Technical Templates Continued

Well, like we always say, you got to play it as you see it.
Only you know your comfort levels, your risk appetite & your favored set-up plays.
I’m sure you’ve worked hard to generate consistency with your templates Jimmy, so you stick to your guns & go where your research tells you.

Don’t forget what we used to say about the markets biases:
Specific (current) influences always trump the generic themes.

Greece (& the other weak administrations ie, Portugal, Iceland, Eire etc), conflicting rhetoric from inside the EU hierarchy & simple jittery psychology is weighting heavy on the Euro right now

Everything else gets pushed aside until this spinning plate begins to speed up on the spindle……until then traders will jump on the rumor, the uncertainty & the order flow!

If in any doubt - trade what you see right here, right now & protect your risk exposure like a new born babe :wink:

Hi Jocelyn, Saw your post in my daily hi low. I’ve stayed away from this particular thread because it was too hard to find the wheat burried under so much chaff. Lot’s of others like that too. Maybe I can begin to learn something from this one for a change.

Sure, come on in TalonD :slight_smile:

Have a mooch & sniff around & chill out.

If you want to ask questions, or address a certain point or angle, then don’t be put off by posting up your comments. Haul up a chart or two & you’ll receive some (positive & constructive) feedback.

I won’t be able to pop in every day, but I’ll (or some other kind soul will) get to them as & when.

I agree, there’s a lot of dead wood cluttering the place up.
I mean, see how you guys feel…if you want I’m sure Pipcrawler will clean it up & thin it out wherever necessary & try get it back on track?

Just say what you don’t want & put your suggestions forward….see if the thread can honor the concept of it’s original intent?!

It’s not up to me, it’s you guys who dictate whether it’s a goer or not.

I’ll persuade Art Krantz to step in & steer it along.
I’ll look in too when time permits as long as the thread can stay clean & free of the nonsense & disruption.

There are a good bunch of very capable posters on here - veterans & new posters alike….more than enough to keep it honest, free of crap & interesting for all tastes & skill levels.

Looks like I missed an area of interest line on my 4hr chart, the chart should be pretty self explanatory, would have been a nice place to look for an entry on my setup template. If I had gotten an entry here, I think my play would have been to get the risk reduced asap (trading into a triple bottom) and then watched to see if the bears had enough steam to break through the recent lows and continue the down move.

Hind site is 20/20 :slight_smile:

Don’t lose sight of what traders (humans) migrate to when psychological tolerances become stretched to extremes.

Prices generally move in sharp aggressive steps & usually end up grabbing hold of key levels that price has either found solace at previously, or get buoyed at big figures & round numbers, where option barrier & stop order activity resides.

Cable slowly hiked back up off its sharp descent yesterday & where did it find initial resistance in the US close?..…a big figure – 1.5000.

A level that was touted long & loud as a clear options barrier + the 50% level of yesterday’s high to low move.

If you were looking for a likely level in which to stick a tester ‘long’ buy stop, or expect a mini-battle for near term supremacy, I guess 1.50 would register on your radar?

Same to the downside. Where has price recently been repelled from? The near term destination will be yesterdays lows at 1.4780. There will be bids & continuation stop orders building on the path back down there & if it slips thru yesterday’s lows, just scroll along your Daily chart to the left & look for the next obvious zone of support that traders will be probing for.

If you look at your 4 or 1 hour charts, is the dominant bias to the upside or the downside?
So, is it less effort for traders to consider betting long or short?

Again, keep it basic & straightforward – look for the flight of least resistance. Sell rallies in a downtrend bias, buy dips an uptrend bias according to your own favorite set-ups.

If you can easily spot & identify the simple approach, then you can bet quite a few others are considering a similar view too!!

Reviewing yesterdays summary & putting it into visual format will give you a taster of what’s included in the 2 Technical Templates threads red ear, & is pretty much typical of the type of things we talk about on a regular basis.

Identifying the near term levels & scrolling out a little to see where the price action attracted attention previously is simply highlighting potential area’s of interest.

You’re laying down guide posts or markers to offer assistance in either initiating trade entries (& exits), or helping to manage positions once you’re aboard & prices begin moving in your favor.

There are common technical themes that are mentioned by differing groups of traders on a very regular basis. Fibonacci support/resistance levels, trend line & naked horizontal support/resistance zones being 3 of the more popular methods of identification.

The idea is to try locate common ground.

Zones that have held interest on prior visits.
Traders are creatures of habit. They migrate back & forth to visible levels of technical importance every day of every week, almost like a magnet.

Levels such as prior session/range high & low zones (Tokyo, Europe/America), prior weekly & monthly high-low zones, sharp swing level reaction levels where price was repelled for whatever reason – they constantly re-surface as the order flow ratchets back & forth.

The more you plot & observe the action, the more they appear to repeat the same behavior & leave very visible footprints.

So, yesterday identified that price moved up off its days lows at 1.3460 & met resistance at the 61.8% of the days high-low price move.

I suggested that as the outlook was weak & displaying a bearish or heavy tone, sell interest would reveal itself there & dependant on the Tokyo reaction, there would possibly be opportunity to get aboard via pullback entries.

We got the lower level marked out as an initial destination & if you use the average daily range movement of the pairs as an assistor, then the EURUSD currently averages 140 pips per session from high-to-low & vice versa.

That would compute a secondary destination from today’s current high printed during the Tokyo shift (at 1.3575) down to approx 1.3435.

Considering this triple bottom support will harbour each-way stop order activity, it will be a pretty volatile area to navigate. These types of strong technical levels are generally well defended & bids need to be absorbed & tested before a determined push thru toward next level interest.

If & when it does manage to crack through this lower floor support at 1.3430, then we can toggle out a little more & begin plotting next downside potential activity.

And that’s basically how you look to engineer your upside & downside pressure points.

Work from your shorter timeframe area’s first & see where the near term potential action is at, then scroll out & begin identifying your next upside/downside potential.

Look for common ground where the various market participants did battle & use these common market influence zones to help arrive at your decision making process next time around.

Since ATT is such a long thread is there a condensed version like a pdf ? is it worth going back and reading it all? What you just posted is informative and enlightening so maybe not necessary to go back and read through very long threads.

I go through the original from time to time, only reading posts from ‘the crew’ and tonymand. I think it’s worth it to go through it several times, I pick up new stuff each time, plus it’s good to learn the the words the crew uses to describe things. Once I get the vocab consistent with what they are used to it will be easier for me to communicate.

My first attempt at plcing S/R lines - took little longer than your recommended 10-20 seconds Jocelyn tho…!:stuck_out_tongue:

Critiques please. Any obvious ones I’ve missed or ones placed that I shouldn’t have?

My chart of EU for today. Were back at an area where I’d would be looking to short, but were up on the daily open, and close to crossing over the weekly and monthly opens. If I recall correctly ‘going with the flow’ was mentioned many times in the previous threads.

For me I still like a short here if we can get back under the daily open and my trigger chart shows a good low risk entry.


I’m not sure what you mean by a low risk entry. how do you know if it’s low risk or not?

maybe I’ll catch on to that when I do a lot of reading which I havn’t done yet.

When I say ‘low risk entry’, what I mean is I’m looking for an opportunity to occur on my trigger template that allows my to get into a trade close to the current level of conflict, so I can tuck a stop behind that area, and still have good room to run until the next area of conflict (for me this would be the 1.3500 - 1.3450 area). If my trigger template presents an opportunity halfway between the current trading range, and I’m not already positioned towards the top, then i’m not inclined to jump in there because the only sensible place (for me) to have a stop is outside the range.

I’m not good with words, I hope that makes sense. And please don’t hang on my commentary, I’m no expert, just trying to keep the conversation going :slight_smile:

EDIT: I’m going to throw up another post with some charts to illustrate what I’m trying to say.

The area of interest defines the low risk entry. Once price gets near a level like this, you want to be looking for either a breakthrough accompanied by HH HL patterns to confirm the presence of demand or a shift to the supply side marked by some consolidation and making new low.
Entering on and around these ‘two way zones’ allows you to capture moves at their core

If you look on the daily chart you can see the flow is up at the moment (price is above monthly, weekly and daily open). Before I would consider taking an opportunity presented on my setup chart, I’d like to see price back below the monthly and weekly open for sure, and close to the daily open.

If you look at my 4 hours conflict zone chart, you can see the two areas I’m interested in right now, the top and bottom of the range. I like shorting at the top of this range (somewhere within my red box) if I can get a trigger in that area, and price is under the 3 opens. However if price wanders too far below that red box area, I’m no longer interested in looking for short setups, because I’m still going to want to tuck my stop outside of that range. A larger stop means a smaller position size, which means less bang for the buck.

Make sense?

That sums it up much better than I was able to…

Like Tessa say’s, the smart operators will wait for a previous area of demand/supply to come into focus & look for signs that the novice, clueless traders are doing the exact opposite of what they should be doing.

Executing trades at these lower risk/higher reward zones is what it’s all about. Forget about flogging your ass inside all the hustle & bustle where all the silly money is operating - identify the key handover levels, bide your time until price comes into view & then jump on the value trade - Jocelyn

Not quite there yet, but the fail of y’days high already provided a couple opportunities to front-run that level…

Start thinking of support & resistance more in terms of zones than specific lines.

Obviously we use lines to identify & focus the area of interest, but once price arrives at the identified point, we then need to watch how the price behaves & reacts to the influences that are currently driving it as it moves around the zone.

Timeframe is of lesser importance to be honest. If I see an area attracting keen attention on a 60-minute chart, I’ll naturally zoom out on a 4-hour & Daily to see if it acted as a magnet further back for any reason.
Generally, the more touches a zone receives the higher technical importance I’ll place on it.

I’ll zoom back & forth to get a little perspective.

I want to see if a particular area has attracted attention in the past. Was it a level of intense demand or supply? If so, I want to see how it reacts next time price begins to come into view around that zone again.

Remember what I said about price (traders) being a creature of habit? Obviously market psychology will usually be behaving differently to the current influences & driving forces than it was previously, but these key reaction area’s attract traders attention.

I’m not trading the level or zone, I’m using the information that the zone provides me to assess & identify good value, low risk trading opportunities.
I’m actually trading the herds response & reactions to the level.

I make good money when the majority get it wrong :wink:

Yes, you’ve got it.

I agree, price rarely performs as we’d like it to. We have to use what it offers us & give it a little wiggle room to flex its muscle. That’s why I look at s&r as a zonal activity rather than a precise line or exact measure – the market rarely works to exact measures.

There are far too many participants actively transacting business every day with very differing agenda’s for the price action to behave itself according to our desires.

You’ll witness peak/trough behavior playing out across all timeframes. A 5 minute chart can be adhering perfectly to the pattern, whilst on the 60 minute chart of the same pair, price could well be simply popping around in sloppy range type mode.

Unfortunately its not an exact science red ear. There are some aspects of this business that simply can’t be short-circuited. As with most professional endeavors, experience is a good friend!

EURJPY & GBPJPY would fit your criteria for sure. The timezone you’re looking at there is leading into the North American close & isn’t usually the most attractive of periods in which to consider pulling the trigger.

ps: don’t worry about asking questions that may have been previously asked. You’re fresh into the material & you’re bound to want certain aspects of it highlighted & addressed. It’s no problem for me to cover points a few times.

Also, if you’re unsure or not quite grasping an answer or point, then ask it again…it’s important you feel comfortable with absorbing information.

If you’re prepared to put yourself out to study the material on the thread, then the very least I can do is to ensure you get the opportunity to adequately absorb & process the information :slight_smile:

I’ll try offer you a specific example of what I commented on in the previous post.
I mentioned that s&r is probably better viewed as a zonal rather than a ‘line specific’ exercise.
We do however need to plot a line to focus our attention on a zone, I’ll then zoom in on the area that offers up a focal point to give me a base from which to work.
This time I’ll use GBPJPY as the example.
I’ll post this chart up first highlighting the 139.20 level to give you a little background angle, then I’ll toggle back & we’ll cover how this particular zone acts out over the course of time & what type of information a typical s&r zone can offer up.

We can actually go back a little further than April of 09 to see how this level influenced the price action on this pair.
Late 2008/early 2009 had it tick boxed as a pretty neat area of dual activity over a 7 month timeframe.

7 months worth of magnetic attraction would be enough to convince me to keep it on ‘alert’ for future reference.

We have to wait a further 5 months for it to reappear on the radar. But when it does, it meets demand (for Sterling) around the same zone 3 more times toward the back end of 2009.
If you zoom out & expand your chart around those periods you’ll see that the activity within those 4 hour bars were displaying strong rejection (bullish) patterns, indicating good demand for Sterling at this key prior activity zone.

And here we are in the current timeframe with the 139.20 focal point still active on the chart orchestrating the activity right up to as close as last weeks action.

This time however, look at the movement & behavior of the price action as it vibrates away during early February. Short, choppy moves….rather passive behavior in comparison to the last few times it encountered demand at the zone.

That will be due in part to what’s influencing & driving the market psychology.

Although it’s not really imperative that we understand what those influences are in order to execute our trades, it might help explain the behavior & attitude of the market participants as they juggle their trade positioning.

In the next post we’ll see how we can use the information this zone offers us via the lower timeframe chart by drilling down a little to get a closer view of the action…

We know from all the headlines that risk aversion is high on the agenda due to the European problems with Greece, the UK government potentially facing a hung parliament & the debt problems still blowing a gale, affecting forward growth in the European business sector etc etc….so the current news & general outlook isn’t exactly showing too many positive signs for this pair.

That would help to explain the probable lack of any real Sterling demand at this prior level of bullish activity.

But like I said, we don’t really need to know about that stuff to effectively read what the chart is saying. It’s all reflected right there in the psychology of the price behavior.

The attitude & that behavior is telling us that traders aren’t exactly bouncing with joy about triggering ‘longs’ in this pair.

And the confirmation that the 139.20 zone is giving up the demand ghost comes during the Tokyo sessions action of February 25, when price drops pretty solidly thru the prior days low at 138.35. (this would be your “active” session period)…

You can now see the peak/trough behavior (selling into rallies via pullbacks) opening out on this 15 min chart timeframe & how you might look to capture some of this switch in the price action bias as it flips from support (demand) to resistance (potential ongoing & forward supply).

I wanted to post my EU daily chart and my reasoning for not being interested in any trades right now. Price is below the Daily open, so my rules state I would only be looking for shorts. However, we are right on top of the Monthly and Weekly open, which leads me to believe that any move down into that level is going to meet resistance. An appealing option would be to look for long opportunites off any bounce of the Weekly/Monthly open cluster, but price would still be under the Daily open. So that option is a no go for today.

I did take a short yesterday and got stopped out on the late session burst up. In hind site I shorted right where I told Jocelyn a few days ago I was not so interested in going short. duh! I also shorted against the daily flow (a rule I had not incorporated into my trading plan as of then). Live and learn.