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Pipster's Trend Analysis from 4hr\Daily 1 reply

Trend technical analysis 8 replies

Trend Analysis for REAL Traders 4 replies

Here is what you should know: The Consensus!

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  • First Post: Dec 18, 2012 10:55am | Edited at 11:55am
I came across these very true paragraphs from trader on this site that seem to capture the simple, true essence of a trading system. I have discovered this truth myself and that is why this piece rings so true. Being good at the principles outlined there makes for a great system and with good money management trading is less of a challenge and more like a money machine to be topped into continually. These are the elements that need to be discussed, and mastered. Anything else is a waste of time. This thread I hope should develop into - TREND IDENTIFICATION ON PAIRS, S/R Analysis and possible Entry Consensus, Here is:

Quote
The one thing you have as a trader is TREND. That is your edge. The next thing is SUPPORT AND RESISTANCE, that is your second edge. Candle sticks are useless they mean NOTHING, candles from different brokers, depending on time frames, look different so the same market gives different signals huh, useless.

But, at the right points, i.e support and resistance levels, you can see how price reacts, HERE candles mean something. So what do I look for, firstly the trend has to be going in the direction I want to trade, secondly I look to trade currencies that move and don't range. The daily trend is indeed your direction finder, it points the way.
Mike Horan. Source: http://www.forexfactory.com/showthre...33#post4618333
TODAY I am mainly focusing on the EUR/JPY:

Trend segment start: (roughly) 106.851
Tend: UP - BULLISH
Time to buy: I would not (buy) add to positions at moment, waiting for slight pullback....
"There are 100's of ways to enter the market, breaks of resistance, pull backs, what is critical is stop placement." Your stop/ risk control is what keeps the money in your bank account. No matter how effective your system is, if you do not LIMIT LIMIT LIMIT LIMIT emphasis... limit risk on entry into the market, you will have no money left in your account and your dreams for success in this business will only remain fleeting dreams... not reality. Risk control is whats makes you in this business...
Taking your profits....!!! TAKE IT, TAKE IT, TAKE IT emphasis Take it. However you prefer - by setting profit targets or the run of the market... just take it. I personally prefer the run of the market. It's only by taking your profits that you will get what you want out of the market. Your system lets you in the market, the market should let you out. Don't force the matter... it's virgin.
That's all you need to know to make money in Trading. There are hundreds of 'systems' on this website that in someway or another fulfills the principles for success in the market outlined in the previous postings. If you don't like any. A simple exponential moving average on your chart will do. If you ask me for my system. My answer: It's simple... too simple. You already know it. Know your trend.
I don't even believe in support/resistance or its variants - round numbers, fibs, pivots whatever. IMO the whole idea of support and resistance is in direct conflict with the idea of currency correlation and intermarket correlation. People who use support and resistance in their trading have a poor understanding of how financial markets operate in relation to each other. The trend is the only friend you have, everything else is bullshit.
If you can't dazzle them with brilliance, baffle them with bullshit.
Quoting numbnuts
I don't even believe in support/resistance or its variants - round numbers, fibs, pivots whatever. IMO the whole idea of support and resistance is in direct conflict with the idea of currency correlation and intermarket correlation. People who use support and resistance in their trading have a poor understanding of how financial markets operate in relation to each other. The trend is the only friend you have, everything else is bullshit.
Hello numbnuts

There is some truth in that, but I don't fully agree. Central banks have been known to protect certain price points for certain reasons. Therefore the concept of support/resistance holds true.
Top-Forex-Systems. com
Quoting numbnuts
I don't even believe in support/resistance or its variants - round numbers, fibs, pivots whatever. IMO the whole idea of support and resistance is in direct conflict with the idea of currency correlation and intermarket correlation. People who use support and resistance in their trading have a poor understanding of how financial markets operate in relation to each other. The trend is the only friend you have, everything else is bullshit.


Buy low, sell high = support and resistance. I'd suggest you don't understand how markets behave if you think this is somehow illogical...
"Don't Panic..."
Central banks have been known to protect certain levels on very rare occasions - very rare when you consider how often prices test these levels.

Flick back and forward between eur/usd and eur/gbp, you will easily see the two are highly correlated. When one goes up the other goes up, when one goes down the other goes down. What happens when eur/gbp approaches a resistance level? Will eur/usd stop and reverse too? Of course not - usd is much stronger than gbp, so eur/usd will go where it wants to go and eur/gbp will follow ignoring any s/r levels in its path. If it doesn't follow automatically, bank arbitrage programs will aggressively swap the difference until the correlation resumes.

We know about correlations between currencies when a smaller economy neighbors a larger one - nzd follows aud, cad follows usd, chf follows eur etc. But currency correlation is just the tip of the iceberg. Each currency also is highly correlated to its equities indices and commodity prices. When the DOW or NASDAQ indices go up and down, the usd follows, then cad follows usd. nzd follows aud which follows gold and steel prices, but it also follows prices of its agricultural exports which roughly follow oil prices, which lead to changes in usd. And it gets much, much more complicated than that.

When we look at a chart and go long or short, we are not just placing a bet on that currency pair - we are betting on an incredibly complex network of changeable relationships between various financial instruments. Going long on eur/usd means we are predicting that the basket of instruments which have varying effects on the relative value of the euro will appreciate in net value against the basket of instruments which have varying effects on the relative value of usd. Think about that next time you see price approaching a s/r level.
If you can't dazzle them with brilliance, baffle them with bullshit.
Buying with the trend would mean that the smart money has already been in position and is now selling their positions to you so they can take profit and you can take the toxic inventory!
Play the players, not the cards.
i use price action in my trading. but it's not the holy grail. if you don't know what you're doing you lose. my impression is that a lot of people lose using price action. support resistance is the mantra of this forum but its strong discretionary side makes it very difficult to profit from.
Quoting numbnuts
Central banks have been known to protect certain levels on very rare occasions - very rare when you consider how often prices test these levels.
Not correct. I'm not talking about direct intervention. I am talking about everything in general - from monetary policy to the daily comments they make. They can (and do) influence price in such ways where supports and resistances are created.

Correlations, trends, etc do exist, which is the part I agreed with, but that's a separate topic from the 'support and resistances don't exist' one.
Top-Forex-Systems. com
Quoting GnarlyPips
Buying with the trend would mean that the smart money has already been in position and is now selling their positions to you so they can take profit and you can take the toxic inventory!
That is the case if you get in at the wrong time.
Top-Forex-Systems. com
Quoting 2+2=4ex

Correlations, trends, etc do exist, which is the part I agreed with, but that's a separate topic from the 'support and resistances don't exist' one.
I am not suggesting that s/r levels don't exist, only that they are far, far weaker than they are widely given credit for. And I don't think correlations and s/r are seperate topics - my whole point is that they should be thought of together. Each currency pair is closely correlated to related pairs and each individual currency is correlated to other markets. When a pair approaches a s/r level, one of two things can happen - the pair can respect that s/r and reverse, breaking its correlations - or it can follow correlation and ignore s/r. It's kind of like evolution vs creationism, it's a one or the other deal - you can't believe both.

And I am not suggesting people who use s/r cannot make profits - I am sure there are profitable traders who use it. I am suggesting that their profitability comes from other parts of their system. I personally use an ultra simple trend based system which is a consistent winner over a long period of time. If I added s/r analysis to my trading, I am sure I would still profit - but it wouldn't add anything to my system.
If you can't dazzle them with brilliance, baffle them with bullshit.
Quoting 2+2=4ex
That is the case if you get in at the wrong time.

That's the case only if you get in after realizing there's a "trend". How does one define a trend, anyhow? What does a trend represent in the physical world? What's going on "behind the charts"?
Play the players, not the cards.
Quoting GnarlyPips
That's the case only if you get in after realizing there's a "trend". How does one define a trend, anyhow? What does a trend represent in the physical world? What's going on "behind the charts"?
That is literally the million dollar question.

Top-Forex-Systems. com
Quoting GnarlyPips
Buying with the trend would mean that the smart money has already been in position and is now selling their positions to you so they can take profit and you can take the toxic inventory!
LMAO.

Triberry started this thread to declare that he has lost faith in technical indicators and there are only two absolute truths left to believe in - trends and support/resistance. I am doing my best to tear up his belief in support/resistance, then you chime in and try to undermine his belief in trends. I think we should send the poor guy a box of chocolates or something, he is probably feeling a bit exasperated now.
If you can't dazzle them with brilliance, baffle them with bullshit.
Quoting numbnuts
LMAO.

Triberry started this thread to declare that he has lost faith in technical indicators and there are only two absolute truths left to believe in - trends and support/resistance. I am doing my best to tear up his belief in support/resistance, then you chime in and try to undermine his belief in trends. I think we should send the poor guy a box of chocolates or something, he is probably feeling a bit exasperated now.
Might as well eat all the chocolates in the box also before sending it to him. LOL
Top-Forex-Systems. com
The bottom line of market direction (and associated correlations etc), is longer term fundamentals, the anticipation of the affect of future events on the markets. The big picture. SR is useful to get into the direction of this big picture if you understand SR not as lines on your chart, but as areas of liquidity, trapped traders and latent orders that are going to be taken advantage of by the bigger players. And of course one can go against the main trend based on this very concept.
I agree that S/R are generally far weaker than how a lot of people in the market today give it credit. If you listen to a lot of people you get the impression that one the market come close to a previous S/R level... IT HAS TO DO SOMETHING. That has become a belief for a lot of people overtime. But its not true. That's why S/R can't be the number one reason for making trades. It should be number two however. The collective nature of the S/R SHOULD be number one: tendency. You guys have probably read this line, but here it is again:

Quote
... at the right points, i.e support and resistance levels, you can see how price reacts (to previous areas of Support or resistance) there candles say something
That is important. When price reacts to S/R at a level, its is important - If price does not react, don't 'think' it is important. And don't even think or believe price will react at a certain point either. The word is: caution.

Another word on s/r. As the market moves it makes s/r levels in various places. For you to tell if the market is demonstrating an upward tendency, support levels will normally occur higher and higher, price bars will normally print higher and higher. And this is also true for a stronger downward tendency. You will see lower and lower Resistance levels, price bars. Not all resistance levels are important but they all have a story to tell about the structure of the market.

What if the market did not show tendency. How would you trade?
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