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Anna-Maria

Week 48

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Monday kicks off with Cable consolidating at the top side of Friday's range play.

 

Reasonable near term support rests at c8930 on the 60m frame, with the Round Number (1.89) offering secondary support ahead of last weeks Fib activity @ 8850.

 

To the upside, 8975 & 1.90 psychological resistance are marked on the 60m as the 1st line targets for the (Cable) Bulls.

 

I'll be waiting to draw in my Asian range H-L barriers as usual, to guage the early week flow & either side potential....the data cupboard is relatively light leading into Thursdays Thanksgiving Holiday, so we could well witness reduced flows (& pockets of spikey volatility on Cable) this week.

 

The 15m frame below plots the S&R 1-2 lines for todays play.

 

attachment.php?attachmentid=289&stc=1&d=1164006668

gbp18.gif.86a690765528a56b1beb90f16f628dfc.gif

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An alternative to the European instruments this week, given the data releases due for print, could well be CAD.

 

It's nudging a key weekly level & houses some pretty good step levels which will attract each-way interest from it's recent journey.

 

attachment.php?attachmentid=290&stc=1&d=1164012072

 

attachment.php?attachmentid=291&stc=1&d=1164012070

cad1.gif.e59b1d30f1d94be84be90d0b18e8f32b.gif

cad2.gif.1dd19b9fbde60936c10190399b5a1923.gif

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I've let the Cable shunt up thru the consolidation break pass by this morning. It spiked a little too fast for me thru the Tokyo range after the minor UK data, & is bobbing to & fro underneath this tricky S2 resistance line.

 

I prefer to focus & manage the Franc trade from Friday, which has mirrored Cables move thru the consolidation barrier to test the 1.24 Big Figure.

 

I've pared out a little more profit here as it nudges the 78.6% reverse zone marked at this current s&r level.

 

Remaining stops can now be re-adjusted down to sit above Friday's lower range barrier @ 2460 to check any return move back into the range.

 

attachment.php?attachmentid=292&stc=1&d=1164019799

3swiss.gif.06063f583d0e065da4297900bba60a65.gif

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Looks like a breakout here. Looks like a pullback is there but not sure if the resistance above will be able to broken after Friday's push. I'm going long from the pullback and test the morning's high and see if it can take it higher.

 

attachment.php?attachmentid=293&stc=1&d=1164022341

GBPUSD-5MIN-LONG-8961-STOP-8945.gif.e8d9cb4c4bd83dd22a9098d8b84b09c6.gif

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Yeah, it's maintaining a steady line around the Asian high zone, so this pullback from the mornings highs could well establish some decent support/attraction into the NY Open.

 

Certainly encouraging to witness the higher low off the London Open!

 

All the best with it ;)

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I noticed that in forex, compared to futures, the trader has to have much much more patience in order to let the prices play itself out. I don't usually do overnight holds but in forex it's the only means to make big gains. I'm learning already!

 

"know when to hold 'em and know when to fold 'em"!

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Wouldn't disagree with that comment torero. Not that I trade any other instruments apart from currencies, but patience sure ranks high on the pre-requisites when trading these things!

 

That + finding a couple key (repetative) behavioural assistors ;)

 

Same old, same old huh?

 

attachment.php?attachmentid=294&stc=1&d=1164114875

gbp19.gif.7af16416c3cb1e492c81481011dc3a46.gif

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I have a question, it looks like Cable is stalling below 9000. It still shows higher lows but the Euro is showing lower highs, divergence. In your experience, do Cable and EURUSD correlate well or not?

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They generally move in tandem to one another, as the attached correlation graph highlights.

 

Occasionally, if one is experiencing some flak at a keen technical level or maybe awaiting an item of (specific) Fundamental importance, it will step out of line.

 

But in the main, they're pretty much bosom buddies as far as directional bias is concerned.

 

Again, from an intraday perspective, Cable is the 'sprinter' as far as range extension goes, with Euro playing catch-up....but then, that's no surprise given it's volatility attraction.

 

attachment.php?attachmentid=295&stc=1&d=1164125586

correl.gif.f43d8bf11ce8fcb4f56e3f29bb26d5c4.gif

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Our brother usually keeps tabs on the intra-session/week/month volatility numbers, but to be honest most of the info can be derived by careful (daily) record keeping.

 

However, again it highlights the % balance between the majors & one of the methods we use to re-configer our intraday R1-2 & S1-2 levels.

 

Usually, unless they step wildly out of synch, we'll keep them to the avg 35 & 50% guides on the Cable/Euro...but now & again, he'll update the range extreme percentages to give price a little more breathing space.

 

The 2006 numbers have yet to be calc'd on the weekly range extremes etc, but we don't expect them them to be much out of line on the 2005 numbers.

 

The intraday pip range figures further confirms the increased pace in which Cable travels over & above it's fellow major pairs.

 

attachment.php?attachmentid=296&stc=1&d=1164127689

 

attachment.php?attachmentid=297&stc=1&d=1164127644

piprange.gif.acdb2f2b568320ec0d4414879795cb9c.gif

wklyrange.gif.88ad30fdf0e7616fbc038fa4664e866a.gif

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Excellent analysis, tex! This will be very useful for me down the road.

 

I finally closed out my long position waiting almost the entire day for it come back to 9000 to hit my target. Forex requires more sitting on one's hand more than any other instruments I've traded up til now. This is a really good test to the daytrader.

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Yes, it's certainly borne true on a number of occasions torero. It sure pay's to observe prices & react accordingly if they either continue to 'trend' or set-up a reverse/pullback opportunity on or around a Big Figure.

 

Reduced liquidity is sometimes a double-edged sword, certainly where currencies are concerned.

 

Although NY will be sidelined, & the London flows will also be light, these conditions can occasionally work to the advantage of traders. Like anything else, if opportunity exists according to your trade template/plans, then as long as appropriate risks are considered & strictly adhered to, it's 'good to go'

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I prefer to focus & manage the Franc trade from Friday, which has mirrored Cables move thru the consolidation barrier to test the 1.24 Big Figure.

 

Remaining stops can now be re-adjusted down to sit above Friday's lower range barrier @ 2460 to check any return move back into the range.

 

 

Update on this Franc trade:

 

I've trailed our stops down at lunchtime (London) to sit at the 1.2360 zone after this next leg shunt down, locking in a bit more profit. Price never traded thru the stop line at all this week, & never really looked like shaking out the shorts from last Friday.

 

Next line (Daily) s&r zones are now in focus, which we'll attempt to trade in line with appropriate management. It's often a "trade-off" as to whether the stops require slight upward/downward adjustment once a move gets under way, but compounding (& paring out) back in allows a potential move to soak up any extra fee's, whilst capitalizing on an aggressive trend run.

 

Anyhow, we'll see how much farther this run takes us!

 

attachment.php?attachmentid=299&stc=1&d=1164207293

 

attachment.php?attachmentid=300&stc=1&d=1164207235

swiss4.gif.6662920b2c0d2c6254c539fb419e192d.gif

swiss5.gif.6b2c42552cd54dbe6a96e28a7ffe76a6.gif

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Thank you for your kind comments, they’re much appreciated!

 

I think by now, you will have noticed the common denominator in the vast majority of these trades? You’ll certainly have observed that most of my entries revolve around breakouts in one form or another.

 

This isn’t the only set-up we execute by any means – but it does form the basis of my/our activity on these instruments. However, like any set-up, to offer a decent potential return v/s stake-risk deployed, it has to include rigid parameters. And in the instance of triggering a trade via a pullback opportunity, there has to be a confirmation of “intentâ€Â

 

That intent reveals itself to me by means of a ‘test or pullback’. If price fails to retrace or re-test a breakout level, then it goes without my/our money. Simple as that. No head scratching, stressing out about losing out on a move, worrying bout whether it’s faking or teasing etc etc…..if it breaks, it pulls back offering an opportunity to climb on – or it doesn’t receive our funds.

 

Experience tells us there are plenty of (other) opp’s on other instruments or candidates which adhere to our strict rules, rather than risk our entry money on half assed trades.

 

These (currency) markets are fickle enough at the best of times, without us playing tag with their silly games.

 

I don’t mind which timeframe I witness the pullback from. 5m thru 60m are the most sensible frames obviously, but the Daily/240m template frames will offer the clues….it’s then a case of drilling down to focus on the level which stirs our interest to trigger the entry/compound etc.

 

Nothing complicated - no complex indicator signals to observe, no if’s or but’s….just pure, plain price activity signals. It either breaks the line & fakes out the weak hands before continuing on (which is where we climb on) or it breaks, pulls back & ranges.

 

We then have a choice: either revert to a range trading strat or stand aside.

 

Sooner or later, due to the massive volume participation which FX attracts, price will break out & trend. Ok, the trend might only shunt for a couple cents or so, other times it will shift pretty quickly for a 4-5c run…..but that’s where the trade management will determine how much of a move we book.

 

There are plenty of opportunities across the majors every week to keep you busy, as long as you possess a strong, basic & consistant method/plan of taking advantage of these moves.

 

That’s the real key!! Plan the trades & trade the plans!

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Contrary to popular belief, currencies spend a good part of their life in ranging environments.

 

I guess it depends on how you determine (& trade) your ranges? Sure, the lower timeframes regularly throw up very tradeable ranges, but a quick mosey out into the larger frame references will clearly highlight the primary range(s) where applicable.

 

One persons trend is another one's range :)

 

I guess you're maybe referring to tighter range boundaries on the Index Futures? I can't really compare the 2 with any degree of accuracy, because I don't trade them.

 

But ranges not only appear on these instruments with increasing regularity, they're also very tradeable!

 

attachment.php?attachmentid=301&stc=1&d=1164228416

 

attachment.php?attachmentid=302&stc=1&d=1164228358

gbp21.gif.aa0ce01c50371fda2fef8d2d7a24aaae.gif

eurrange.gif.d180c6525a7e6d8984fe782a8e6366b1.gif

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To be honest, you'll unearth more traditional & better behaved ranging candidates on the crosses than you will via the majors.

 

If you scroll back thru your favored timeframes on a few of the popular crosses, you'll see what I mean.

 

The 2 examples below offer a reasonable selection of the types of behaviour you'll witness. A case of horses for courses.

 

attachment.php?attachmentid=303&stc=1&d=1164229707

 

attachment.php?attachmentid=304&stc=1&d=1164229647

range2.gif.9cbc96aa931522ca7f99fd3bd3265cc7.gif

range3.gif.92f4a8354b34f706a46bab77475a7d8c.gif

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Good day, Texxas! (Yep, I am who you think I am.)

 

Awesome trading! You continue to amaze me. And as always, your analyses (just like your brothers) are bang on!

 

There is a bunch of whooplah spewing out of some of the analysts out there that cable may see another one of its seasonal bull runs during December. HSBC did a great research article a while back trying to figure out why cable sometimes runs during December. They cautioned that because the market is now aware of this behavior, the run may be subdued this (and subsequent) year(s), or may be observed during November or January instead.

 

You've been in this game far longer than I have. Have you noticed this behavior? And if so, has it become less pronounced in recent years?

 

Keep up the great work!

 

- Cowpip

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Howdy Cary :)

 

You got your spies out buddy? ;) LOL.

 

I can't recall now who it was, but one of the research houses compiled a similar study back in late 2004, attempting much the same kinda stats. I don't think they drew any conclusive results on it though.

 

Personally, I don't think it's very worthwhile spinning back much beyond 2000 to guage this type of behaviour. The make-up of the markets have changed enormously since then, due to a number of reasons (main one being the much hyped attraction over recent times within the retail community).

 

But I guess 2000 thru 2003 were the better end of year performance sprints for the Cable of late. They were pretty decent trading periods as I recall. The 90's weren't anything too special, and as you say - there doesn't appear any concrete reasonings for it.

 

Obviously, a whole heap of book balancing takes place around end of 4th Quarter & 1st Quarter tends to inject a fair pace of volatility for obvious reasons, so I guess it's merely a case of 'common sense' if the Cable is kicking in a 'trending phase'? which is certainly was in 2002/03.

 

All's I'm bothered about is that volatility exists. I'm not too choosy what direction it takes :)

 

I'll leave all the debating to those who have the time to study it ;) December is the month to crank up the credit card a/c - the more $$'s which hit the a/c, the more Jimmy Choo's I can snaffle LOL.

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The Buck wiggled lower today to our aforementioned focus levels on the bearish technical breakdown off the 4hr frame.

 

We've pared out a good lick of the compound stakes & most of the remnants of the original positions down here, with last remaining positions sitting at the level marked on the graph.

 

I'm happy that level now offers us fair value on any renewed $ strength off this 1.2200 Big Figure. It's travelled 3c since our entry last Friday & that's good enough for me.

 

The hourly is printing a whole heap of neutral/reversal bars & if the resulting action can haul itself above today's red bar, then it's welcome to our stops!

 

I'll assess the follow thru potential tomorrow to guage the next level bias, but I wouldn't be surprised to witness a little kickback on the buck at these levels.

 

We'll see.

 

attachment.php?attachmentid=307&stc=1&d=1164300701

swiss6.gif.5000268f3ce84b18826c73ddcad71b7c.gif

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