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  • #1,161
  • Jun 11, 2008 9:20am Jun 11, 2008 9:20am
Here's a very good example of what happens when waves start to collapse. Not sure if the NasDaq daily wave is confirmed yet. However... we now currently have daily wave collapses on all three indexes.
Attached Image(s) (click to enlarge)
Click to Enlarge Name: dowjones_daily.gif Size: 9 KB
Click to Enlarge Name: sp500_daily.gif Size: 9 KB
Click to Enlarge Name: nasdaq_daily.gif Size: 9 KB
  • #1,162
  • Edited 8:47pm Jun 11, 2008 10:38am | Edited 8:47pm
Quoting zoopy
Going to be interesting to see what happens with this pair. It's starting to show possible signs of turning around but things can change by the time the 4 hour period ends. Bias for this pair is down.
This is a follow up to post#1158. This has been on my radar for the past few days and is finally showing signs of weakness and seems to be gathering momentum. What I really look for now is how much time I have until the period ends (in my case it's around 30 min) and where we are in relationship to the closest round number. For a market that is falling, I particularly watch movement around the round number itself and the following increments x.xx90, x.xx80 and especially x.xx70. These areas you tend to find where the big players are located when they decide to buy. If there's no strong buying around these increments, there is a very good chance we fall down to the next round number level.

Edit: Shorted pair. Momentum looks like it's turning around plus we're below 2.0300 more specifically 2.0270.

Edit: Will be pulling trade if upside momentum picks up.
  • #1,163
  • Jun 11, 2008 11:25am Jun 11, 2008 11:25am
I've posted this before in a previous post but wanted to create a whole separate one devoted to this analogy (this way it's easier to find since it will be placed in the index). Not only does it help to understand my current experiment/method, but also helps to understand why one should always trade with the trend.

Before I start with the analogy, when I make reference to the Tsunami wave, I am referring to the big players that move the market and set the tone. The ripples/smaller waves are the smaller traders who follow.

When trading the waves as I have described in the later portion of my journal, I always make reference to spotting well defined waves. The reason for this is because these are the Tsunami waves that we want to keep an eye on. If they start breaking up/down, there is quite often a high probability of a follow through. This is the reason why the market always moves up or down in waves. Because of this movement, we shouldn't be worried about missing the "BIG move" since there will always be another wave to catch. As long as waves keep breaking in the same direction, you don't have to panic or overreact because the momentum of the initial move will more than likely bail you out.

If we make a comparison to Jacko's methodology, the principle is the same. Jacko uses a weekly chart with trendlines to determine the long term trend direction. In essence, he is following the directional move of the big waves and only trading in that direction. If you think carefully about how trendlines are drawn, you are basically drawing them using the bottoms/tops of waves. As long as the waves keep breaking up (in the case of the eurusd), you are more than likely going to be right. You aren't thinking about how to outsmart the market, you are simply following the big players. Having said that... follow the big waves, they are the ones that show you the direction that the market is headed to.
  • #1,164
  • Jun 11, 2008 2:40pm Jun 11, 2008 2:40pm
Was looking at the usdcad pair since I know some traders are trading it. On the daily chart, we have a confirmed wave break to the upside. The move up created a very big wave so there may be a retracement first before heading higher (if the market decides to follow through). On the 4 hour, price came close to creating a wave collapse however it's starting to turn up now. Bias for this pair is currently still up. On the 4 hour watch for price to break the current wave to the upside, including any increased upside momentum OR for a possible wave collapse.

Attached Image(s) (click to enlarge)
Click to Enlarge Name: usdcad_dailybreak.gif Size: 11 KB
Click to Enlarge Name: usdcad_4hour.gif Size: 8 KB
  • #1,165
  • Jun 11, 2008 3:23pm Jun 11, 2008 3:23pm
Quoting zoopy
Didn't realize Bernanke was speaking today. Tally now stands at 12 of 16. I believe he's speaking again on Thursday so that's something to be mindful of.
Tomorrow Bernanke speaks. Our current tally stands at 12 of 16. Will we make it to 13 of 17?
  • #1,166
  • Jun 11, 2008 4:45pm Jun 11, 2008 4:45pm
Quoting zoopy
Was looking at the usdcad pair since I know some traders are trading it. On the daily chart, we have a confirmed wave break to the upside. The move up created a very big wave so there may be a retracement first before heading higher (if the market decides to follow through). On the 4 hour, price came close to creating a wave collapse however it's starting to turn up now. Bias for this pair is currently still up. On the 4 hour watch for price to break the current wave to the upside, including any increased upside momentum OR for a possible wave collapse.
The wave break is in a sideways market, do you trade it, or you only trade the ones in a trending market?
  • #1,167
  • Jun 11, 2008 4:59pm Jun 11, 2008 4:59pm
Quoting Fxtrader
The wave break is in a sideways market, do you trade it, or you only trade the ones in a trending market?
I trade it in all market conditions even ranging. Works on all. I've included a 4 hour chart showing before this recent run up. Keep in mind this was when the market was moving sideways.
Attached Image (click to enlarge)
Click to Enlarge Name: usdcad_4hour.gif Size: 11 KB
  • #1,168
  • Jun 11, 2008 5:06pm Jun 11, 2008 5:06pm
Quoting Fxtrader
The wave break is in a sideways market, do you trade it, or you only trade the ones in a trending market?
Thought I would follow up with another example that was even worse than the movement happening on CAD. Here's a recent example of cable. On the daily chart I remember it was a nightmare just looking at the movement (this was when I was using candles/bars). But... if you look at this on the 4 hour and even on the daily using line charts, it's paradise lol.
Attached Image(s) (click to enlarge)
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Click to Enlarge Name: cable_4hour_range.gif Size: 13 KB
  • #1,169
  • Edited 8:41pm Jun 11, 2008 7:44pm | Edited 8:41pm
Cautiously watching the eurusd as the line chart on my 4 hour is starting to dip down. If there are any signs that momentum is building up on this current move down, I will be pulling my trade. If I can, I'm going to see if I can hold the trade until the end of the 4 hour period.

As a word of caution for those that are thinking about going long. If we happen to close below the horizontal line I have marked on my charts, that signals a wave collapse which could lead to further downward movement.

Edit: Trade was pulled. Momentum picked up. What I will be watching now on this pair is a possible wave collapse.
Attached Image (click to enlarge)
Click to Enlarge Name: eurusd_4hour_weak.gif Size: 9 KB
  • #1,170
  • Jun 11, 2008 8:42pm Jun 11, 2008 8:42pm
There's been another wave collapse on the audusd.
Attached Image (click to enlarge)
Click to Enlarge Name: audusd_4hour_collapse.gif Size: 10 KB
  • #1,171
  • Jun 11, 2008 10:20pm Jun 11, 2008 10:20pm
Unusual to have so much movement during Asian session. I now have a few pairs on my radar.

Look for possible wave collapses on the following:
eurusd
gbpusd
*maybe usdcad

Look for possible wave breaks to the upside on the following:
usdchf
gbpchf
usdcad

I think right now the safest thing to do is to wait another 4-8 hours to see where the pairs land up. By then I'll know which waves to follow.
  • #1,172
  • Jun 11, 2008 10:51pm Jun 11, 2008 10:51pm
Quoting zoopy
Unusual to have so much movement during Asian session. I now have a few pairs on my radar.

Look for possible wave collapses on the following:
eurusd
gbpusd
*maybe usdcad

Look for possible wave breaks to the upside on the following:
usdchf
gbpchf
usdcad

I think right now the safest thing to do is to wait another 4-8 hours to see where the pairs land up. By then I'll know which waves to follow.
Hello zoopy,

EUR/USD is ready for the next wave down...
agree??


sonic
  • #1,173
  • Jun 12, 2008 5:55am Jun 12, 2008 5:55am
Pulled my trade also on eur/usd

Actually I'm still biased for long on eur/usd , going to watch. 1.54000 range. It seems we have a very great support down there. I will look for longs there. If we break a bottom of the wave created on June 5th when I'll change my bias to short.
  • #1,174
  • Jun 12, 2008 6:07am Jun 12, 2008 6:07am
Quoting sonicdeejay
Hello zoopy,

EUR/USD is ready for the next wave down...
agree??


sonic
Since this was posted lastnight, I disagree. My rules to buy/sell are strict and definite. I never doubt what the waves tell me. They represent the market and the market is ALWAYS right. Lastnight I was still biased to the upside because there was no wave collapse.

Early this morning there was a confirmed collapse so my bias has now changed to the downside. This also means I will not buy, only sell until we get a wave break to the upside.

I have attached my eurusd 4 hour chart showing lastnight's close at 12:00am NY. There was no collapse.
Attached Image (click to enlarge)
Click to Enlarge Name: eurusd_4hour_waves.gif Size: 11 KB
  • #1,175
  • Jun 12, 2008 6:14am Jun 12, 2008 6:14am
Quoting kaunasny
Pulled my trade also on eur/usd

Actually I'm still biased for long on eur/usd , going to watch. 1.54000 range. It seems we have a very great support down there. I will look for longs there. If we break a bottom of the wave created on June 5th when I'll change my bias to short.
Could be. Although I don't see any signs of buyers at 1.5420. If there were buyers waiting at 1.5400, you would start to notice a reaction by now. Then again... who's to say I'm right. Market could hit 1.5380 and shoot up like there's no tomorrow lol. Personally though, I think we're going to hit 1.5300 by end of today.

What you could do is let price fall through and if it shoots straight up catch it on the way up if your plan is to buy.
  • #1,176
  • Jun 12, 2008 6:26am Jun 12, 2008 6:26am
Here's my updated eurusd 4 hour chart. We have a clear and confirmed wave collapse. As I mentioned in my previous post, I am now biased to the downside. If this collapse follows through we will be getting waves going down.
Attached Image (click to enlarge)
Click to Enlarge Name: eurusd_4hour_collapse.gif Size: 10 KB
  • #1,177
  • Jun 12, 2008 6:31am Jun 12, 2008 6:31am
Quoting zoopy
Tomorrow Bernanke speaks. Our current tally stands at 12 of 16. Will we make it to 13 of 17?
Tally for Bernanke stands at 12 of 17.

Even though this started out as a joke, I'm actually finding this quite interesting. Bernanke's tone has definitely changed and we're having a reverse effect. What I might do next is do the opposite. Whenever he speaks do a tally of how the USD strengthens. Who knows? We might even be able to use him as a leading indicator lol.
  • #1,178
  • Jun 12, 2008 6:40am Jun 12, 2008 6:40am
This hasn't happened yet but just noticed that oil is headed down to the base of the current wave. If this collapses, we may get a follow through.
Attached Image (click to enlarge)
Click to Enlarge Name: oil_4hour_collapse.gif Size: 10 KB
  • #1,179
  • Jun 12, 2008 7:14am Jun 12, 2008 7:14am
Quoting kaunasny
Pulled my trade also on eur/usd

Actually I'm still biased for long on eur/usd , going to watch. 1.54000 range. It seems we have a very great support down there. I will look for longs there. If we break a bottom of the wave created on June 5th when I'll change my bias to short.
Kaunasny

I posted a chart referring to this level of support in Jacko's thread. Hopefully this is what you're referring to. Wanted to add that so others can see your perspective as well and can understand the reasoning behind it which is definitely a very valid one. If I was trading Jacko's method the way I was trading it before, I would be waiting to buy at 1.5400. But... since I'm using 4 hour waves my approach is different now. In any case, see link below to the post.

http://www.forexfactory.com/showpost...postcount=4111

Anyways, just wanted to add that. If there are other reasons please post them too.
  • #1,180
  • Jun 12, 2008 7:45am Jun 12, 2008 7:45am
Quoting zoopy
Unusual to have so much movement during Asian session. I now have a few pairs on my radar.

Look for possible wave collapses on the following:
eurusd
gbpusd
*maybe usdcad

Look for possible wave breaks to the upside on the following:
usdchf
gbpchf
usdcad

I think right now the safest thing to do is to wait another 4-8 hours to see where the pairs land up. By then I'll know which waves to follow.


Follow the big waves
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