonder did anyone watch the GY/guppy? It just show my favorite break and retest setup of the previous day low during Asian session today again. It allowed myself to be positioned and was lucky enough to be get on the train to the south when London opens. At my time of writing, the guppy has moved around 200 pips down, I exited early and now was slapping myself for not able to stay with the flow.

[tonymand]

Its been a bitty week after the great start on monday. This trade has worked well. The daily hammer yesterday suggests reversal, consolidation during the Asian session, also a 15 minute resistance from yesterday and then a strong breakout candle, pretty much dominant. Stop now at breakeven, initial target in the 139.50 area then on to 141.50 if we get through that. Either way for closure sometime this evening as its friday

[Jocelyn]

I notice you got last weeks low marked there on your chart (at 135.52) Tony.
Nice double (support) bounce off that marker into NY/London trade, with both inside & outside bar triggers in line with momentum.

Cable rejected similar territory into post London trade yesterday before blowing thru it (last weeks low) this morning.

They’re handy (& common reaction levels) little markers when the activity begins to hot up around them

[tonymand]

Stop now below the daily SR level which is being tested. Might usually give it a bit more room but this is not a good market. If it does pull away I wont add to it for the same reason. Either way a couple more hours and I am finished for the week. In total 5 trades (more than usual), 2 wins, 2 draws, 1 loss (you can see my love of football!). Good weekend to all

[o990l6mh]

After some time reading, learning and demoing I think I’m getting the hang of the basics in trading.

But there are some things that I can’t quite figure out. So, I have to ask:

Which is more significant in placing a S/R line? wicks or bodies?

Most literature would say wicks - I know - but I’ve also come across the opposite view, and I have to say that I somewhat agree - the body is where price could be closed at. The wick represents a level that, yes it was traded at, but still was unsustainable to get a close at.

Like I said, I’m a bit lost over this. If any of you would like to share your greater knowledge, I’d be grateful.

Good weekend to all

[tonymand]

After some time reading, learning and demoing I think I’m getting the hang of the basics in trading.

But there are some things that I can’t quite figure out. So, I have to ask:

Which is more significant in placing a S/R line? wicks or bodies?

Most literature would say wicks - I know - but I’ve also come across the opposite view, and I have to say that I somewhat agree - the body is where price could be closed at. The wick represents a level that, yes it was traded at, but still was unsustainable to get a close at.

Like I said, I’m a bit lost over this. If any of you would like to share your greater knowledge, I’d be grateful.

Good weekend to all

Both schools of thought exist. I tend to use wicks as they are obviously the most extreme point but will take into account bodies that are around the same area as adding to the overall importance of the zone. After all they represent exploratory pushes through that have been beaten back. Like so much in this business no hard and fast rules but what I like to think of as common sense when you are focussed on an area of interest

[Tess]

Opinions are divided amongst technicians on the true strength & balance of support & resistance measures for gauging actionable triggers.

Personally, I like to see a level ‘actively’ traded & pressured.

I�m not too bothered whether it contains open/close activity at the zone of s&r, or shadow (wick) activity � just that the level or zone is sufficiently strong on the radar to attract the type of activity that justifies my participation.

If that activity is being generated via mid to long range (4 hour-Daily-Weekly) touches, then I�ll pay closer attention & quite often drill down into an hourly or maybe even a 15min timeframe to determine the quality (if any) of the potential trigger/set-up.

A lot depends on where the price is & what type of market cycle we�re trading in.

You can ask 10 different (experienced) technicians what they consider to be the most appropriate definition of support & resistance, & more than likely you�ll receive a 60/40 split on full body/shadow choice!

As you�ll note on many of our chart examples, we like to annotate our area�s of interest in a rectangular box type marker��price action rarely conforms to precise, detailed structure.

Orders (limit/protective stop/additional compound stakes) are usually stacked on & around a key level, & that level often brackets anything from 20-50 pips, which is why you�ll often witness false breakouts & sharp pullbacks as the assorted orders get filled, absorbed & the dominant flows pick up the slack & either continue the existing dominant directional bias or flip price into reversal mode.

I doubt this post has helped you to arrive at a conclusive decision, but it might have assisted in explaining why the markets rarely conform to our desires!!

[o990l6mh]

Opinions are divided amongst technicians on the true strength & balance of support & resistance measures for gauging actionable triggers.

Personally, I like to see a level ‘actively’ traded & pressured.

I�m not too bothered whether it contains open/close activity at the zone of s&r, or shadow (wick) activity � just that the level or zone is sufficiently strong on the radar to attract the type of activity that justifies my participation.

If that activity is being generated via mid to long range (4 hour-Daily-Weekly) touches, then I�ll pay closer attention & quite often drill down into an hourly or maybe even a 15min timeframe to determine the quality (if any) of the potential trigger/set-up.

A lot depends on where the price is & what type of market cycle we�re trading in.

You can ask 10 different (experienced) technicians what they consider to be the most appropriate definition of support & resistance, & more than likely you�ll receive a 60/40 split on full body/shadow choice!

As you�ll note on many of our chart examples, we like to annotate our area�s of interest in a rectangular box type marker��price action rarely conforms to precise, detailed structure.

Orders (limit/protective stop/additional compound stakes) are usually stacked on & around a key level, & that level often brackets anything from 20-50 pips, which is why you�ll often witness false breakouts & sharp pullbacks as the assorted orders get filled, absorbed & the dominant flows pick up the slack & either continue the existing dominant directional bias or flip price into reversal mode.

I doubt this post has helped you to arrive at a conclusive decision, but it might have assisted in explaining why the markets rarely conform to our desires!!

No, it did help.
Sometimes it’s easy to get the idea that everybody just watches wick levels, but I now feel strengthened in the thought that it’s a good idea to watch both.

Often, I think that one could consider the space between wick and body levels as a zone - a wick break could be supported by a following body break, so to speak.

There’s a lot more to learn than one thinks at first, isn’t there!

It’s also a permanent challenge to accept that there’s no black or white in trading, just shades of gray. Hardly any solid lines, more like you said, zones that represent areas where price has tended to hesitate in the past.

I notice, for instance, that EUR/USD ended the week with a close just a few pips beyond the previous body high in late february (looking at 4H), wick high from late feb is still untouched though, but only about 60 pips away.
Also, I noticed that price on fri 13 pretty much ranged between the last body highs made in late feb, with 4H high as top boundary and daily as lower boundary.

This suggests quite a bit of indecision on this pair right now, and since I’m not in any position, I’ll prefer to sit by the sidelines until the market decides.

Thoughts on this?

Best regards

[Tess]

@o990l6mh

I notice, for instance, that EUR/USD ended the week with a close just a few pips beyond the previous body high in late february (looking at 4H), wick high from late feb is still untouched though, but only about 60 pips away.

Also, I noticed that price on fri 13 pretty much ranged between the last body highs made in late feb, with 4H high as top boundary and daily as lower boundary.

This suggests quite a bit of indecision on this pair right now, and since I’m not in any position, I’ll prefer to sit by the sidelines until the market decides.

Thoughts on this?

Well lets mark it out & take a look at what this upper & lower area looks like from a forward planning angle shall we?
See if the price action can offer any clues to assist in putting together a simple action plan to avail oneself of likely 2 way opportunities.

We know where price has arrived from & we know it�s exhibited typical trending behavior traits by the peak-trough (higher highs & lows) steps easily identified via the larger hourly chart references.

There are a couple clear visible flip zones (resistance becomes support & vice versa) where you can lay a few markers down on any move back off the current highs. Those are highlighted at 1.2850-70 & 1.2730-50, back toward the 1.2600 handle.

To the upside, price is approaching a couple likely key activity zones where orders are definitely waiting. We�ll get to see the strength of those each-way order tickets from the manner in which the price action responds to those bracket levels as & when they get tested.

(the circled area at 1.3250 is real body open/close activity)

Using your historical s&r zones in tandem with current intra-session high-low & previous week high-low markers will begin to build up a clearer picture of where the dominant order flow is biased.

Remember, there are differing agenda�s at play from the assorted market players when the price action begins threatening these big figure & key round number levels.

The action can react quite intensely as stacked orders get absorbed into the mix (profit stops on shorts fire off & match up with fresh buy order tickets) & create heightened volatility until it all plays out.

Once you can regularly identify the likely reactionary zones to the north & south of the current price action, you can prepare your each-way set-ups/triggers to take advantage of the higher odds-lower risk opportunities as the psychology reveals it�s intent via the candles & bars.

Doesn�t really matter whether your preferred timeframe of choice is a tick chart, 5min, 15min whatever��if you can consistently plot the technical area�s on your charts that offer potentially greater odds of lower risk engagements, that will naturally transfer to better value trades!

Just as a matter of interest, I back tracked these current upper zones of forward interest to see whether they held any weight on previous visits��funnily enough they did � well, what a surprise huh? LOL