Snow Dog

The market was very quiet yesterday with the US and Canada holidays. EUR - 4 hr lower high lower low in tact, bias down. The next key support area is 1.2625. GU - Paused at Y's lows. 4hr lower high lower low flow in tact. Bias down.

We have Euro group meetings and holidays in US and Canada so things may be slow today. EUR - 4hr lower high lower low flows in tact. Asian session did not push up much. We are at the lows from 8 Nov and D pivot 1.2729 which may provide resistance. We have support areas also in general area and should we fall a major turn area at 1.2626. Bias down. GU - Charts showing similar picture to EUR. Should we move up counter trend then we have resistance from 8 Nov lows, D pivot and W pivot in and around 1.5940. Bias down.

We have poss buy/positive 4hr divergence. At the moment whilst we are making new lows I'm happy to follow the moves down. Looking for sell divergence on 1hr and 15 min back into down trend.

D moves above below RSI 50 can run for 4-6 weeks with small retraces along the way. EUR headed down since 18 Oct so we are getting to that 4 week window. Maybe another good down week, we'll see?

At some stage there must be a bounce up for eur, even if only by way of some relief rally of sorts. Any move up until proven otherwise would just be a CT scalp and then chance to sell rally in downtrend. EUR D - on 6 Nov we had a small pos close hammer. Couldn't cause a cross of RSI or a cross of 8 lwma which is a pretty tight ma. So didn't inspire too much confidence. From there D bias was down and still is. There is a major SR turning point going back to Jan at 1.2626, a small reaction up from there would only re-inforce downtrend, the Jan move up lasted for 6 weeks and 800 odd pips. So lets say we hit that level and get a 50 pip bounce, my money will be on 1.2626 failing. 4hr - Whilst we are not exactly rocketing down at the moment the lower high lower low flow is on. We remain below the RSI 50 level. The 48lwma clearly shows the D trend down (D 8 lwma). The London Close bounce was not that high and the 8 Nov lows acting as R. Pretty much down bias for EUR.

Its amazing how many days follow this structure. 1.2775 genuine lower high sets up move for the day. Pause at W M1, falls to RN 1.2700. Going into pre/early US we would avoid weak 1hr candle fake out moves up. Resumption of London direction resumes to W S2. This is the chart see above we had our trade on Fri. Sold 1.2770 ish partial exits at the W pivots - W M1 and W S2.

These charts again show the importance of W pivots and identified SR levels.

To consider in next weeks trading, we have a major support level from Jan '12 1.2626 area. This level should provide a reaction, I'll be looking at some D charts in Jan to see exactly what it looked like. Comparing what happens now will be interesting. Anyway this is without question a major SR level.

Very similar scenario to above post. We are above our ma's so buy bias??? Price moved up to Y's high/5 and 6 Nov lows SR level. Then 4hrs of drift. Obviously a struggle to go higher. Upper wicks on 1hr with sell negative divergence. 15 min chart, divergence, lower high, head and shoulders pattern. Shooting star on the right shoulder, little/no lower wick. Exited 60% at W M1 for approx +40, the balance exited just below the RN at W S2 1.2692 approx +80. The W pivots and SR levels continue to do a great job of containing price.

Recap 7 Nov A big push up early morning as news of US election results was coming out. Both currencies paused at resistance levels and stalled for almost 4 hours before falling. In general we view above/below our ma's as short term trend, if we are going against them we want significantly more than 1 candle 1 time frame. Focusing on GU, we had a previously identified resistance level, divergence on 1hr and 15 min, 4 hours of hesitation/upper wicks. All together clearly shows the battle to go up and the sell opportunity. 8 Nov EUR - D engulfing neg close below 50 RSI. 4hr lower high lower low flow resumed. Bias down. GU - Couldn't manage an engulfing close and there is support at 1.5950. We are below 50 RSI on all 3 time frames. Bias down but there is possibility of bounce at 1.5950/W S1.

Didn't look like making the target level and with the elections coming up we exited balance.

Sold 15 min 2b yesterday (evening star pattern also). Good angle down on 128 lwma so we are happy with 4hr trend down (128lwma 15 min = 32 lwma 1hr = 8 lwma 4hr). Exited 60% at W S1. Balance target W M1 at 1.5928. Definition of 2b trade here http://vantagefx.blogspot.com/2010/05/my-basic-trades-higher-lows-and-lower.html

Whilst we have support levels and W pivots for eur and gu that we can bounce up from sure looks like downside bias. A bounce solid engulfing close might always give scalp buy, any move up in price between the 1hr ma's that gives a 5 min lh or 15 min engulfing close from a pivot, RN/psych level etc etc should be a sell op.

Sorry for the multi post long winded way of saying what works. For me its trend and I have chosen a trend definition that suits my time frame and trading mentality. Support and resistance and W pivots work. You do not need a long list of indicators, an ma or two and we use rsi. Price action works, for us its market follow (higher lows lower highs), engulfing closes and evening/morning star patterns.

Last chart from 1/11/12 we have 4hr sell signal so we are looking to sell moves between our ma's from 5/15 min or engulfing negative closes.

From the red line 30/10/12 we are looking to buy. Same story in between the ma's we are looking for 5/15 min higher lows/engulfing closes from the same list of pivots, RN's etc. Missing those engulfing 1hr closes.

Drilling down to 1hr. To the left of line 30/10/12 we have continuation of last weeks signal. The purple ma is a 32lwma i.e. 4hr 8lwma and decent enough short term trend signal. Here we have good angle down on 32lwma so we are happy with 4hr trend. With this good angle down If price retraces between the ma's we are looking to sell 5 or 15 min lower highs or neg closes in reaction to pivots, round numbers, SR levels etc. If we miss those 1hr engulfing negative closes.

Onto the 4hr chart. What works for us. Please note the W pivots extend right across the screen but are for this last week only. We have 3 red lines being what we regard as proven SR areas from D chart and W pivots. I think its fair to say that between the 2 they have done a great job of containing price. We have part of the fozzy indicator (popular several years ago, an 8 sma on an 8 rsi). You can use the cross as a short term indicator of trend and of course as divergence if needing some additional info when price turning. We have an 8 lwma, yes an open/close the other side of the lwma is in itself a semi decent signal. Yes if you're observant you might say the rsi cross and lwma open above/close below (and open below close above) give pretty much the exact same signals so 1 of them is redundant and could be deleted. Fair enough but this is what I'm comfortable with. The arrows up and down show closes where the candle to the left has closed higher/lower than the previous two candle closes i.e. an engulfing close. What to look for then: SR levels, pivots and prices reaction to them. The rsi/8lwma cross will generally signal trades 2 or 3 times a week on 4hr chart so unless you are scalping a short term counter trend method follow this trend. Is price flowing i.e. on a lower high lower low or higher high higher low. Have you got an engulfing close? In this GU chart for the last week we had 2 signals, coming into the week we were on a continuation of last weeks signal. We have lines highlighting signals at 30/10/12 8am and 1/11/12 4pm. 30/10/12. Price stops at W M2, has an engulfing positive engulfing close, fozzy rsi/8lwma cross. An engulfing close (i.e. price showing it has power to break a range). Same story 1/11/12. Price has an evening star pattern (a personal fave) positive close/hesitation then negative close. Reaction to R level, RSI/lwma cross, engulfing close. You could trade these as a 4hr method, we go down to smaller time frames. We know generally each cross is likely to follow through for a couple of days i.e. an average 2-3 signals a week.

My wife and I are day traders we had a trade run overnight 2 weeks ago, first time in years. So my comments are focused around that, inter day. First off our D charts have what we have easily eyeballed as SR areas. Often at the bodies of candles (open and close) and not at the wicks extreme. Here is our D chart. Yikes lots of lines, well from Jun-Aug price chopped around a limited range. We don't trade at the identified level but look to see the reaction to that level.

What works? Lots of stuff works. There is nothing new in trading. The question then becomes what will work for you as an individual, what do you see on a chart and can relate to, what time frame do you have to trade, what is your personality? The items in this thread work such as support and resistance, pivots (for me based around midnight GMT) including W pivots, price action (focus greatly on the trend i.e. higher highs higher lows/lower highs lower lows and if counter trend multiple candles to confirm a change), engulfing closes and morning/evening star patterns The question then becomes how do you pull that together?

The W pivots and SR levels showing how important they are yet again. Move up on 22nd contained by W M3. Stall on move down at W pivot. Now again stall at W M2. Heading into London close reversal time that may provide a bounce. Plan for tomorrow will be (pa permitting) a lh sell, partial tp and then again targets at W S1 and perhaps leaving a portion for W M1.

OK 4hr lh, engulfing close, below 50 level. Against the D pos close but its a solid 4hr signal. We stopped at an obvious S level around the W pivot. The bounce up was what we would describe as weak Mrs V sold the 2b back into London session move down. The pre US session weak pos closes on 1hr avoided. Mrs V 60% exited at RN for +30 ish and target is W S1 1.2900, then went off to watch X Factor on the TV. Will need to break the SR levels at 2990 and then W M2 2956.

Narrow ranges yesterday with W pivots and support /resistance areas containing the moves. After the strong move up there was little reaction down so I'm viewing this as pause in move up and retaining bias up to 1.3000 area (W pivot, Feb-Apr lows). There is the potential for sells on good candles should the upper resistance level hold again. The German court case due Wed on the legalities of Euro bail outs obviously has the potential to make the market pause.

If anyone is wondering why a few months back counter trend was not working (still recall reading elsewhere someone posting 7 of 8 recent to the time EUR 1hr CT trades failed) but now its buy sell all over the place and everything is fine. Well the market changed. US hols perhaps lower vol's, ECB head talks up the EUR. Whatever the reason at the moment its support/resistance levels and W pivots ruling. The moves between them are tradable. Have a look at your GU EUR D charts over the last couple of months to see the ranges we have been in. When we break these ranges that may (repeat may) be the time to again take more care with CT trades.

I have for some time been more and more focused on the flows on 1hr charts as set ups for 5 min hl/lh entries. 1hr flows = 1hr higher lows and lower highs. The attached charts should be clear enough.