cowpip

This was just a quicky for me - Scaled a portion out at 08 and closed the remainder at R1 (9826). If only all trades were so worry-free. So the question now is whether investors have the gusto to push prices through the ceiling at 9850 pre-BoE-minutes news tomorrow, or whether they'll let prices consolidate yet again. T'will be interesting.

Nicely done, Torero. I too jumped in long at 77. It'll be interesting to see how it handles 9850. The door is now unlocked for a solid test there.

Well wasn't yesterday's session a bore? The daily ranges are contracting and it appears to me as though prices are beginning to coil up. Cracks are also beginning to appear in what has been fairly solid resistance at 9780. Prices made new multi-day highs today during the tail end of the US session. Perhaps defenses are shifting back toward 9850 now. What is most clear in the current price action is the consolidation that is continuing to take place at this level, which solidifies this area as a possible launching zone for another leg higher. The market is undoubtably waiting for the BoE minutes to decide how best to get positioned now. Price is hovering around very key levels. A break above 1.98 (particularly 1.9850) would likely herald a rise toward the psychologically important 2.0 level. I personally don't expect much to happen until the minutes are released. They might take another crack at breaking 9800, but I wouldn't expect prices to break 9850 until the minutes are released - assuming the minutes favor such a move.

And of course, that is precisely all we can do. The important point of all of this analysis is that we all have plans regardless of what price does. If it breaks higher or lower, it shouldn't matter. If you have a plan on how to handle things, you can make money going either direction.

You're bang on, as usual, Jack! If I restricted myself solely to the daily and shorter time-frames, I too would be looking very closely toward the short side of things. The daily doji on Friday as well as the divergence setting up on the 240 min time frame, combined with the fact that the market is quite long on cable right now suggests that a correction lower may be due before a continuation higher occurs. I'm sure we will both be trading with the herd rather than trading on a guess in which direction the herd is going to move next. Stay with the herd.

Since I like to play the devils advocate (I really miss that devil emoticon on here!), and since I know Jack well enough to understand he won't be offended by offering an analysis that runs counter to his, I thought I'd throw this out for the beginning of the week. But first, I would emphasize exactly what Jack is saying. This level up here on cable near 9700/9850 is extremely tricky to navigate and has in the past been the subject of some very whippy action. The daily has printed a firm doji and the divergence has been building for some time on this pair now. So it is very possible we could see prices dip back as low as perhaps 9200 (or lower). My personal view is more bullish, although I recognize the susceptibility noted above and will trade according to whatever price dictates. Being aware of both sides of the coin leaves us better prepared, in my opinion. So... I'll start out on the longer monthly and weekly time-frame. If we go waaaaay back, there is one nagging trend line that price is currently trying to navigate (bottom pane below). It has, particularly during the last month or two, pushed far enough above this trend line to convince me that we're now on the up-side. Technically, we have broken through, pulled back and are now pushing on with a new leg. Pattern target would be near 2.2920 (typo on the image - sorry) in the longer-term. Perhaps most significantly, we have recently (end of 2006) breached the previous monthly swing high which may help to confirm this pattern and aid in the thrust beyond 2.0000. The weekly (top) panel is also bullish to me. Aside from the bullish engulfing candles 2 and 3 weeks ago, there is also a possible bull-flag that has (as of Friday) closed above the upper bull-flag trend line (just barely - not perhaps convincingly). If this holds, it could mark the start of the completion of the next pole which would thrust cable through to perhaps 2.0590. If it fails, prices could easily re-enter the bull-flag channel and retest the low near 1.9200, which is also the 78.6% fib from the move up started in December 2005. Divergence hasn't yet confirmed on the weekly, and has in fact widened a tad during the last week. I have spotted one other period in the past that has had a similar divergence pattern (see below). In both cases, the divergence preceded a breakout higher. I wouldn't personally place too much weight on this latter analysis. Just because there was one period of similar patterns in the past means diddly-squat about what may happen in the future. But it is, nonetheless, a bit interesting. It is entirely possible that the BoE minutes this week could be the trigger for a further move higher. If the minutes are unambiguous and clear that further rate hikes are on the table, that may be all it takes. If the minutes are ambiguous (which is probably the more probable scenario), then we may have to wait until U.S. news shows further degradation before seeing this bullish scenario materialize. So that's my take on current events. As I always say, time will tell...

Interest rate announcements are of course the most important news events, but any other news report that can directly impact interest rate views (economic growth reports, inflation reports, etc) are also very important to watch (first-tier releases). I would recommend reading the following link, which enumerates the most market moving news events of 2006. It will probably answer most of your questions concerning this. http://freeforexebooks.com/Fundamentals/MostMarketMoving.pdf

LOL! I come from a family of 6 myself (3 sisters), and like you - I'm the only brother, so I can sympathize what that'd be like. For me, their head size doesn't swell - mine just automatically shrinks! lol... Isn't that the truth! They can clean out stops in a real hurry if you're caught with your pants down.

Thanks, Buk. That makes a whole lot of sense. It's sometimes hard to think that way when you see such a positive news print. The print itself sometimes obscures clear thinking. Yet another item learned tonight. It never ends, does it? This is significantly more complex than any chess game I ever played. Lol.

Texxas, you continue to astound me with your ability analyze the situation so quickly and to pull the trigger so confidently! Wow... bravo! I too am confounded by the news reaction this time around. But I think the preamble you and Buk provided leading up to the news answers a lot. I would have thought the big boys would have pounced on that news and drove cable well above 9710 toward 9750. If the CPI news can't push it beyond that barrier, I can't imagine what news this week could. Anyhow, I took a small portion off the table tonight, but not nearly as much as I should have had I been as cat-like as you were, Texxas. Wow... way to go, girl! I just about fell out of my chair when I saw how you handled that. No wonder Buk calls you the scalping Queen (the noun that popped into my head was significantly more omnipotent than "Queen," let me tell ya)!

Buk and Torero - I tip my hat to you two for providing us with some refreshing and cool chit-chat. Nice job spotting those opps, Torero. As I said before, you seem to have a keen knack at spotting them. Nicely done!

It sure looks that way, doesn't it? You have a good eye for spotting patterns. Looks like you'll do just fine in forex, and perhaps better than most who start out. I'm impressed with your trades to date. As for myself, I'm going to close things up here now. This is awful dreck to be trading on cable. It's slowly wiggling higher, but without any conviction (from my point of view). I suppose everyone is waiting for the retail sales news in a few hours. Somehow, I suspect even that may be a non-event. Doesn't matter to me though - I'll be snoring Zzzz's. Overall, it's been a good week. Thanks again to Texxas and Buk for all the fine commentary. Have a great weekend, everyone!

That last little spike down took me out. C'est la vie.

Torero, if prices are trending well and I have an entry that is well protected, sure, I'll hold a position over the weekend. Yes, there is risk, but as you know - where there isn't risk, there isn't reward. Sometimes, the only way to make a swinger really work well is to hold it over the weekend. That's my 2-pips worth of opinion.

Alrighty - I was able to get a price of 468. Stop has already been moved to b/e as this could be the spike-5 of a 1-5 reversal pattern if it fails to plow ahead.

Nicely done, folks! I came to the screens about 5 minutes too late (sigh) to catch the drop that Texxas pointed out in the chart above. Dang! Ah well... plenty more fish to fry.

You are doing awesome, Torero! Very nicely done indeed!

Yeah, that is precisely the response I was hoping I'd hear. Buk's comments had me wondering whether he would attempt to tag a position so close to the UK news, so I just had to ask. You hit the nail on the head concerning my feelings. For those who aren't as familiar with forex, take a good close look at the TICK prices of this release and you'll see how hopeless a bad position would have been. Also take into consideration the whopping 20-pip spread that many brokers tack onto prices a mere few seconds before the major news is released, and you'll quickly discover why it's a dangerous game to engage positions near the news. So far as I know, there is NO STRATEGY that is immune to the wicked plays that occur around major news releases. I've tried several (and died trying) when I first started learning forex. You might as well play Russian Roulette, cause the odds are about the same. Thanks again, Texxas!

That'll do it for me today, folks. Oanda's up and down like a Mexican jumping bean on a hot griddle. They're completely unreliable today - which is, I must say, the first time I've seen them have this big of a problem since I started trading with them over a year ago. Nonetheless, there's no way to get a decent entry when their platform is up and down so much. Just too unreliable today. I hope some of you are able to extract profits from this suprise rate decision! I'll try to hitch a ride tomorrow, if the market is willing.

Blimey!!! Wouldn't you know it - they'd throw a surprise rate decision out now! Sheesh... what a rotten time to close a position. Ah well, better out wishing I was in than in wishing I was out.

For the record, I decided to close my trade pre-UK news for +55 on my remainder, due heavily to a nasty problem that Oanda is currently having. During the last 4 hours, Oanda's connection has dropped out on me probably 20 or 30 times. I don't feel as though I can maintain and reliably manage a position when they're having problems this severe - particularly with an important news item due for release. I'll bank my profits and go home instead of pulling my hair out on the off-chance I might have a connection when I need it. I've talked with their tech support twice now, and they're about as all-knowing concerning this problem as rocks are in an open desert.

Buk, what do you do when you notice price attacking key levels of interest during a time when an important item of news is due for release. Taking your above example, price is attacking the 78.6% fib, but we are also due to see whether the UK rates are revised higher or left neutral. Do you take on a position such as this even when we are within a few hours of a major news announcement? Or do you hold fire until the news has passed and possibly suffer the consequences of not getting in at your desired level?

That is by far the hardest part of swing trading that I have found. You have to have the guts to give up (sometimes considerable) numbers of pips in order to let price test genuine momentum. It's a tough psychological nut to crack at the best of times.

I have a loooong way to go yet, I'm afraid. But days like this sure do help offset the bad ones, thanks.

Awesome "job", Texxas (I know - booo!) . I took a long entry at 29 - going in the same direction as the dominant asian trend, on that famous asian/london cross pull-back I like so much. Scaled some out up here near 50 so I can move my stop back into safer territory for b/e - just in case this move up isn't legit.