Trade Discussion and Analysis

[pipMonster 10]

Thanks for the charts, Wasp. I've been following your strategy for a couple of months now and each week up to this point has been very profitable for you. This week, in fact, up to the point you posted the charts would have been break even had your laptop not died. That's not a bad thing with the market being as whippy and wild as it has been this week.

 

Your strategy has been consistent as long as I've been following it. Every setup now and again meets a market that seems to thwart it's every signal. This is one of those weeks for you. DON'T MAKE ANY CHANGES TO YOUR STRATEGY! Nothing is proven in one week. If next week brings on the same kind of problems, then start considering making some changes. Cowpip's observation of moving the strategy to lower time frames looks to be a reasonable proposition.

 

Right now, we're trading during the most unstable financial time in nearly 100 years. We still have not seen capitulation in the US stock market.

 

I'm not changing too much, if anything, about how I trade this market with your setup. I'm up for the week and most likely because I'm being very picky in my entries(though I got wacked pretty good last night) which has reduced my trading frequency. If that's what it takes, so be it. I'll continue to let this rattle around my brain, but for now, I don't believe any changes are necessary.

[wasp 10]

cowpip posted a good thing.... High volatility, drop the timeframe....

 

This is the last 24hrs!

[cowpip 10]

It seems to work fairly well (for now). I started using the 5-min TL's and took most of the 150 up and about half of the move down (I screwed up and gave back half of the way down). But still... that ain't bad for a few hours of work.

[wasp 10]

I thought about it but I had this nagging feeling that if I deviated slightly from my regular plan, the plan would work and the 5min would screw me!

 

In fact, a quick look through and this was the only day it would have been advised (compared to as far back as I looked)

[cowpip 10]

I thought about it but I had this nagging feeling that if I deviated slightly from my regular plan, the plan would work and the 5min would screw me!

 

Lol... the brain can be an awful thing. That's my concern as well. But so far, it seems to be handling the new conditions ok.

[firewalker 10]

But this has potential:

 

 

we went through that like a knife through butter...

price at 870 already! :shocked:

 

I guess the logical place to find support is at the 2002 lows now.. the speed and angle that accompagnied this fall since last month is just amazing.

[firewalker 10]

... it doesn't always move this straightforward. But when it does, it's very sweet.

 

First: with the absence of any clear S/R I look at the overnight to see if there's anything special to be found. I just note these things, but don't necessarily use them. There was a congestion area that could provide resistance at the market open:

 

 

As it turned out, it did. But what next? Again, if you exited everything at the first or second signal you would still be missing out on a huge move that came in the last hour of the day.

 

 

Just compare the first two charts with the one that depicts the whole daily range:

 

 

When price bounced off 963, there was no way to know price would eventually collapse much further, so I think it's very sensible to scale out there. In any case, you'd already made +40 points.

 

Imho, anyone who sets targets of +5 points in these kind of market circumstances, is denying himself the opportunity of a much larger profit.

[wasp 10]

I've given up on support... there is none! Anywhere! On anything!

[Bearbull 10]

I've given up on support... there is none! Anywhere! On anything!

 

A support line is drawn as previously at this price demand appeared, however just because the line is there does not mean price is going to hold, yes it will be tested, buyers will appear but will supply is better quality then it will overwhelm the buyers, that is all, it is not a question of whether S/R worked this time or did not work IMHO;)

[firewalker 10]

I've given up on support... there is none! Anywhere! On anything!

 

I thought you were all about maximizing exits... in that context, I see no reason to exit a short!

[wasp 10]

A support line is drawn as previously at this price demand appeared, however just because the line is there does not mean price is going to hold, yes it will be tested, buyers will appear but will supply is better quality then it will overwhelm the buyers, that is all, it is not a question of whether S/R worked this time or did not work IMHO;)

 

Arrrrr, 'tis true what you say, but it's no good if your 'cunning plan' keeps telling you to buy support!

[wasp 10]

I thought you were all about maximizing exits... in that context, I see no reason to exit a short!

 

Apart from the 3 successive long setups that normally net me an average 1000 pips a week, neither do I!

[Phil Mibbutz 10]

Yes, it's a nightmare out there, but when/if there's a bounce, it could be ginormous. I think the Plunge Protection squad (if they exist), will be be putting all their efforts into keeping the US market afloat today. There must be some money left, somewhere!

[wasp 10]

Makes you wish you traded longer term really.... Would have been great shorts!

[firewalker 10]

Yes, it's a nightmare out there, but when/if there's a bounce, it could be ginormous. I think the Plunge Protection squad (if they exist), will be be putting all their efforts into keeping the US market afloat today. There must be some money left, somewhere!

 

I prefered the downside. In and out in no time... almost felt like scalping

 

 

Makes you wish you traded longer term really.... Would have been great shorts!

 

longer term? this is a 1min chart if you wait 10 minutes you see a lot of profit vanish...

[cowpip 10]

Alright Wasp... here's how I saw the same page you and I played.

 

It's not as neat as yours... haven't figured out how to annotate very well in Metatrader yet.

 

Total pippage wasn't the "perfect" picture because this is a realistic look at how I would have/should have played it if I had stayed with the 1-hour time frame and played it accordingly.

 

I'm really upset I got side-tracked on the 5-min strat. Bugger! I should have known better. I have a multi-3-digit loss this week. You did exceptionally well compared to me.

 

Next week, I'm going to nail this sucker to the wall!!!!!

[wasp 10]

It's not as neat as yours... haven't figured out how to annotate very well in Metatrader yet.

 

I'll just do this first......

 

For your trendlines: double click line, go into properties and on the 2nd option page, un-check 'ray' and that will stop the lines continuing forever. On the first section you can change thickness and colours.

 

For the Horizontal and Vertical lines: same thing.

 

For the general layout: Right click the screen and choose properties. Then you can change everything from grid colours to candle bodies.

 

Other helpful tips:

 

Tools: options: objects: = change the magnet sensitivity to 0 and you can put the lines on the chart EXACTLY as you want them rather than them snapping to grid.

 

I also remove the toolbars and move the line studies out of the screen to the top as a floating window just so you get more 'screen'.

[Bobby S 10]

This is how I see it for what it’s worth.

 

It’s kicked off a real long range ‘resistance turns support’ zone on this weekly picture & closed well off it’s lows on Friday’s bar, forming a hammer type print on the Daily chart. Obviously, one candlestick doesn’t make a reversal signal, & whether any following bullish push constitutes anything other than a temporary respite in sales of Sterling remains to be seen I guess.

 

Not sure anyone other than die hard and/or wrinkly, old school technicians will be eyeing that particular line in the sand given the rather unique circumstances driving the current price action, but it’s there & visible, so I guess it’s worthy of inclusion for those who follow historical supp/resist analysis.

 

The British Pound mirrored the closing behavior v/s the $US too, so it might well be due a relief rally.

 

 

Selling rallies remained the lower risk option all week really, as the price action failed to re-take it’s lower high swing tops.

The last hourly chart I posted on Wednesday on the other thread, earmarked that 177.0 swing high as it’s near term target, but it got smartly rejected, just as they have done all month.

 

 

That previous swing high at 175.60-176.20 is now the target to try turn this bearish momentum around in my book.

 

The 4 hour printed an indecision doji & bullish thrust bar away from that 166.0line y’day.

The resulting 60 minute bar behavior (doji & spinning top prints) signified profit taking/end of week book squaring ahead of the G7 meeting, after racking up over twice it's average weekly range figures.

 

I guess we'll have to wait see how they take up the slack during the Asian activity & early European trade next week. Risk (aversion) will continue to orchestrate events no doubt, so another round of intense psychology is on the cards hopefully.

 

[cowpip 10]

Not a half-bad analysis there, Bobby. Good job.

 

I don't know if anyone recalls the post I made a week ago or so (was it only a week ago???). I'll repost the image here to emphasize another technical reason why price action has resisted further moves lower. I had no idea that the move down on the monthly chart would happen 5 days after I posted. Wow. What a week.

 

There are basically two scenarios, depending on how you like to measure fibs. The first, which I used last week, would place the target where profit-taking would commence in earnest at current levels (we've now bounced off of that target level).

 

But the second scenario, and the one which I am more inclined to favor, suggests that price action will actually drop down to the target level I note in the second image (the "Corrected Target Level") area. That, to me, seems like a better area, and fits more conveniently with retraces back up to the various 23%, 38% fib levels.

 

Thus, I believe (from a purely technical perspective) that we will punch down to that lower target level either this month or next month.

 

Worse yet, if you're an Elliot enthusiast is the thought that this is only the second wave down. We're due for one more wave lower on this pair sometime perhaps next year. That's gonna hurt, but somehow, it seems to fit with how bad the UK housing situation is and how badly it may hurt the economy.

 

Looks like the yen may end up shining through on this pair.

 

Of course, I don't play the monthly frame. But it's fun to look at. I should also note that as far as my trading goes, I hold about zero percent weight on this analysis. It's fun to predict, but has no bearing on how I trade. I'll follow the ups and downs no matter where it goes. This analysis could be completely wrong. I don't care, since I won't trade it. BUT, it is important to understand your playing field from the long time frames all the way down. And on the long frames, the trend is down.

[wasp 10]

Interesting stuff cowpip. I am hoping this won't happen as it really makes S/R a pain but I digress........

 

I was thinking Friday, as the Nikkei plummeted, that these things are cyclical.

 

Last year the US started heading downhill and the dollar was getting punished as cable rose above $2. Over the last 2/3 months, the credit crunch has affected Europe and thus, the pound and the Euro has started to take a beating.

 

So now both the economies are in worse shape than Gordon browns political future yet the pound is the one thats down as it hit us second.

 

As of the end of last week, it hits Japan and bang, we bottom out and move back up to end the week. Not a huge amount but still pushed back up.

 

Yes we are still in the downtrend but, if the last 12 months are anything to go by, the Yen should now take a beating and the pound recover, even if only slightly.

 

Not that it matters to much to a TA day trader but just thoughts................

Edited October 11, 2008 by wasp

[pipMonster 10]

Bobby, do you know Anna-Maria, Tess and Jocelyn?

 

You're style of annotation is very similar to what they've posted on other threads.

 

Just wondering... :\

[wasp 10]

Where next? (my attempt at being Buffet!)

 

http://news.bbc.co.uk/1/hi/business/7521250.stm

[Bobby S 10]

Bobby, do you know Anna-Maria, Tess and Jocelyn?

 

Yeah, I'm one of their nephew's.

[pipMonster 10]

Thought so. Glad to meet you here. Are you still finishing school or are you into this full time now?

 

Tell them and your uncle Mark that Jack says "Hi".

[cowpip 10]

Where next? (my attempt at being Buffet!)

 

http://news.bbc.co.uk/1/hi/business/7521250.stm

 

Anyone can be Buffet. You just have to pickle your body with cherry coke and burgers. That guy should never die. Or maybe he will, and we won't be able to tell?

 

Nice analysis. Yeah, I too hope that price doesn't go much lower from here. It'll be a royal pain.