cowpip

Sorry Torero... that was a while back. Mark organized a group on the Hi5 website that he and the group used to share their views of the market. It was a precious resource to me and reinforced the absolute importance of patience and discipline. But the H5 meeting locale was abandoned after a while when (if I recall) his work got in the way and he just wasn't able to keep it going as he wanted to. These guys have my utmost respect. And they're a hoot to hang around! PS: Yeah, my ISP finally came back long after the reversal had taken place. But I'll hitch a ride on the next available bus!

Thanks for the update, Andre. It's good to hear the troops are doing well. I knew Mark had a "thing" for Cyprus, but I didn't know it ran THAT deep! Now I wonder why Mark didn't ask for one of his sisters to come and steady the ship? Lol... Take'r easy

Hi Milliard. Yip, I'm one of those chaps that frequented the H5 group (Mark introduced me). Were it not for Mark, Anna, and the rest of you kind souls, I wouldn't be having so much fun now! I love this business. I don't really have a "favorite" strat I like to play on eur/jpy. There are several in my tool-belt I like to throw on the fire from time to time, depending on conditions. Today for example, I took the nice pull-back on the fast time frames (the stop-hunt on the pull-back) and went long, then took a good portion of it off the table (enough to be quite happy) at the top of the hourly given the obvious resistance above. I was really looking for price to reverse on the longer frames up there, but I wasn't able to get a short on the table thanks to an internet outage (yep, I work from home and love it except when my ISP chops the connection during critical times - grrrr). Ah well, there's plenty more fish in the ocean. Eur/jpy is quite reliable for retracing most of the initial knee-jerk reaction, then stop-hunting the poor saps who move their stops too quick. It's almost like shootin' fish in a barrel now. More generally, I watch major daily fibs, major daily swings and historic (daily/weekly) S/R points - and most importantly, confluence between these features. I like the hourly+ time frames, but will often zoom in to the 5-min charts to fine-tune my entries or take a few nice daily scalps, looking for reversal or continuation price patterns as confirmation. I have a few favorite key moving averages I like to keep an eye on, but otherwise don't pay very much attention at all to fancy indicators. They all lag what price action tells me anyway. I paid extremely close attention to Mark and Anna's trading styles when I was fortunate enough to spend time reading their trades and analyses. Their extreme patience and discipline encouraged me. I wouldn't be anywhere near where I am today without their guidance. It's been a lot of hard work learning patience and discipline. But it sure has been worth it. You guys/gals (everyone who was in that H5 group) are an incredible bunch. It was a pleasure and a privilege to participate. It's a real treat to see you guys/gals flow through the forums that I frequent now and then, cause I've otherwise sort of lost contact with you (except with Mark, who I still "pester" now and then). I hope everyone is doing fine. Sounds like you're all still having fun throwing popcorn at each other. :haha:That's cool!

Yeah, that's wise advice. Unless you're at a significant S/R level and have a good price confirmer, some reduction from full size is probably wise - and especially if you're not used to the pair's characteristics. I too think eur/jpy is an excellent pair for slightly lower volatility, yet good spreads. I certainly wouldn't be trading full size on an automated plan with gbp/jpy - but then, I don't trust the automated plans any further than I can throw a twelve-ton boulder. I only trust price action, and price action alone. To each their own...

Woo-hoo! Let'em be shark bait! I'll eat anything green and crunchy. :cheers: Cool posts, as always, Anna and Milliard. They say old Mr. "B"ean works 7 days a week. I find it rather humorous that he wasn't aware of the French bank issues when they cut rates last time (only 8 days or so before todays meeting). I would have LOVED to have been a fly on the ceiling then - or the drywall repairman who had to fix the numerous head-sized holes that were likely littering his well-used office walls the day he heard about Mr. Kerviel's trading life. :crap: Frankly, I don't care which way price goes today. I'll make money regardless of direction. I'd prefer to see them cut by 25 bp today (or less), because that would help ramp up volatility - and I loooove volatility.

Yep, you're right. Everyone is waiting. There will be far greater clarity after tomorrow, and a greater potential for a trending move. There's a whole lot to digest tomorrow, starting with ADP, then GDP only 15 minutes later, followed by the Fed later in the day. Should be a fun one... Whips are a part of life (and so are occasional slips, unfortunately - particularly if you play the news - a dangerous gamble that should be largely avoided, imo). I switch into a range-mode during these whippy periods (profit targets are smaller and reversals signals are more plentiful). They can be just about as profitable as trending periods if you play them carefully. But for those with longer time frames of reference... it's definitely a waiting game right now. Happy hunting tomorrow, everyone!

My favorite at the moment is eur/jpy, although $/yen is a pretty cool pair as well. The recent doubt that the ECB has introduced into the mix for the euro certainly has provided a nice bit of downside potential for eur/jpy which has been quite profitable.

It was just a matter of time before the gambling establishment would try to tap into the forex market. Their "work" will only soil the reputation of a perfectly profitable market, and may (if it becomes a problem) result in future government legislative involvement - which in this particular case might be good, but almost always grows legs and becomes worse than intended. If unsophisticated people get suckered into this, they deserve the consequences of playing with sophisticated people. But I think it's unfair who they're targeting (the less sophisticated who likely have little or no interested in true investing). Talk about feeding the lamb to the lions... On a more technical note, this company's involvement in forex wouldn't even register as the tiniest microscopic blip on the markets charts. It would probably take hundreds to thousands of these goofy organizations to produce a measurable impact - and even then, it would probably only show up as the smallest increase in background random noise. I congratulate the company involved for providing a new and even dumber definition for the term "dumb money." It will be a hoot to read this company's risk disclaimer.

Don't underestimate this wisdom from Milliard, Don! I think many people fail specifically because they won't keep things simple - or on the first sign that their strategy isn't working, they change to something else. I'm not implying that you're in this boat. I'm stating it more for those who are following your thread of progression. Those who do the best have a simple strategy and stick with it. That doesn't mean you can't tweak it. Adjusting to the market as it changes is a necessity. But simple things are far easier to adjust.

Don, sorry for cluttering up this thread, but I'm curious... PYenner, can you elaborate why you would think this? - maybe in a different thread?

Great responses guys! There's not much left to add. Don't rush into going with cash. That's where most new people make their biggest mistakes. They get attracted to the profit potential, make a few dozen trades that work out real well for them on a demo (demo trading is what we call "paper trading"), convince themselves that they can make big bucks, load their account with a good chunk of their savings, then discover that they didn't really know how to trade after all and end up with very little in their account over the next 6 months or less. This is a BUSINESS just like any other business. It involves risk, expense (losses), and profit (wins). Until you can prove that you can employ sensible strategies that will PRESERVE YOUR CAPITAL, you have no business starting this particular business. It is a heartless and (for most people) difficult journey, but is well worth the effort (and then some) if you succeed. I was always taught by some very wise people who have been trading for decades, that there are really only two things a good trader needs to master: PATIENCE and DISCIPLINE!!! Patience to take only the highest quality trades (with the lowest risk and best reward ratio) and ignore the rest without grieving that you missed the boat. And Discipline to follow your own individually proven strategy (which requires time and patience to develop) with built-in money-management that will help you to PRESERVE YOUR CAPITAL. For those starting out, aside from the end-goal of achieving Patience and Discipline, the #1 MOST IMPORTANT thing you can do is to PRESERVE YOUR CAPITAL!!! Do everything in your power to PRESERVE YOUR CAPITAL, or you will very quickly and absolutely (without question) become one of the many in the world who will claim that it is not possible to make a profit trading. You will probably at first rely on others to help you develop a trading strategy. You will likely discover that many of those strategies don't seem to work for you (and it may frustrate you). In time, you will learn that successful trading is something that can't be shared easily. The best mentors will tell you that you have to find your own groove... your own set of trading criteria that fits your own personality and your own personal risk-profile. What is good for one person is not necessarily good for you (and in this case, most likely is not). But it is important to listen to everyone - and at first, even try other peoples strategies, keeping in mind that the SIMPLEST STRATEGIES ARE OFTEN THE MOST SUCCESSFUL! Take your time... consider this a longer-term education. As odd as it sounds, you will discover that YOU are your own worst enemy. In the process of learning this business, you will learn a great deal about yourself, and about how your brain works against you. Mark Douglas's book is a great book - but I think it has greater meaning and worth to those who have already established themselves as mediocre or better traders. You may think what he says is a bunch of hogwash - but it isn't. It really isn't. If you don't find the book that good right now, hold onto it and read it again next year once you have had more experience in this business. I think you'll find that gold grows on its pages as you continue to gain more experience. Best of luck to you!

That's probably the better indicator (the 100 ma), huh? I'll be watching that one closely over this next week. Prices broke the upper-bull-flag channel last night, failed to take out the high and dropped through the lower bull-flag boundary on my charts. So it would appear we're on-track to re-test that 100ma line around 9700? A double-bounce off that level would provide more confirmation for the bulls to shove this through 2.0. Besides, the dollar data this week (and last week) doesn't seem to favour the bears a whole lot. At least now, I have a technical reason to short. Prior to the bull-flag break, I favored longs. Now, it would appear the ball is more in the bear camp. Thanks for your comments, Buk and Torero. I appreciate it.

This is how this week's "playing field" looks to me for cable. We have had a protracted drop from the yearly highs and price appears to have finally found some support near the yearly open price and the 50% fib from the move up to 2.01. The weekly chart shows that we are still in a bullish trend-channel on cable, with a possible longer-term target now near the upper trend channel above 2.06. Of course, that isn't likely going to happen anytime soon, but it suggests that where prices recently bottomed near the yearly open price may serve as a lower boundary for another (probably protracted?) leg higher. The daily chart shows more of the gory details, of course. Note, in particular, how the interesting trend-line I've marked as the "prime" trend has been interacting with price. This trend is formed by plotting from the low of 17 July to 17 November 2006. It has been a very interactive little trend-line ever since. Price seems to like plodding off of it. Perhaps more significantly, it is worth noting that price has never dropped more than 200 pips below that trend line. It has always (since 2006) rebounded back above it relatively quickly. And finally, the 4-hour chart upon which our working canvas is essentially completed. This chart shows a bull-flag within a bull-flag, with a potential target near or slightly above the 2.0 mark. The weekly pivot and S/R levels are also shown, and are definitely worth watching closely as price works around these levels. This is NFP week. If the NFP numbers do not line up nicely for the dollar, this bull-flag may bust northward (assuming it can consolidate that long). Otherwise, I expect prices will push right back down into the yearly open zone, where there should be additional support. Good trading to everyone!

And then, it's entirely possible (and the way it's looking now - perhaps even probable) that I'm just full of bunk!

So the day(s) of the central bank meetings are upon us. As expected, trading has been somewhat subdued leading up to these larger event risks. But there were still plenty of opportunities to secure positions prior to these events. The U.S. has already had their day in the sun, announcing an unchanged rate and no substantive change in the accompanying text, leading some to speculate that there will likely be no rate cut for the remainder of this year. I'm not so certain, however, with the household NFP numbers last week appearing much worse than the headline number portrayed and overall weakness evident throughout much of the report. As is usual, more data is necessary to determine a more accurate outlook - and the Fed will now have another 1.5 months or so of data to examine before rendering their next verdict. Overall, it was probably wise for them to take the stance they took. Next, the BoE is scheduled to release their verdict within the next few hours. Most believe a 25 basis point hike is expected (and is already fully priced in). A few speculate that we may see a 50 bp hike. But given that the BoE is likely near the top of their hiking cycle and with recent data suggesting a plateau is in sight, I figure this is probably very unlikely - particularly if their inflation projections (also due today) continue to indicate a sharp drop in inflation in the coming months. The ECB is also due to release their verdict shortly after the BoE, and although Trichet is expected to keep rates steady this month, he is expected to signal a hike in June using his normal cryptic rhetoric. Why do they get off on code-words, anyway? Just tell us and be done with it! Either you are pregnant, or you aren't - there's no halfers! Technically, there is scope for large moves higher on cable and euro for the rest of this week if the BoE hikes and indicates another hike is probable (and/or if their inflation forecasts are revised higher), and if Trichet uses his "strong vigilence" code-phrase to signal a hike is expected next month, AND if U.S. retail sales on Friday comes in weaker than expected. The likelihood of all of these things conspiring against the dollar at one time is not likely, but it is also not entirely improbable. It is interesting that the other major U.S. currency pair (dollar/yen) may be affected by comments by Fukui who stated that keeping interest rates very low may cause overinvestment. Although no one can be sure, his "tilted" comments were definitely towards a hawkish bias - which I am certain the carry traders are eyeing closely. All of this could conspire towards an air of dollar cautiousness, which would support my longer-term bullish belief that cable (and euro) should rise. Technically, there is scope for a rise towards 2.0386 (see the chart) during the next couple of weeks, but of course only if the data proves supportive. The move higher may not occur this week, as a rate hike by the BoE is already fully priced in. But with inflation data due next week, a friendlier US inflation number-sequence could restart the cable trend higher. The rest of May will be interesting indeed.

Thanks for the advice, Andre. That's precisely what I've been trying to do. The pull-backs have been profitable enough to pay for the eventual and unavoidable sting (and then some).

Thanks, Andre. Is this price action ever boring today with much of Europe and Asia in holiday mode. Zzzzz.... Andre, I've heard rumors that the barriers between 3680/3700 on EUR/USD are quite large. I'm not sure if that's true, but it's fairly obvious 3700 is being defended. Have you (or anyone else) heard anything concerning the expiry dates on those barriers?

I edited my original post. Is that any better? I have no clue why the attachments disappeared. Maybe I took too long to post the message while first editing / typing it.

Eeek! I used a different browser, and the charts are now gone. Hmmm... Now what did I do wrong?

I did post charts. I can see them imbedded within the posting I posted. I wonder why other's can't see them? Hmmm... I must have done something wrong.

Torero, I think we all deserve to tip our hats to you for maintaining this thread. It's an important one and deserves to be maintained. Here's a brief(ish) review of the summary that I perform each weekend to help me stay focused on the configuration of the "playground" for cable. I'm not an economics expert, or anything like that. But I do try to follow the fundamentals as closely as the technicals. Evidence continues to mount that the U.S. economy is slowing. Advanced Q1 GDP on Friday took a bit of a nose-dive, with a below-consensus read. As I said, I'm no economics expert, but it seems to me as though there is underlying strength imbedded within the Q1 GDP report. I wouldn't be at all surprised if we saw upward revisions in GDP and downward revisions in inflation contained in the report on 31 May. But until then, we must digest what we have - and what we have indicates a continued below-consensus slowing of the U.S. economy. Conversely, the UK has shown continued resilience, with surprisingly strong inflation reports and slowing (but still growing) housing activity. It is no wonder that cable has been trending higher. So, which way is the herd moving this week? To determine this, I look at the weekly and the daily charts. The price action on the weekly chart (not shown here) is clearly up. This last week we saw some consolidation and retracements following the break of the multi-decadal highs. Of particular interest on the weekly chart is the inside bar that has formed. In addition, the computed weekly support and resistance levels nicely correspond with the upper and lower wicks of the last two weekly candles. This therefore establishes a range through which any break could trigger some more substantial follow-through. Since the daily chart (below) shows an established rising trend channel, I am currently in a bullish mood of buying dips. I apologize for some of the obtuse trend lines I've labelled that will have no meaning to those reading this. They're taken from previous analyses I've done, but still have worth, in my opinion. I am currently targetting the area around 2.0370/2.0390 as the upper edge of the next leg higher. That zone corresponds nicely with the fib extension targets (shown) for the 3rd wave. Also, the 50% fib of this projected target fits nicely with the currently formed resistance at 2.0134ish, which suggests that after the fib target is met, a retracement to that level would offer support. This is all based upon the assumption that Friday's price action reached the low through which the next leg will commence. And based on the confluence we now have with this fib extension, it's 50% retracement line and formed resistance at 2.0134, we may now have more of a basis to believe that prices will begin ascending toward the target perhaps this coming week. I wouldn't expect a quick shuffle up to the target, specifically because the upper-channel will probably prevent prices from reaching the target until the week of the next BoE meeting and quarterly inflation report (all due May 10th). But gradual steps higher are certainly possible, and perhaps a more probable outlook. The 4-hour chart below illustrates my shorter-term thinking. I like to use the bollinger bands to aid my analysis, although they are used mostly to help me see where there may be greater support/resistance. The activity on Friday was a good example, where the 4-hour pin-bar formed at known support on the lower channel boundary, at the lower bol boundary and at the 50% fib retracement line - easily sufficient support to justify a long entry. By way of interest, that zone is now also this week's S1 pivot support line. The way I see it, a break above the weekly R1 pivot resistance line (where a bunch of stops and buy orders are almost certainly also clustered) should propel cable toward the current 2.0134 high. If 2.0134 is broken, there is very little except minor resistance toward my larger target. The fundamentals could also support a move higher this week if the Fed's preferred inflation measure (PCE) comes in at or below consensus, or if the employment report on Friday indicates weakness. It will probably be very difficult for the NFP report on Friday to best the results seen in April. Topping 180,000 is unlikely, and most consensus forecasts I have read thus far are far lower (100/130k). Perhaps we will see a retrace in the numbers this month following last months blockbuster numbers. If so, that would further support cables push higher together with rampant speculation that the BoE will hike rates the following week. All is not entirely bullish for cable, however. There are reports this coming week that will probably be mediocre for cable. They probably won't be bad, but the consensus suggests some of the indices will slow. But since the markets are still being dominantly driven by interest rate differentials, those reports will probably just add to an air of consolidation. The cable bears are looking for some decent negative prints that will give them a reason to thrust cable below the last two week's lows and below the weekly S1 pivot level. A move below there would certainly be bearish, in my mind, as it would also break the lower end of the rising trend channel we have seen since March and may mark the beginning of a top on cable, particularly if the data were to provide the BoE with a stronger reason to consider pausing after May's anticipated rate hike. The way I see it, cable's ascension above 2.0 will be only temporary. The UK is not that far from implementing a longer-duration "wait and see" approach to interest rates, and as soon as the market gets a wiff of that in the air, cable will likely return back below 2.0. Combine that with the anticipated drop in inflation (if the BoE projections are correct) in a few months, and cable will likely relax some more. So that's my analysis for this week. Good trading to you all!

Torero, I took a long position on that huge pull-back pre-CPI news at 9439. That sure was a nasty pull-back, huh? I thought they had taken everyone out who had entered prior to the news with that drop. But it sure did provide a beautiful pull-back location for going long. Yes, it was a riskier entry given that it was immediately prior to the news, but sometimes you have to take those risks. And in this case, it paid off handsomely for both of us. Nicely done for hanging in there!

I hope you/we are right. I was in this long from last Friday, but was kicked out after this last pull-back from 60 (on your chart). I re-entered at around the same time as you: currently long from 19, waiting to see if this has the guts to survive the American open.

This is wise advice. I can give you an excellent example of this in the following chart. I pieced it together from another analysis I completed recently, but it's of relevance to the current discussion, so I thought I'd publicize this part of it. I apologize for some of the text being truncated. I shrunk the image and inserted the current chart in it so that it would all fit here for easy viewing. The truncated text basically said that after the pull-back, a larger thrust up is observed. These two patterns are, as far as I'm concerned, very close to identical. They're quite common, particularly on the faster time frames (although less reliable on the faster frames too). This chart is based on the 4-hour time-frame, so it's quite reliable. The basic features are illustrated. What we saw on Friday fits this pattern almost precisely, and would suggest the next move will be higher. Hi Bramble. You will notice that, just as Torero suggested might occur, there was a pull-back after this breakout - precisely as this pattern suggested there would be. The depth of the pull-back might not have been as large had this breakout not occurred at the end of a week. I suspect profit taking and pre-weekend position scuttles were probably to blame more than the CPI news that came out earlier. However, the important point here is that price did in fact retrace all the way back and touch support. If you take a quick look at the hourly charts at the end of the day, you will see that a pinochio (pin-bar) pattern formed, possibly opening the door on Sunday for a move back up the ladder to resume this leg higher. I can also see your point. Sometimes, these breakouts don't return back to prior support levels and it pays to catch the ride as soon as you can. In these cases, if you play the pull-back game, you'd just have to wait for the next train. But then, as we all know, there are a never-ending stream of trains to ride. Whatever works best for you is the best to use.

Ah, if only I had the depth of vision to see the inner workings as like that. Excellent (and eye opening) explanation, Texxas. Thanks. Torero, you did very well holding that trade as you did. You demonstrated great patience. I can tell you're trying hard to engage a swinger. I'm a bit surprised prices didn't hold up a bit better above 9850, but then these are very lofty levels for cable. Perhaps a correction is due?