I offer the following by way of critique of commonly held TA assumptions that everybody takes for granted and not as a critique of your efforts. Please carry on.
Common TA assumptions should be scrutinized by anybody who wants to trade with the probabilities. Ask the following question, how can 2 or 3 data points determine a trend? What about all the other data points - are they less significant than the ones that are cherry picked for trend line drawing? How about another question, why must a trend line be a straight line?
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A trend cannot be derived from two points. Two consecutive days of cold weather don’t constitute global (or even local) cooling. A trend requires a statistically significant number of observations, and as such we will determine a minimum number of observations to give us statistical significance. Most traditional TA fails by this rule because it allows for the connection of two points into a line, called a trend line with the inference that the connection of two data points defines a support or resistance area.
There are lots of other basic TA assumptions that need to be revisited. Many of them are detailed in the post linked below.
I offer the following by way of critique of commonly held TA assumptions that everybody takes for granted and not as a critique of your efforts. Please carry on.
Common TA assumptions should be scrutinized by anybody who wants to trade with the probabilities. Ask the following question, how can 2 or 3 data points determine a trend? What about all the other data points - are they less significant than the ones that are cherry picked for trend line drawing? How about another question, why must a trend line be a straight line?
There are lots of...
Thank you for the comments. You have very valid points that all should take note of.
If one is talking on pure mechanical systems then significance or non significance of data points or indicators etc definitely are clouded. However TA is like art more than science, there is naother element... the trader who makes the interpretation of the chart. Agreed?
I like the simplicity of the trendline. By the way, USD/JPY 1H chart is showing a nice trendline. If you look at the daily chart, it's just in the middle of upward movement. So I'm not sure if it can make a good breakout or turns out to be just a consolidation until US Retail Sales data is released. It could be a false breakout, but anything can happen. Let's see.
I just took a look at usdjpy, I guess you could draw the trendline as in the screenshot. But in hindsight.... The art is to draw it in advance.
Hey sorry about this, but this chart seems to be the wrong chart. Charting application is in error. Actually usdjpy is one that I don't follow, simply because of its 'cramped' nature. So apologies.
I'm not sure which part of the chart your screen shot is showing. Mine is USD/JPY Hourly chart. I think either upward or downward break may make an interesting move. Only the market knows though.
I'm not sure which part of the chart your screen shot is showing. Mine is USD/JPY Hourly chart. I think either upward or downward break may make an interesting move. Only the market knows though.
Apologies, my charting app was in error for some reason. Sounds good, your analysis of the situation, I concur...
I follow your thread and I actually use a similar method.
I want to ask you if you have statistics about the % of winning trades and the size of the move divided by the syze of you stoploss(the R:R ratio)?
I follow your thread and I actually use a similar method.
I want to ask you if you have statistics about the % of winning trades and the size of the move divided by the syze of you stoploss(the R:R ratio)?
I'm not sure which part of the chart your screen shot is showing. Mine is USD/JPY Hourly chart. I think either upward or downward break may make an interesting move. Only the market knows though.
Hi emarco, I'm from Japan. Yep, it went down. I actually took a short position by placing a sell stop below the trendline, but already closed it with a small profit. I simply didn't want to hold it longer. Currently, other majors are going up. If this overall move continues, then Yen, a risk-aversion currency, may become weaker, eventually pushing USD/JPY higher later on. I can't tell if this happens or not, really. We'll have to see US Retail Sales data, maybe. Maybe I would regret closing the position too early later on, but it's always good to exit with a profit than a loss especially when you are not confident about the position. I'll look for another one when there is a clearer indication of a trend or a breakout of a trend. Cheers,
The most poignant wording in this report are:
"In recent months we have argued that the US Dollar was likely to recover against the Euro and other key counterparts on extremely one-sided bearish positioning and sentiment. Yet the tables have clearly turned in the Dollar’s favor; CFTC Commitment of Traders data shows Non-Commercials at a record net-long the US currency against the Euro. Such one-sided USD-bullish positioning has made it extremely difficult for the currency to eke out further gains. Indeed, a further unwind would almost certainly bring EURUSD rallies."
Yeah, emacro, actually EUR/USD is now at the verge of an interesting point on daily chart. It'll be either temporarily pullback or a gain after an oversold area on a daily chart (see the chart).
On the hourly chart, it will be interesting if EUR/USD made a pullback to the previous swing high and start gaining momentum again. I'll probably ride on it if I have a chance.
