Reading Charts in Real Time

[thalestrader 14]

Monday's 2 trades: -20

 

The most important take away from today's trading looking at your chart is that you managed to avoid getting chopped to pieces on what could have been a very difficult day. The first trade looked fine. Your entry may have been early (I take it that is what you mean by "wrong degree," but it was a long sequence at the bottom of the range, so a good trade to take.

 

Best Wishes,

 

Thales

[thalestrader 14]

Current look at the Dollar Index ... still resting

 

Best Wishes,

 

Thales

Edited January 26, 2010 by thalestrader

[thalestrader 14]

Lots of things moving like its 2008 all over again, but the EURGBP is biding its time, treating this short like a stroll through the park ...

 

Best Wishes,

 

Thales

[jonbig04 10]

Lots of things moving like its 2008 all over again, but the EURGBP is biding its time, treating this short like a stroll through the park ...

 

Best Wishes,

 

Thales

 

Did you short 6E? Been watching it and thought you may have caught it,

[thalestrader 14]

Did you short 6E? Been watching it and thought you may have caught it,

 

I didn't, but my daughter got short the EURJPY at 128.206 with a 127.00 profit target just before she went to bed ... she'll be very happy in the morning.

 

Best Wishes,

 

Thales

[jonbig04 10]

I didn't, but my daughter got short the EURJPY at 128.206 with a 127.00 profit target just before she went to bed ... she'll be very happy in the morning.

 

Best Wishes,

 

Thales

 

:rofl: That's awesome.

[thalestrader 14]

Current look at the Dollar Index ... still resting

 

Looks like someone woke up the Buck. Now I have to get some sleep.

 

Best Wishes,

 

Thales

[forrestang 10]

No more mechanical tha I described here in the past: I match various fib levels up S/R levels. The 1.27 is typically a BE point for me, though depending upon the size of the swing that got me into the trae and the depth of the pullback prior to the trade triggering, I will sometimes use the 1.38 or 1.618 as my BE level.

 

As far as "common," I guess I would say that it is common for me to exit quickly if price just stops me in a by a tick or two and then pops up 5 or 6 ticks. I would also say that if price moves immediately in my favor, then more often than not it hits the 1.27 before coming back to break even (if it comes back at all).

 

I would caution that while this approach works in all liquid markets, each has its own character. For example, the ES is better traed after a breakout level has tested and hels at least twice and over several minutes (the more the better it seems at times). Whereas the currencies often break a level and move directly to the next anticipated S/R level.

 

I don't know if i answered your questions or not, Forrest, because I am not quite sure I understood them. I hopt that helps.

 

Best Wishes,

 

Thales

Your reply was helpful Thales.

 

I was just saying I seem to observe 3 different scenarios most of the time. Of course anything can happen.

 

1) Price will stop you in, move almost immediately to the 1.27 and beyond.

 

2) Price will stop you in, barely nic your entry so to speak before immediately moving away from your entry and heading towards the last swing point or your ISL.

 

3) Price will do anything in between the two outlined above.

 

My question was about #2 mainly. In that what is it that tells you to exit a position prior to your initial stop being hit when price just nics your entry? Is it just a feeling, a sense of momentum going against you?

[Marko23 10]

EUR/JPY may leave long lasting chop zone

 

[Marko23 10]

EUR/USD left two wedges

[Marko23 10]

EUR/USD Long chance

 

 

Triggered

 

B/E

Edited January 26, 2010 by Marko23

[Marko23 10]

EUR/USD next Long chance

 

B/E

 

Out at 106, waiting.

Edited January 26, 2010 by Marko23

[Gabe2004 10]

I didn't, but my daughter got short the EURJPY at 128.206 with a 127.00 profit target just before she went to bed ... she'll be very happy in the morning.

 

Best Wishes,

 

Thales

 

Good/Happy morning indeeed.

 

Could you tell us what was /would be the reason to short at that level?

 

Thanks

 

Gabe

 

PS I could not draw a line @ 128.206 .This is the closest my platform would allow.

[Beachtrader 10]

Hello Thales,

 

Would I be correct in my understanding this as a potential '3 drives to a bottom'?

 

 

With kind regards

BT

[BlowFish 10]

Thanks for supporting Thales' hint.

 

Currently these wedges fascinate me. I overlooked them far too often.

 

They are an interesting structure. The Wolf Wave thread hear on TL may be of passing interest (also written about in a chapter of Raschke and Connors Street Smarts). That particular chapter can be found on the interwebz for download. These deal with wedges and projecting a target through a couple of points in the wedges.

 

The temptation of course is to try and consider too many patterns/structures and end up confusing oneself. Having said that I am sure it is possible to put together a couple of simple robust strategies ased on wedges. I guess the important thing is to note the loss of momentum and narrowing of range.

 

Edit: Actually when TT first introduced the 'falling wedge after a declining market' (way back when he had Elliot for weekend reading) I thought I should dust off Edwards & Magee, that is my recollection of first being introduced to them.

[Beachtrader 10]

Hello Thales,

 

Would I be correct in my understanding this as a potential '3 drives to a bottom'?

 

[ATTACH]18325[/ATTACH]

 

With kind regards

BT

 

Possibly setting up for a reversal.

 

 

All the best

BT

[thalestrader 14]

... 2) Price will stop you in, barely nic your entry so to speak before immediately moving away from your entry and heading towards the last swing point or your ISL...

My question was about #2 mainly. In that what is it that tells you to exit a position prior to your initial stop being hit when price just nics your entry? Is it just a feeling, a sense of momentum going against you?

 

For a short, the low tick after I am stopped in is a Low. Price then bounces from that Low and rallies 3-4 ticks above entry. That is a High. Price then comes down and retests the low. That is a Higher Low. I am out if price comes back up to make a Higher High. This usually all happens on the same "bar." Bars have nothing to do with it - Highs, Lows, Higher Highs and Higher Lows, Lower Lows and Lower Highs. I am very consistent.

 

Best Wishes,

 

Thales

[thalestrader 14]

... Could you tell us what was /would be the reason to short at that level? ... I could not draw a line @ 128.206 .This is the closest my platform would allow.

 

Sure Gabe. And what I have doen here is I went right to my daughter's computer and her Ninjatrader chart to show what she did. The dotted red lines are hers. The text explanations, of course, I just added this morning for your benefit. The 128.206 level was based upoon the data she was being fed by FXCM, and so your data is likely off by a few pips or so. I think the charts will be self-explanatory. Again, she had the dotted red lines on her chart as early as yesterday morning before school. Everything else, including the blue entry, red stop loss, and green profit target lines I put on her chart this morning.

 

 

Thales's Daughter's Four Step Process For Short Sales

 

 

 

 

 

I hope that helps.

 

Best Wishes,

 

Thales

[thalestrader 14]

Would I be correct in my understanding this as a potential '3 drives to a bottom'?

 

Hi Beachtrader,

 

Looks like it still needs the third push down.

 

Best Wishes,

 

Thales

[Gabe2004 10]

 

Thales's Daughter's Four Step Process For Short Sales

 

I would have never have thought to enter a trade based on a H-L-LH of only 2 bars but this is someting to think about.

I remember seeing this area last night and I went down to the 5min to see if there is a valid sequence but there were none.

 

Thanks for the charts and explanations.

 

Gabe

[Marko23 10]

EUR/USD with possible support from Friday

 

Triggered

 

Stopped

 

New 3-day low, Stop ok.

Edited January 26, 2010 by Marko23

[thalestrader 14]

Possibly setting up for a reversal.

 

Or possibly just a (potentially tradable) "bounce," and perhaps the "C" of an ABC correction before plumbing new lows. What is nice about this approach is that it does not matter - we take the trades, set our stop loss, and either book our profit or book our low, and move on to the next one. I'm on the 6B, and I have a 2R PT. I also have done a little Elliot Wave count to show how I use it.

 

We have three large waves down. These are labeled 1 or A, 2 or B, 3 or C. Why? Because if it has bottomed with the three waves, then the entire decline is corrective, and the uptrend is reasserting itself. No different than any other approach based upon price. Price can do one of two things, continue or reverse. EW recognizes that, and provides for keeping both possibilities open.

 

Last night, had I been up at the break, I would have sold the break of the wave 1 low. This is my favorite trade (and my daughter's as well). A nice big wave down with a three swing reaction against the decline - if I were not such an impatient person I'd do nothing but wait for the the 1-3 times each week that these present themselves on the 6B and 6E and forget everything else. My first PT would have been 1.6120, which would have been filled, and my second PT would be 1.6056, and would still be open.

 

Right now, we have a potential abc up from the low. While this would be a small correction for that third wave decline, but price can do whatever it wishes, so there is nothing standing between this market and news lows but the will of whatever intrepid bulls and frightened bears there be.

 

If this is three waves of an eventual five wave decline, then this bounce/rally should find itself not much higher than the green line marking the wave 1 break down level.

 

I do not write the wave counts on my charts. Like most of my annotations, I do these today for the sake of posting the chart. But I do see these waves, and I do take them into consideration when I am making my decisions. I am not predicting an eventual wave 5 lower low. I am not predicting a rally back to the extreme wave 4 target of 1.6180. I am not even anticipating either as an eventuality. All I am doing is recognizing the mere possibility of each, and trading on what price indicates is more likely to happen next. In this case, since price gave me a long sequence (Low-High-Higher Low), I am trading to the long side. If price is not going to continue higher, that's ok, because I have a stop loss that will take me out and limit my loss.

 

The first chart shows my long entry and stop loss. The second chart shows the wave count.

 

 

 

Best Wishes,

 

Thales

[Beachtrader 10]

Possibly setting up for a reversal.

 

[ATTACH]18328[/ATTACH]

 

All the best

BT

 

I ended up taking a 9 pip loss on this trade which couldashouldawoulda been a b/e trade but I got transfixed with price busting that 6144 resistance - which it didn't!! Anyway on to the next one for me and looking for a LrH below 6144 for a possible short entry or a break above to go long.

 

 

Kind regards

 

BT

Edited January 26, 2010 by Beachtrader
9 pips not 10 for the sake of accuracy!

[Beachtrader 10]

looking for a LrH below 6144 for a possible short entry

 

 

Kind regards

BT

[thalestrader 14]

time to be short the 6B - targets 1.6059 and 1.5932 below...

 

 

 

Best Wishes,

 

Thales