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  • #1,881
  • May 30, 2008 12:12am May 30, 2008 12:12am
Quoting aediaz1
Hi, glad you enjoyed this thread.

I'll try and answer indirectly to your question and illustrate with an chart (the concept of HH/HL) and hope to make it understandable

The reason I add LH LL etc is to make an water-proof "trend-analyze" of which way price is channeling so I'm sure which way I should trade. I just can't stand being caught up in the wrong trend. So I consider a trend strong when it makes new HH/HL in a uptrend or LL/LH in a downtrend.

Take a look at this currently uptrend we have seen on e/u.

Here we have an example where HL is taken out. Then we know that currently uptrend have decreased strength and taking long position have higher risk. On this 4h chart, latest LH doesn't seem too logical but if you look at 1h chart you'll see it clearer. So its pretty similar to support/resistance although I don't take trades on HL/LL. It' simply to measure trends strength which is a part of my system.

When do we know when downtrend is over on e/u ?

We are (soon) forming new LL on 4h chart as we speak. Let's say price heads above previous LH and don't pull back to this area. Then the probability for more upside is in favor.

Remember that we play with probabilities in this game. Even if price should follow this drawn example and form a new HL, we should know that price could "suddenly" head down south again.
Thanks aediaz1 for the illustrations. After studying them overnite, trying to digest and absorb to the fullest, today I'm already better than yesterday!

While looking at your example on EU chart, few questions cross in my mind, hope you don't mind to explain further:

1. to mark the HH/HL and LL/LH swings, which timeframe is most effective (for not too long nor too short but "just-enough" to confirm a solid tradeable trend direction), is it H4 or H1 or ... ?
2. when you draw a downtrend channel, which TL is more important to follow/adjust, the upper or lower one? (vv. for an uptrend channel?)
3. I know best is when we have HH&HL or LL&LH waves (probabilities are more predictable), but sometimes there are HH but also LL swings (and HL but also LH), how to handle these types of wave condition?
4. referring to your example on EU chart, lets supposed if the price make HH&HL, does it need to break the 1st previous LH&LL or it needs to break even further (the 2nd previous) HL&HH (pls see chart) as to presume the price is heading back north?

Hope this is not too many questions at a time, I'm just afraid I'd forget if not asking them all now

Again thanks, I enjoyed and appreciate it very much!
Attached Image (click to enlarge)
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  • #1,882
  • May 30, 2008 1:29am May 30, 2008 1:29am
Here's my chart - short a bit late at 163.41 also short UJ @ 105.40
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  • #1,883
  • May 30, 2008 3:33am May 30, 2008 3:33am
I sold the E/U and sold the U/C and exited when it touched the TLs. I had a gain of 16 PIPs for the E/U and 25 PIPs for the USD/CHF. We will have to see what happens when the EUR news comes out in about 30 minutes. When I look at the E/U Daily it looks like it has a way it can go. My trading style is influenced by the time period I can trade which is the first 4 hours of the London session, so I have to be a short term trader. I had 41 PIPs this morning and my daily minimum goal is 20 -30 PIPs. Now we will see what happens in the next 2 hours.
Attached Image(s) (click to enlarge)
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  • #1,884
  • May 30, 2008 3:44am May 30, 2008 3:44am
My view on E/U

On H4 the Supply TL looks strong, and heading to monthly S1, where i will watch the pair.
Weekly: its not really an engulfing because there are 3 pips missing but i think thats ok.

So the first Qualifier for a downside breakout is
"the price bar prior to a downside breakout must be an up close",
this would be the case if the w-candle from this week is the breakout-candle.

If the next week-candle breaks through Qualifier No. 2 (but not the 1) could be met:
"the current price bars open must be less than both the current TD demand line and the previous price bars close and must then trade at least one tick lower."

Qualifier 3 & 4 wouldnt be met, u could do the explanation as a homework
Attached Image (click to enlarge)
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Invincibility lies in the defence, the possibility of victory in the attack
  • #1,885
  • May 30, 2008 4:35am May 30, 2008 4:35am
Quoting jupiter_peak
Hi Guys,

I have done alot of reading lately especially on Tom DeMark and his ideas. I just finished reading his "New Science of Technical Analysis" and am very bound to buy "New Market Timing Techniques: Innovative Studies in Market Rhythm & Price Exhaustion".

[CUT]
Attached there is some material I have found regarding his philosophy and how it applies to trading.

If you are interested in discussing this further, I also have other material of his theories being applied in FX trading. (true examples)

Hope you enjoy the reading.

Best,

Jupiter.

Hi Jupiter,

I just finished reading the .pdf file you posted about DeMark's methodology and I found it very interesting: this guy came up with an objective way to treat trendline drawing and breakout so that one can easily test strategies based on breakout trades.

So if you have any more material about this subject just post it please as i very much appreciate that!

Best Regards from Italy
1st step stop loss in the green 2nd step play with the free money
  • #1,886
  • May 30, 2008 4:50am May 30, 2008 4:50am
Quoting silverheat
My view on E/U

On H4 the Supply TL looks strong, and heading to monthly S1, where i will watch the pair.
Weekly: its not really an engulfing because there are 3 pips missing but i think thats ok.

So the first Qualifier for a downside breakout is
"the price bar prior to a downside breakout must be an up close",
this would be the case if the w-candle from this week is the breakout-candle.

If the next week-candle breaks through Qualifier No. 2 (but not the 1) could be met:
"the current price bars open must be less than both the current TD demand line and the previous price bars close and must then trade at least one tick lower."

Qualifier 3 & 4 wouldnt be met, u could do the explanation as a homework
Hi Silverheat.
I appreciated your analysis of the E/U, and I do not disagree. The E/U has been in a strong uptrend since 2002, so one always has to use caution when shorting this pair. I am a short term trader so I follow patterns that fits my goals, that is why I sold and exited my trade of the E/U when I did. That is why I waited to see what the price would do around the recent support levels. Although it has moved up, I will not buy it at this time. I want to see patterns develop before I will enter again. I value your opinion, you are right on target.
Attached Image(s) (click to enlarge)
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  • #1,887
  • May 30, 2008 5:00am May 30, 2008 5:00am
Thanks Dcb,

the other thing is, from fundamental perspective, that eur/usd is trending with gold, and also connected with oil. So the last days gold had some troubles, so did oil, and therefore eurusd will struggle. Watch out for charts on gold/oil/usdindex on the public chart list on stockcharts.com, since they are good indicators for eurusd and some good opinions from pros.

Quoting Dcb
Hi Silverheat.
I appreciated your analysis of the E/U, and I do not disagree. The E/U has been in a strong uptrend since 2002, so one always has to use caution when shorting this pair. I am a short term trader so I follow patterns that fits my goals, that is why I sold and exited my trade of the E/U when I did. That is why I waited to see what the price would do around the recent support levels. Although it has moved up, I will not buy it at this time. I want to see patterns develop before I will enter again. I value your opinion, you are right on target.
Invincibility lies in the defence, the possibility of victory in the attack
  • #1,888
  • May 30, 2008 5:19am May 30, 2008 5:19am
Quoting silverheat
Thanks Dcb,

the other thing is, from fundamental perspective, that eur/usd is trending with gold, and also connected with oil. So the last days gold had some troubles, so did oil, and therefore eurusd will struggle. Watch out for charts on gold/oil/usdindex on the public chart list on stockcharts.com, since they are good indicators for eurusd and some good opinions from pros.
Hi Silverheat,
Good insight. Jupiter_Peak has been talking about USD/CAD because it is so tied to oil.
  • #1,889
  • May 30, 2008 5:24am May 30, 2008 5:24am
Quoting Dcb
I sold the E/U and sold the U/C and exited when it touched the TLs. I had a gain of 16 PIPs for the E/U and 25 PIPs for the USD/CHF. We will have to see what happens when the EUR news comes out in about 30 minutes. When I look at the E/U Daily it looks like it has a way it can go. My trading style is influenced by the time period I can trade which is the first 4 hours of the London session, so I have to be a short term trader. I had 41 PIPs this morning and my daily minimum goal is 20 -30 PIPs. Now we will see what happens in the next 2 hours.

This is what I have for E/U and U/C...

E/U - Support line- LTL @ 1.5485. Price couldn't quite break it. This could mean double tops movement could be over and we could head up with a double bottom (possibly)???

U/C - Finding some resistance at +- 1.0530. Not quite at daily top (R3) yet.
Attached Image(s) (click to enlarge)
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  • #1,890
  • May 30, 2008 6:08am May 30, 2008 6:08am
Quoting jupiter_peak
This is what I have for E/U and U/C...

E/U - Support line- LTL @ 1.5485. Price couldn't quite break it. This could mean double tops movement could be over and we could head up with a double bottom (possibly)???

U/C - Finding some resistance at +- 1.0530. Not quite at daily top (R3) yet.
Good morning Jupiter,
I am thinking the same thing for the E/U and the U/C. Today is the last day of the month. The E/U and the U/C may be setting up for next week. I thought the USD/CHF would stop at my UTL on my H4 chart, and I believe next week it will try to move down to my LTL. I also expect the E/U will start its move up, but I want some more pattern development. Have a good day trading today. It is time for me to start preparing to shut down my trade station for the day.
Attached Image(s) (click to enlarge)
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  • #1,891
  • May 30, 2008 6:15am May 30, 2008 6:15am
Quoting jupiter_peak
Hi guys,

Closed my short position with - 6 pips. Why, didn't pay attention to the D1 support bounce!! So I am not dure as of now if it will make a third wave down.

If you notice, there's a double bottom at D1 as well.

Perfect example of how we have always to be very precise in our analysis. I forgot to look at daily... and... had to revise my observation.

Lets see what happens.
I am glad I closed my short trade @ a -6 loss. But I still favor shorts because oil is under a very bullish trend.

There's some news coming from Canada this morning. Lets see what happens.
  • #1,892
  • May 30, 2008 6:32am May 30, 2008 6:32am
Quoting LeveragedJoe
Hi Jupiter,

I just finished reading the .pdf file you posted about DeMark's methodology and I found it very interesting: this guy came up with an objective way to treat trendline drawing and breakout so that one can easily test strategies based on breakout trades.

So if you have any more material about this subject just post it please as i very much appreciate that!

Best Regards from Italy
Jupiter,
I also printed and read the pdf file you put out there. Thank you for that information. I am always reading and studying to improve my trading. One book I have used a lot is The Best Trendline Methods of Alan Andrews and Five New Trendline Techniques by Patrick Mikula. I am now reading Beat The Odds in Forex Trading by Igor Toshchakov.
  • #1,893
  • Edited 10:09pm May 30, 2008 8:37pm | Edited 10:09pm
Hey guys,

I spotted this one at the end of the day.

Will GBP/USD take us to new heights?

Reverse Head and Shoulders on Daily.

I am getting a resistance on H4 @1.924 and R1 @ 1.929. If it breaks resistance and R1, then I believe we should be in business.

Long and short term indicators are all pointing up.

Targets:

1)1.9895
2)1.9974

Lets keep our fingers crossed!!
Attached Image(s) (click to enlarge)
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  • #1,894
  • May 31, 2008 3:04am May 31, 2008 3:04am
Good Morning Jupiter

its funny, to me It looks totally different ...

on the daily i see indecision, which expresses itself as a megaphone on h4, what i learned from this thread is bearish
on weekly there is a bearish hanging man, which has low reliability and needs confirmation says candlestickers, so lets see what will happen next week



Quoting jupiter_peak
Hey guys,

I spotted this one at the end of the day.

Will GBP/USD take us to new heights?

Reverse Head and Shoulders on Daily.

I am getting a resistance on H4 @1.924 and R1 @ 1.929. If it breaks resistance and R1, then I believe we should be in business.

Long and short term indicators are all pointing up.

Targets:

1)1.9895
2)1.9974

Lets keep our fingers crossed!!
Attached Image (click to enlarge)
Click to Enlarge Name: GBPUSD20080531.png Size: 20 KB
Invincibility lies in the defence, the possibility of victory in the attack
  • #1,895
  • Edited 8:56am May 31, 2008 8:37am | Edited 8:56am
Quoting silverheat
Good Morning Jupiter

its funny, to me It looks totally different ...

on the daily i see indecision, which expresses itself as a megaphone on h4, what i learned from this thread is bearish
on weekly there is a bearish hanging man, which has low reliability and needs confirmation says candlestickers, so lets see what will happen next week
I agree with you in some aspects.

The main trend is very bearish since March 14. However, if you notice, the waves downwards are losing power and retracements are becoming stronger.

If you look at the D1, you can observe that an uptrend channel is almost formed(or is it just a retracement for the downtrend???). I took the liberty to draw it before hand in order to observe it early. We still need another H4 candle to close above the one that touches my projected LTL in order to have a valid LH.

Also, I see a formation of a reverse H&S which is not totally defined yet. Like I mentioned in my post, there is a resistance point for this potential up channel.

Also, when I saw the megaphone I conclude that the UTL of the megaphone would be around the neckline of the reverse H&S. So, I might say that around the 1.9850-9860 area we should have a buy signal. If not, short for trend continuation.

One other thing: We have touched the 1.9366 daily support and we could say that we had a double bottom formation as well.

This is why this market is such a challenge.

Again, lets see who wins this battle: Bulls or Bears?

Here's my daily chart. Observe that price has tested the UTL of the downtrend a few times now. I would say 3-4 times.
Attached Image (click to enlarge)
Click to Enlarge Name: gbp_usd_d1_31_05_2008.gif Size: 26 KB
  • #1,896
  • May 31, 2008 3:52pm May 31, 2008 3:52pm
Quoting metapips
1. to mark the HH/HL and LL/LH swings, which timeframe is most effective (for not too long nor too short but "just-enough" to confirm a solid tradeable trend direction), is it H4 or H1 or ... ?
I use 4h and 1h as lowest (best for intra-day trading).

Quoting metapips
2. when you draw a downtrend channel, which TL is more important to follow/adjust, the upper or lower one? (vv. for an uptrend channel?)
Both lines play vital roles. If you see that 1 line doesn't seem logical, remove it. If in a downtrend channel, lower TL is broken you know that the probability for accelerated/stronger downtrend is in favor. And the opposite for broken upper TL.

Quoting metapips
3. I know best is when we have HH&HL or LL&LH waves (probabilities are more predictable), but sometimes there are HH but also LL swings (and HL but also LH), how to handle these types of wave condition?
I only use this "method" to define/measure currently trend if there is any. So if price do what you say here, making HH but also LH, this trend seems to be rather weak, IMO.

Quoting metapips
4. referring to your example on EU chart, lets supposed if the price make HH&HL, does it need to break the 1st previous LH&LL or it needs to break even further (the 2nd previous) HL&HH (pls see chart) as to presume the price is heading back north?
If price breaks first LH, it could be a sign of weakening bears. If price breaks previous HL/HH, the probability for more upside is in favor, IMO.

This might seem like an damn unpractical way to define trend, as many people use moving average to define trend with. Again, I think it's a personal issue. I can't tell you that this is a better way than MA's, but it fits me better, since I register how the market move (in waves).
Measure twice, cut once
  • #1,897
  • May 31, 2008 4:02pm May 31, 2008 4:02pm
Quoting Dcb
The U/J looks like it could reverse and come down.
Got pennant on 4h chart;
Attached Image (click to enlarge)
Click to Enlarge Name: ujpennant.jpg Size: 101 KB
Measure twice, cut once
  • #1,898
  • Edited 5:48pm May 31, 2008 4:09pm | Edited 5:48pm
Quoting jupiter_peak
Hey Aediaz,

Looks like we have great examples this week.

Check this one out. I spotted it today but could not post it because I was too busy at the office.

It seems to me we still have a last wave down.

This one is clearly moving in waves as well.

Downwards channel in USDCAD.
Indeed. Always be on the lookout for strong reversal-signs like double top/bottom.
Attached Image (click to enlarge)
Click to Enlarge Name: usdcad.jpg Size: 111 KB
Measure twice, cut once
  • #1,899
  • May 31, 2008 10:51pm May 31, 2008 10:51pm
i see flag patern on GBP/USD.what do u think traders.it seems potential of break up !!
Attached Image (click to enlarge)
Click to Enlarge Name: flag.gif Size: 38 KB
  • #1,900
  • Jun 1, 2008 2:26am Jun 1, 2008 2:26am
Hi Jupiter,

i think your considerations are well funded, i would also say if that pair if it goes above 1.9850, that could be the start of a short ( what is short?) rally
but below 1.9600 i could imagine that it goes down much deeper to 1.9360

Also if you look on the monthly (i know u are a short term trader ) there is this major trendline, which it hasnt touched yet, so i know i shouldnt go against the trend but what about a buy limit order in the area of 1.9360?
Anyway, it could do anything in a month

Quoting jupiter_peak
I agree with you in some aspects.

The main trend is very bearish since March 14. However, if you notice, the waves downwards are losing power and retracements are becoming stronger.

If you look at the D1, you can observe that an uptrend channel is almost formed(or is it just a retracement for the downtrend???). I took the liberty to draw it before hand in order to observe it early. We still need another H4 candle to close above the one that touches my projected LTL in order to have a valid LH.

Also, I see a formation of a reverse H&S which is not totally defined yet. Like I mentioned in my post, there is a resistance point for this potential up channel.

Also, when I saw the megaphone I conclude that the UTL of the megaphone would be around the neckline of the reverse H&S. So, I might say that around the 1.9850-9860 area we should have a buy signal. If not, short for trend continuation.

One other thing: We have touched the 1.9366 daily support and we could say that we had a double bottom formation as well.

This is why this market is such a challenge.

Again, lets see who wins this battle: Bulls or Bears?

Here's my daily chart. Observe that price has tested the UTL of the downtrend a few times now. I would say 3-4 times.
Attached Image (click to enlarge)
Click to Enlarge Name: GBPUSD20080601.png Size: 12 KB
Invincibility lies in the defence, the possibility of victory in the attack
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