I have redrawn my channel, and it supports the short a little more on the 4 hour chart, however, all daily aspects are still questionable.
Attached Image (click to enlarge)
Could anyone answer as to how the 89sma gives the trend of the market?
Is the trend defined by the being above/below the price, or is the trend defined by the slope of the 89sma?
At the moment many of the pairs are moving close to major MA's and it is difficult to know therefore whether your trade is actually a trend continuation trade or a counter trend trade
AFTAB
Time Will Tell & Price Will Show
Could anyone answer as to how the 89sma gives the trend of the market?
Is the trend defined by the being above/below the price, or is the trend defined by the slope of the 89sma?
At the moment many of the pairs are moving close to major MA's and it is difficult to know therefore whether your trade is actually a trend continuation trade or a counter trend trade
What a great question! And Aftab's reply is worth more pips than you realize right now! When in doubt about direction, wait for the market to show itself to you before getting involved. However, I'm going to be "academic" for a minute (just to give us all something to think about) regarding the trend direction.
Our main objective is to make money in the market, and the easiest way is to follow the path of least resistance (i.e. trade with the trend), right? But, what is the trend and how do we as trader's determine which way the market is going? Isn't the trend the overall direction that the market is moving over a period of time? If that is how we define trend, then why do we argue with our longterm trendlines? If the lines are upwards (and price has not violated the upward support line), than price is in an uptrend (vice versa for downtrend). The real issues is that we, as traders, are afraid of missing out on pips and, therefore, we look to maximize our profits by identifying short-term trends within longterm trends (i.e. the correctional phases of the market ). We trade corrections both for profit and out of boredom. We feel we must always be doing something, and therefore, we trade up, down and sideways.
With that in mind, think about the lines on your chart. You most likely have your longterm trendlines which indicate the longterm directional bias of the market. Within those trendlines, you most likely have other lines which indicate short-term bias (like for cable, it is biased back upwards for the last week, which corresponds w/longterm trend)...The 4 hour system gives you another tool to help determine market bias. The 89 helps with short term market sentiment; if price is above the 89, mood is for buying...if price is below the 89 market sentiment has shifted to selling. Now, you must look at the lines on your chart and see if they are in harmony to market sentiment. The highest probability trades will unite market sentiment with the appropriate technical level on your chart (and sentiment is determined by watching S & R, thinking about price in relationship to the MA's and confirming short term direction w/MACD signal).
OK, the point I'm trying to make is this:
1. Overall Trend direction is determined by seeing the longterm price pattern up or down.
2. Conter trades are naturally against the longterm trend (i.e. any shorting of cable is really a contertrend trade b/c longterm trend is up).
- In the 4 hour system, we define counter trades as going against our short term s & r lines, as well as going against short term sentiment as defined by the 89 (in relation to the other MA's ).
3. Anticipated price direction is determined by the MACD signal/direction.
4. Because we trade short term, we will naturally be looking for a method to identify short term trends (these are defined by our support and resistance lines as well as current directional moves in price, especially in moves away from the 89). When you see the price close to the MA's and bouncing around & between them, you are seeing a period of consolidation and market sentiment confusion. These periods are often difficult to trade because the markets are unsure if they are ranging, trending (even changing trend direction) or just plain choppy. These are the times when you either stay out of the market or trade based on your s & r lines (range plays).
With all this said, let me assure you the one thing traders everywhere struggle with is trend definition. How to define the trend to maximize trading profits (and that is why it becomes difficult
).
Happy trading all! Hope I didn't confuse people too much w/my ramblings...
Pips
- #4,931
- Jun 6, 2007 9:05am Jun 6, 2007 9:05am
Hi Mr. ED,
What a great question! And Aftab's reply is worth more pips than you realize right now! When in doubt about direction, wait for the market to show itself to you before getting involved. However, I'm going to be "academic" for a minute (just to give us all something to think about) regarding the trend direction.
Our main objective is to make money in the market, and the easiest way is to follow the path of least resistance (i.e. trade with the trend), right? But, what is the trend and how do we as trader's determine which way the market is going? Isn't the trend the overall direction that the market is moving over a period of time? If that is how we define trend, then why do we argue with our longterm trendlines? If the lines are upwards (and price has not violated the upward support line), than price is in an uptrend (vice versa for downtrend). The real issues is that we, as traders, are afraid of missing out on pips and, therefore, we look to maximize our profits by identifying short-term trends within longterm trends (i.e. the correctional phases of the market ). We trade corrections both for profit and out of boredom. We feel we must always be doing something, and therefore, we trade up, down and sideways.
With that in mind, think about the lines on your chart. You most likely have your longterm trendlines which indicate the longterm directional bias of the market. Within those trendlines, you most likely have other lines which indicate short-term bias (like for cable, it is biased back upwards for the last week, which corresponds w/longterm trend)...The 4 hour system gives you another tool to help determine market bias. The 89 helps with short term market sentiment; if price is above the 89, mood is for buying...if price is below the 89 market sentiment has shifted to selling. Now, you must look at the lines on your chart and see if they are in harmony to market sentiment. The highest probability trades will unite market sentiment with the appropriate technical level on your chart (and sentiment is determined by watching S & R, thinking about price in relationship to the MA's and confirming short term direction w/MACD signal).
OK, the point I'm trying to make is this:
1. Overall Trend direction is determined by seeing the longterm price pattern up or down.
2. Conter trades are naturally against the longterm trend (i.e. any shorting of cable is really a contertrend trade b/c longterm trend is up).
- In the 4 hour system, we define counter trades as going against our short term s & r lines, as well as going against short term sentiment as defined by the 89 (in relation to the other MA's ).
3. Anticipated price direction is determined by the MACD signal/direction.
4. Because we trade short term, we will naturally be looking for a method to identify short term trends (these are defined by our support and resistance lines as well as current directional moves in price, especially in moves away from the 89). When you see the price close to the MA's and bouncing around & between them, you are seeing a period of consolidation and market sentiment confusion. These periods are often difficult to trade because the markets are unsure if they are ranging, trending (even changing trend direction) or just plain choppy. These are the times when you either stay out of the market or trade based on your s & r lines (range plays).
With all this said, let me assure you the one thing traders everywhere struggle with is trend definition. How to define the trend to maximize trading profits (and that is why it becomes difficult
Happy trading all! Hope I didn't confuse people too much w/my ramblings...
Pips
Thanks for your great reply. You have managed to clarify things very well. In essence the 89SMA gives us an idea about shorter term market sentiment and the trend lines tell us about the actual trend, if I understand correctly.
Transfering these thoughts to my charts I get the feeling that there is a lot of mixed sentiment (or emotion) in the markets at the moment and I probably will not be getting involved until the fog clears a bit.
Good to hear that others are sometimes as confused as I am.
Eamon
Foricks,
I got in as well but that tail above the trendline stopped me out (1200 candle on my platform). Had I set the sl 6 pips higher I would still be in. I entered at 1.0594 with a sl of 1.0626. Macd gave a tc toward zero and back down. All was well and still would be if it had not been for that stupid tail
.
I got in as well but that tail above the trendline stopped me out (1200 candle on my platform). Had I set the sl 6 pips higher I would still be in. I entered at 1.0594 with a sl of 1.0626. Macd gave a tc toward zero and back down. All was well and still would be if it had not been for that stupid tail
.
Wow!!!! Phillip, your lessons keep getting better and better! You have such a gift when it comes to imparting your knowledge clearly!!!!! I really admire you!
You truly are special (here comes some more !!!!!!!!)
Pips
You truly are special (here comes some more !!!!!!!!)
Pips
