cowpip

Looks like the worry-warts came back in the market today. It wouldn't surprise me if we saw the Fed-heads crawl out of their holes in the very near future to try and limit the carnage. The question is, will anyone trust them? Have they shot all of their bullets? All they can do is what?... cut rates again after having just finished signaling that they're in a holding pattern? Hmmm.... that sounds eerily familiar. :bad idea:

In my experience, there is a slight (sometimes more profound) "personality change" that occurs during the summer months. Liquidity seems to be a bit lower and range-bound plays more abundant. The propensity for currencies to break major ranges is lessened during the summer, which of course makes sense if the liquidity is lower. But other than that, summer months can be just as profitable as any other. The activity (or lack thereof) we've seen in the last week has probably been more related to this upcoming FOMC statement than anything else. Ranges usually contract in the days leading up to the FOMC statement, just as they do prior to the release of other major news items (NFP). They then break out following the news events and resume somewhat of a more normal daily range. I've grown to despise FOMC statements specifically because of the lack of volatility that precedes them. But it always returns in the days that follow. Happy hunting to you all.

Heh heh... their absence now completely explains why the markets I like the most have been exceptionally dull! When they go on holiday, so do the markets. At this rate, the FOMC statement tomorrow will move the markets... maybe 10 or 15 pips? :puke:

That's true, but for SMA's, only the number of days being computed should be necessary (for a 200 day sma, only 201 days of data should be needed). I'm pretty certain Oanda has that kind of data in the cache, and I know for a fact that MetaTrader does (which I like to use as a charting package). I trust MetaTrader more than Oanda. If I plot a weighted 200 day MA using MetaTrader, I get nearly an identical plot to what I see with Oanda (give or take a small bit). So I'm really curious why Oanda is calling it a SMA when it clearly does not appear to be. It's an oddity. As you say, trust, but verify. That's so important.

Hmmm.... it appears that Oanda doesn't use a true simple moving average formula to compute their SMA's. It appears they're using something closer to a Weighted moving average. Here is the daily chart I use with the 50 and 200 SMA's in black (ignore the other junk). You'll see that they are no where close to crossing over, yet, and price is currently on the UNDERSIDE of the 200 SMA (which has been perhaps helping to hold price down). I'm personally on the other side of your trade - looking for price to return back into the 105/106 range on $/yen. I don't believe the fundamentals support an interest rate hike by the Fed and any lasting hawkishness in their statement will be diffused quickly when the markets realize that the Fed is hogtied. If they raise rates, they risk losing control of the progress they have made with the financials. The fundamentals are far from what the Fed would probably like to see (stability in housing prices). They're essentially damned if they do, and damned if they don't. Their own inflation readings are also not much hotter than they have been in recent months (although I personally think the inflation numbers are so badly cooked that they don't resemble reality - but the Fed still relies on them - supposedly). End result: they're forced into playing with verbs. Talk the inflation talk to try and help keep the dollar elevated (to control inflation), but don't walk the walk for fear of completely destroying everything they've done so far. Talk is powerful, but if they muck this up by causing the market to think that they won't hike, the negative impacts could be pretty strong. Unfortunately for them, this game will only work so long before the markets lose confidence. It'll be an interesting day tomorrow... the ranges have been contracting. A breakout smells imminent.

I hope you were able to nab your 108.40-ish entry, GJ. Price is skittish at that level (owing to the evident interest in selling at that level). I'm personally looking for a slide back towards 105/06. We'll see soon enough.

Very nice chart porn, Wasp! I for one am thankful a measure of the uncertainty has returned. It has been bloody DULL in recent years, as you have so visually demonstrated.

Personally, I LOVE this volatility. Anyone recall what 2006 looked like?... eur/jpy or cable would be lucky to make a 60 pip DAILY range. Now, 100 to 200 pip days are closer to the norm. That's what I like. :beer:

That was a good call. You nailed that one.

Good questions... maybe it has something to do with the fact that the US dollar was running higher at the same time? And now that the US dollar has started to slide in a retrace, the pair is seeing some larger downside action. The increase in the price of oil is undoubtably helping the CAD today as well. I don't think we're going to see a terminal drop in the USD/CAD pair. Canada is too closely tied to the fate of the US to ignore the fundamentals. Honestly, I think the US and Canadian central banks are bluffing. I don't think we'll see the US increase rates anytime soon. It's all hot air. They couldn't afford to increase rates - not when we haven't yet seen much of a hint that housing prices have bottomed. Bernanke has worked hard to prevent the housing market from collapsing into something more systemic. I doubt if he is going to be able to muster up the courage to undo what he has done and risk further economic damage by increasing rates at a time like this. Ultimately, I feel the dollar will continue to slide downwards. But then, I've been wrong a million times before... so who knows...

No kidding! That's a very nice and clear pin-bar type setup. And on the daily frames, they can be quite powerful. Good eye, Sledge! I hope it has produced some greens for you.

Isn't that the truth?!?! It's a big nasty battle, that's for sure. We have to be careful we don't get in the way of the big guns, or we'll get plastered.

Nothing there for me, Sledge. Today was a tough one for me - this move higher for the dollar has me completely stumped. But that's ok. I'll just realign my radar.

That puppy ran and ran and ran... I missed it myself (grrr). Congrats to those who caught it. Whoever guessed $/yen would see a complete and full retrace of Friday's move is prescient! Some sort of a retrace I expected, sure... but not a full retrace in one day. I never thought we would see that - not with a gap lower open. And now, we have what appears to my eyes to be an expanding triangle on the daily charts of $/yen... It's a whippy little bugger. Correction: ascending triangle, not expanding.

Here's a chart that illustrates the relationship fairly well, in the latest issue of the Currency Trader magazine (I don't read it [but it is pretty good for those who are new to forex], but was pointed to it by a friend). EDIT: The relationship seems to be getting stronger the lower the dollar goes (or the higher the euro goes, or both). It was pretty weak at the beginning of the chart, imo.

Good point, Trader333... you're probably right - the comments from Israel probably started the ball rolling. The tie between the dollar and oil is probably a lot more complex than I was thinking when I posted that comment. In many ways, it may even constitute a reinforcing feedback loop: news concerning israel's possible intentions hit the wires and cause a jump in oil, which (combined with employment news) allows the US dollar to depreciate. That depreciation probably reinforced the upward move in the price of oil, which may have also in-turn reinforced some weakness in the dollar? I guess the source of the dollar decline / oil rise doesn't really matter. As traders, we just need to know that it happened, recognize what may happen in the future as a result, and follow the crowd. Swissy is (as you undoubtably know) a safe-haven currency. There was definitely some safe-haven activity occurring on Friday (even in treasuries). In my mind, that helps explain the drop in GBP/CHF. To me, the rise in GBP/USD simply means that GBP weakened (yes, weakened) less than the USD. GBP seems to have weakened against most of the other majors, which makes sense given how precarious the UK economy seems to be relative to the other majors.

You're definitely closer to that situation than I am, Torero. My thoughts were just thoughts, and although I still think it's remotely possible, it may be far more remote than I am thinking. As for oil and currencies - you only have to look as far as Friday to see possible correlations between oil and currencies (and other markets). I believe it really was oil (with some contribution from unemployment results) that caused much of the dollar fall. Of course, there's no way to prove it, but when the entire market is fixated on one item, effects of that item will move the market. I'm not saying it was the sole reason for the dollar fall on Friday. That would be ridiculous as there are a myriad of other things that move currencies. But oil had to be a part of the equation, imo.

Cool, you guys. You did very well on cable. I personally focused on $/yen and rode it down. If oil stays up on Monday, any retracement might be on the shallow side. There is usually a retracement the following Monday or Tuesday after NFP (sometimes a full reversal). But I think this time the main trend will be reinforced and the downward movement will resume. Uncertainty regarding financials, oil, politics, and Bernanke's failure to keep the dollar suspended will probably keep the yen on the side of strength. Cable, on the other hand, is a different story. I can still see cable whipping around rather violently since the UK is not that different (in terms of their immunity from the credit crunch) than the US. Their economy is also likely to suffer fairly badly as the stress continues. I can see other pairs having greater predictability than cable. But that's just my 2 cents. Here's a scenario worth watching. It isn't likely to play out yet, but the first hints are starting to form now. If the Euro zone concentrates solely on inflation and if they are heartless towards employment (after all, price stability is their sole responsibility, unlike the FOMC), member countries who are really starting to feel the pain may be decimated to the point that they start arguing about bringing back their own currency and replacing the Euro with it. I can see several countries (Greece, Spain, Italy and France) who might start publically debating the worth of staying a member of the Union. All it would take to seriously destabilize the euro is an effort from a few of these countries (preferably simultaneously) to start talking about resurrecting their own currencies. Yes, it would be expensive for them to do this, and the short-term pain may be high, but let's not forget that the Euro Union still does not have a ratified constitution and none of the countries are obligated to stay in the Union permanently (as I understand it). If any one of these countries threatened to jump-ship, the Euro could become significantly devalued against the other currencies. I would imagine in this scenario, the yen and the U.S. dollar would win. I can see where it wouldn't take too much more pain at the gas pumps combined with rate increases by the ECB to really start this type of snowball from rolling down the hill. And once it starts, it may be hard to stop. Euro/Yen could fall hard in these events. Of course, these are long-term outlooks, but must nonetheless be considered in the backs of our minds if we are going to take advantage of these things. At the very least, this is an interesting possibility that could seriously erode the strength of the euro and boost the strength of the dollar. What would that do for inflation, I wonder?

Nicely done, DannyBly. The 14-ema on the 15-min charts also coincided with the 50% fib, which was nice confluence. Price action on the shorter time-frames also helped signal the bounce off of that level. It pads the 'ol account nicely, doesn't it?

:rofl:... I fear you're too modest. That'd position me... let's see... underground on the totem pole. Walterw... didn't mean to spoil the party... just trying to interject some realism. Fire away... show us your evidence.

Yep, you nailed it. It's the daily pivot and the associated R1/2/3 S1/2/3 levels. They're nice to use as assists for entries when I zoom in to take a position. Sorry they cluttered it up. I didn't turn them off before grabbing that image.

Another busy week ahead, it looks like. Here's the playing field as I see it for one of my favorites ($/yen). The gap down (that broke the daily inside bar) early Sunday was a nice early signal to get short once the gap filled. The hourly+ charts offered a nice signal during the asian/european session. Many of the other pairs look to have behaved well, as well.

Walterw, I don't think it's a question of who is right and who is wrong - it's a question of basing trade decisions on believable data or not. I certainly wouldn't invest my cash based on decisions dictated by an indicator that was based on flimsy or fictitious data. That's not a playable "edge." I'll definitely hang my boots beside GammaJammer's opinion on this matter before I'd rest it beside those of the chart providers. These indicators may be "cool" to look at, but "cool" indicators may freeze hell cold when truth be told. The question to be asked (and answered) is this: is it worth your time and/or reputation to engage in "research" that is based on an indicator that has no real computational value? I won't say any more concerning this on this thread. My only concern is with those who know less and who may think that your research is worth trading with real cash, when in fact it should be considered highly experimental at best. To those who are new to forex who are reading this - be careful. Your hard-earned cash is easy-prey out there if you aren't basing your trading decisions on rock-solid and time-tested strategies. To Walterw and the rest who are building this thread... I find it admirable that you are striving to find new strategies to become successful and I wish you the very best. Keep it up and you will indeed be successful. It's always a great thing to have new ideas bounced around. But in making this discussion public, you must also be receptive to comments from those having greater knowledge than you. Don't take GammaJammer's (and other) comments lightly. I have it on good knowledge that their chair sits a fair bit higher up the totem pole than most on here (myself included).

G'day, GammaJammer. I'm sure there's a good mix of both with some folks weighting technicals more than fundamentals and visa-versa. Personally, I keep one eye on the fundamentals and the other eye on the technicals. They go hand-in-hand (or should). Market sentiment is emotion-based, and that requires a good handle on the fundamentals to play properly. Anyone who ignores the technicals and fundamentals (both) is (imho), driving without stereo vision. You can still drive - but it's a lot harder to tell the distance to the next car with one eye shut.

Like all systems, his system has its pro's and con's. When I first examined it a few months ago, the style used didn't sit well with me and the risk to reward seemed too low to be worth the risk. But then that's just me. There are others who seem to like his methods. Kudo's to them if they can make it work to their benefit. If he posts here, he should respond too, otherwise this thread is just a headless announcement-system for his own blog entries. Maybe someone reading this could encourage him to support this thread with some feedback? Otherwise, I would support your call for this thread to be closed.