Busy Day Tomorrow

[torero 10]

This week and last week has been nothing but noise, I managed to stay out until today. I made a point to stay out of trading during last 2-3 days of the month as you folks have pointed out big guys to repositioning their inventories, thus the non-direction. Somehow yesterday coincided with Fed news day so I can assume the move, but I stayed out anyway. Sitting tight sure was tough but was worth the wait, don't have to dig my way out like I used to do.

 

One other note I wanted to mention was I used to stay out of trading Fridays but it's been quite trendy on these days, not sure why they've been good to me.

 

I'm currently on a position on GBPCHF from a breakout this morning and dare I hold it until 2.12? I see it's a pretty drop and assume the pretty pop up as well without much congestion.

Edited May 2, 2008 by torero

[Sledge 13]

I made a point to stay out of trading during last 2-3 days of the month as you folks have pointed out big guys to repositioning their inventories, thus the non-direction.

 

Hmm... I would like to know more about this from anyone who may be able to elaborate. Is this an even larger picture in force? This is news to me. Would like to hear more about this.

Sledge

[Art Krantz 10]

It will only really affect you if you’re trading intra-day.

 

End of month/quarter/half year, etc can throw up excessive volatility as funds & key players shuffle their inventories & sweep back & forth on their book adjustments.

 

You’ll also sometimes witness erratic price activity on & around the various fix (especially the 13.15 & 16.00 gmt) prints, as large orders & counter trade matches clear thru the system.

 

A good deal of the time it’s nothing too much to worry about, you just need to be aware of the times & periods in relation to triggering orders, booking profits & managing your positions.

 

If you're oblivious to that kind of activity you can get washed out pretty quick punting off a 5min chart, or get caught up on the tail end of a rough spike or two.

[Sledge 13]

You just need to be aware of the times & periods in relation to triggering orders, booking profits & managing your positions.

 

Art-

Thank you sir, awareness is key. This information I would most likely utilize, as I do the news- which is that I am aware of a news release, but I don't utilize it as an entry point or opportunity to get into a position, in fact I stay away from it and may close out early if close to target if not already hit prior to the tornado of volitility to come. Generally, I'm out of my position and buttoned up for the day prior to the NY 8:30 News times if at all possible.

 

But this information regarding End of Month is something I will most definately be looking back to see some examples of.

 

Much Thanks for the clarification.

Aaron

[Sledge 13]

 

1. Horizontal grids

2. An awareness of the key supply-demand zones,

3. A check on the main drivers (fundamental flavors)

4. An eye on the wires

is about all that’s required to feel your way round the table to be honest.

 

 

Milliard-

I was going back over the thread and wondered if you could explain the Horizontal Grids you mentioned in #1 above? Do you simply mean in the "Gann" sense you are looking at the charts as plotted and using a trained eye to judge angle (i.e. faster it shoots, quicker it will be overbought or oversold?)

 

Thanks,

Aaron

[Sledge 13]

I feel like I am a bundle of questions today.

 

This one is for Art: You mentioned in a number of posts "2 way stop activity" or "2 Way" Could you define the term and possibly elaborate on it and how it may apply to the term "2 Way stop activity" or maybe their is such a thing as "2 way continuation activity" if I am thinking of it correctly?

 

In one post you had mentioned "I'm essentially seeking out confirmation of probable 2 way stop activity"

Does this mean that in a consolidation period or "zone" that you are seeking bars that paint as a "Doji" or defined as a bar where it appears the bears and bulls interests are conflicting? In order to prime yourself for your next move- either you will let the position ride and continue or you will see this area as a signal to exit your positions or scale out?

 

Thank you.

Aaron

[milliard 10]

I was going back over the thread and wondered if you could explain the Horizontal Grids you mentioned in #1 above?

 

I’m guessing that comment maybe followed on from a post including a graph Aaron? I’m sure Arty stuck up a range grid example a while back?

 

Anyhow, it simply refers to the plotting & observation of horizontal s&r levels is all. The grids are something Art & Jimmy occasionally use to get their bearings if price is stringing out into a confined range.

 

Apologies for the confusion. You’ll get all you need from plotting & observing the traditional s&r levels & zones.

 

It’s definitely nothing to do with Gann or Elliott material. We don’t pay any attention to that stuff.

 

 

Art has left for the w/end Aaron, but I'll answer that call for you.

 

2 way is: buy & sell. It means he was seeking confirmation that continuation buy orders would swamp & overwhelm possible counter (sell) stop activity at a specific level, (usually a previous area of supply) if prices were travelling back up the ladder in Bull mode.

 

Key levels will generally harbour 2 way traffic, where buy & sell orders are stacked (layered). Until all the tickets are worked thru the system & absorbed, prices will bounce around & string out.

 

Obviously, if the order book is light of counter flow activity, price will punch thru a level unchallenged & head straight for next level bid or offer zone.

[milliard 10]

If you look back at the graphs which have been posted up on here, you'll see the highlighted area's on them contain the info mentioned in the above post.

 

But here you go, we got ourselves a live one from yesterday which nails it right down for you. Anna-Maria's post (#125) tickboxed this lower demand zone @ .7750-780 as a likely brake on this leg down on EU v/s Sterling?

 

She had one of the fella's peel off a little more profit today as it shunted into that zone & pinged back towards her next secondary line @ .7840 ahead of stiffer tests at the highlighted levels further up.

 

These area's hide 2 way activity up & down the map & will often slow prices as a trend attempts to mature & string out. Sellers will resume their aggression on pullbacks to near-term supply lines if the bid activity below fades & (profit) liquidation eases.

 

These are the area's you might want to focus your attention on if you're seeking to generate decent, high percentage set-up & trigger opportunities.

[Sledge 13]

Andre-

You are the man! Thanks for the clarification on both. I figured you meant something along those lines with the "grid" but wanted to be sure. I know you guys pay zero attention to Waves, dots, or other items. But I wasn't sure if you did look at the angle of the ascent or descent as part of your technical analyis. All of these answers are helpful in lifting the fog for me.

 

So is it fair to say that the prices on these instruments will travel between these zones fairly easily without much resistance?

 

Obviously you'll get your early exit folks on a bull move who will close positions and temporarily stunt the forward (upward progress) but if I am to use your example if I were keen enough to have gone long @ .7750, would I be farily confident to let that ride until it gets to the 780 neighborhood (zone) and then re-assess upon its arrival @ 780 to see if:

A. It would form a contuniation pattern and stay in the trade

or

B. See a rejection or reversal pattern and cash out

 

Am I getting warmer?

Much Thanks!

Aaron

Edited May 3, 2008 by Sledge

[cowpip 10]

So is it fair to say that the prices on these instruments will travel between these zones fairly easily without much resistance?

 

Nothing in forex travels fairly easily without much resistance, imo. There is always resistance. From the micro to the macro time frames, previous support and resistance will be tested. Once in a while, price will take a good jaunt toward the next S/R zone (particularly post-news), but even those zones are usually retested at some point.

 

... but if I am to use your example if I were keen enough to have gone long @ .7750, would I be fairly confident to let that ride until it gets to the 780 neighborhood (zone) and then re-assess upon its arrival @ 780 to see if:

A. It would form a contuniation pattern and stay in the trade

or

B. See a rejection or reversal pattern and cash out

 

If you see the price action that supports a quick jaunt back up higher to the 7800 area, then carefully consider it. But contra-trend punts are always riskier. In this case, (and imo) there wasn't a good signal on anything but some sub-hourly bars to attempt a long on. In this particular case, you would have been wiser to be careful because:

1. You're punting contra-trend (always a bad idea).
   
2. Your target is so small that your entry would have to be quite well defined (on the micro frames - 5 to 15-min frames) and be well executed in order to reduce your risk / reward to a justifiable level.
   
3. The hourly and (particularly the) 4-hour bars were not encouraging for longs.
   
4. Pre-weekend position adjustments would have made this an 'iffy' trade.

The price action you saw where it bounced off of the 7750 zone was almost certainly more to do with pre-weekend profit-taking / adjustments. That zone hasn't really been well tested yet and will almost certainly be tested harder next week.

 

In fact, the current price indicated on the chart (7823) is a former S/R boundary (from the base of the bigger pattern - it's testing the underside of that now) and may actually be a good place to start looking for a reversal signal to run price back down to the 7750 zone.

 

The safer direction is always with the flow (and in this case, that means short is the path of least resistance). That means being patient and waiting for pull-backs. Then waiting for price action to confirm a reversal back in the direction of the dominant trend.

Edited May 3, 2008 by cowpip

[Anna-Maria 10]

 

So is it fair to say that the prices on these instruments will travel between these zones fairly easily without much resistance?

 

if I am to use your example, if I were keen enough to have gone long @ .7750would I be farily confident to let that ride until it gets to the 780 neighborhood (zone) and then re-assess upon its arrival @ 780 to see if:

A. It would form a contuniation pattern and stay in the trade

or

B. See a rejection or reversal pattern and cash out

 

It’s fair to say we have absolutely no idea whether price will travel effortlessly to next level reaction or not Aaron. We can’t control that. What we can control however is what we’ll do if it doesn’t, what we’ll do if we get an opportunity to compound on the way & what we’re going to do if & when it gets there.

 

Our priority is to obtain maximum value entries wherever possible, whilst managing our risk & exposure as efficiently as possible at all times. We locate our upside & downside vibration levels, & always have a trade management plan in place. What price does & how far it travels in our favor, is purely down to the strength of the participation.

 

As Cowpip quite rightly points out, the flows on this pair are currently weighted to the downside.

 

I earmarked .7750-780 as an area of interest for reaction/profit taking purely on the basis of previous price action behaviour.

 

If you glance a little to the right of that zone around April 3&4, you’ll note that prices got shunted back up there 100 odd pips early last week as it vibrated against it? It found supply at .7935-50 (as highlighted prev on here) before continuing back down on it’s current trend run.

 

Point is, these zones or levels are merely markers or guides. They’re not set in stone, neither are they automatic trade triggers. Sure, the chances of them reacting are usually high because they are being observed & traded by a varied selection of players with different agenda’s. Stops & orders will usually be active on & around these key levels to assist with price flows.

 

But whatever you personally choose to do as prices butt off a specific level or zone will be wholly dependant upon your strategy & style of execution. Your key priority is to manage your trade as efficiently as you can in accordance with your trade plan.

 

If your signals offer you a ‘long’ at .7760 or .7780 & it reaches 100 pips further up the ladder without any undue stress, then you’ll already know what your next move will be because it’s part of your plan….or at least it ought to be. On the flip side, if it starts flapping around & begins taking on water at this current lower high (.7820-40), you should also know what actions to take.

 

It’s very dangerous (psychologically) to allow yourself the luxury of confidence or assumptions that because price has behaved impeccably before, it will repeat the process again. Never assume anything, & always have an each-way plan.

 

Your research, planning & execution simply offer you options. If you cover your bases correctly from the get go, they’ll be no surprises if the trade registers a profit & scratch or a loss.

[Sledge 13]

Cowpip and Anna-

Wonderous depth. Thank you for your clarification!!

 

Cowpip:

You are indeed correct that the bias is a downward trend, and one would have to be VERY careful in taking a long trade in this situation. As I don't trade this pair personally, figured I could ask this general question off the charts provided. Apologies if I meant to say that anything in forex is a simple- buy here and sell here scenario. As with all trades the utmost eye and keen awareness is critical to maximizing the trade and watching it carefully.

 

Anna-

Thank you as well. This is a great, sort of, all encompassing post that tidy's up some loose ends in my head. See I'm still at a phase (who knows if this would mature later on in the trading career) that if I were able to grab a 100 pip move- even if on a one day bounce. That for me is a stellar day and one that will put plenty of profit into the account. I'm kind of a chicken s*it in the sense that if I gain 100 pips, I take it and bank $. The pullbacks are for me to re-assess and look to see if their is another opportunity for entry. As you folks are far greater skilled than I am, I would expect (as your clients probably do) that a 100 pip move and peeling off the position would not be acceptable to them. But you guys play in the majors, I'm still in the bush league ;-)

 

Once again, I thank you both for your contribution and insight. This is by far the most kick-ass thread going on the TL forum- hands down!

Aaron

[Sledge 13]

Another question (What a shock I know) I have posted a Daily GBP/USD chart and wondered if I could get some feedback on it. On the chart below and if you watch this pair as of the last 2 weeks or so, it has been a constant and daily up and down battle.

 

The blue lines are the top of the channel that is in a downward trend off the 2.0397 high of 3/24/08

 

The red lines are the ever shrinking ping pong match that we have seen transpire ever since the 4/17/08 channel breakout. We see clear testing of supply on the top of that channel and we also see the range of movement starting to get to the point of constriction where little movement (i.e. elbow room) is in there to make a play.

 

My consideration is that this pair will indeed breakout to the upside farily soon, but I'm still humble enough to be skeptical of it and not 100% sure that I am reading it the right way. It appears to be basing, but with little signs of long tails to show testing, or long wick bars to show attempt to go up with extreme selling going on, this is a tough nut to crack. Their just are not clear signs to look at. Add into it the fact I just learned a few days ago that at month end, inventory build-up or book tidying may be taking place- makes the pond a little more muddy.

 

I'd like to learn from this chart, maybe someone sees something I do not on it-to someone it may be clear as crystal of what is transpiring, but since I have just recently moved into the longer term, zoom out, phase of my trading, I have yet to see something like this.

 

Thanks,

Aaron

[Anna-Maria 10]

Man, you sure must enjoy busting your balls on that waste of space pair Aaron?! It’s a car wreck.

 

I guess for folks who enjoy getting down & dirty roughing it inside crowded spaces, then it’s a traders paradise. But it’s not for me.

 

I'm not in the least bit interested in learning anything from a technical chart Aaron, only earning from it, & that pair isn't offering me wages at this time, therefore it's off the radar.

 

I won’t even begin to get interested in it until it breaks & re-tests 9965 to the north….9600 to the south.

 

If you can’t see a high opportunity trade on it anywhere soon, then flip thru the menu & locate a pair that does offer one.

 

I guess you’re going to have to obtain feedback from someone whose currently trading it.

[cowpip 10]

I guess you’re going to have to obtain feedback from someone whose currently trading it.

 

Anyone who is trying to trade that pair is undoubtably looking like this: :crap:

 

Screen's full of bars that do not stack nicely will almost certainly sap your cash faster than an unguarded bank. That's why eur/gbp has been such a nice pair to trade over the last few months. Nothings friendlier to the account than predictability, and bars that stack nice are a whole lot more predictable and liquid than those that don't.

[cowpip 10]

Hey Sledge... you should be patted on the back for your questions. You aren't only learning yourself, but you're allowing a whole lot of other people to learn as well. That's a big deal. No serious question is too silly or dumb to ask. None.:applaud:

[Sledge 13]

Ha Ha Ok ok, I need to expand my horizons, I get it

 

Well I may be at a great place to do just that. I have been utilizing the GBP/USD as my currency pair of choice almost exclusively for about 6 months. Maybe it is time to see what else is out there- beyond this 2 star town. :rofl:

 

Cowpip:

Thanks, as I have been always told- the only stupid question is the one not asked! Thanks for the support!

 

Aaron

[torero 10]

Hi sledge,

 

It's good to concentrate on one to get a feel for it, that's how I started with GBPUSD. Little by little I started studying a few others, but I limit myself to 3-4 for now, anymore might be overkill for one trader. But I monitor up to 8 pairs to see if the moves are legit (support from other pairs).

[cowpip 10]

Hi sledge,

 

It's good to concentrate on one to get a feel for it, that's how I started with GBPUSD. Little by little I started studying a few others, but I limit myself to 3-4 for now, anymore might be overkill for one trader. But I monitor up to 8 pairs to see if the moves are legit (support from other pairs).

 

Focusing on one pair - preferably a major (especially when you first get started in forex) is a good idea. I too focused on cable when I first started. I believe once you know one pairs' personality, it's generally not as difficult to learn the personality of others.

 

There are a lot of ponds to fish in. There's almost always one or two pairs that provide decent setups during the course of a week (depending on your strat and the time-frame you play). No sense over stressing your brain, or your account.

[Sledge 13]

Hi sledge,

 

It's good to concentrate on one to get a feel for it, that's how I started with GBP/USD. Little by little I started studying a few others, but I limit myself to 3-4 for now, anymore might be overkill for one trader. But I monitor up to 8 pairs to see if the moves are legit (support from other pairs).

 

Torero-

Yes sir, this is why I concentrate on the one pair. When I started in this currency trading world, I tried to trade everything and anything (but I was also trying to scalp 20-25 times a day too) And you know what- this will test my patience to see if I can just stay put unless I see what I need to see.

 

Speaking of this AM, I saw a very nice low volume test on a 30 min chart, closed on the high, utilized that as my entry. Not a huge play, but went Long at 1.9696 and at last ticker check- it was sitting at 1.9721. When I get home from the day JOB I'll give it a nice analysis and see where we sit.

 

Sledge

[Sledge 13]

A Few more questions if I may pose to the group: Obviously I tend to focus on one pair (for now ) but hopefully the questions are broad enough to encompass all currency pairs or other instruments:

 

1. Right now we see the GBP/USD break out a bit to the downside. At least it broke out of the wedge that it was forming. But it isn't with much conviction. As an example last night (Say 10:00 EST) looking into the background you saw this phenomenon of testing bars, you then saw it creep up with waning volume and little "upthrusts" (bars peaking up and closing on the low) it was a fairly strong sign of more downside to come, but my question is that about 50 pips prior on the downside signals you saw BUYING bars (Bars testing and closing on the middle or highs.)

 

So the question is this- any way to tell a difference between a concerted "markdown" by big money vs. a true breakout? This last evening scenario is playing out to be a markdown, but with obvious signs of buying and selling- it is into gray area once again as to whether this pair is prick-teasing the possibility of heading north again OR going to the basement as the retail trader world seems to be touting (which I think is a load of crap personally)

 

Thanks all!

Sledge

[milliard 10]

As far as Cable goes, I wouldn’t pay a whole lot of attention to activity at 10.00pm EST if I were you. Most of the serious business on that instrument is transacted during London & New York. Tokyo desks might bat it around a little if the cross (GBPJPY) is attracting heat, but any price analysis based around that shifts activity is a waste of time.

 

Again, as far as your specific price radar goes (vsa or volume prints etc) I guess you’re simply going to have to act according to the rules & regulations of your chosen price aids & what they tell you.

 

We don’t recognize it or trade according to that stuff, nor subscribe to volume on the cash – so it’s off our radar.

 

Anna-Maria mentioned in a recent post on here she was waiting for either 9960 to the topside or 9600 to the downside to creak before she climbed aboard that horse, & that’s what she did y’day morning (courtesy of the pullback opp).

 

If you were looking at it via the intradays, then I guess you got a lead in around 9625-30 off the 15m graph on Wednesday morning (London).

 

Whether it chooses to truck on down to next line support at the 9400 will depend on the strength of the participation. Big money, smart money or any other kind of money is irrelevant. If Sterling fundamentals dictate sufficient supply exists, it’ll pump. If not, trailing stops will take care of business.

 

Sterling weakness has reared up again (check your Sterling pairs), therefore the value is to the short side on Cable if you’re touting it.

 

Until it spins out or tells her otherwise, she’ll look to aggressively compound the short side of Sterling.

[Sledge 13]

Milliard-

Thanks again for your insight. I keep forgetting to let that "NY Close to European Session Open" timeframe carry less weight than the NY or London session tallies. Something I must begin to work on and remember.

 

Most appreciated!

Aaron

[Sledge 13]

Milliard-

Question on Futures (taking your advice on looking at them vs. spot)

 

What is the difference between:

British Pound (E) (B6M8)

British Pound (BPM8)

 

Or Say:

Euro FX (ECM8)

Euro FX (E) (E6M8)

 

Thanks!

Aaron

[Anna-Maria 10]

They're all out the door & headed for the beer garden Aaron on this (rare) spell of hot & sunny & British weather!!

 

I think you'll find those pre-fixes simply relate to the month of the specific contract; ie....BPM8 signifies the June contract on the Pound, B6U8 the forward Sept contract.

 

Same on EU: E6M8, the June & E6U8 the Sept contract.

 

We don't trade the Futures, so any in-depth info regards that side of the fence will have to come from other members who maybe trade them?!