No Brainer Trades

1.5610 could very well cap the upside, considering the current sentiment. But if not, another reason to get back up to the 1.5635 area, would be a retest of the recently broken HS neckline. By my count, we should be visiting the 1.5220 area in the not to distant future!

Morning,

Just opened my charts to this lot an order filled and awaiting my first daily bar. That thing sure did take a fall. Keeping a close watch on this one.

Sorry forgot the chart

where's that coffee

Specifically about Cable and EUR/USD. I see a lot of calls to short off of strong resistance levels, however they don't seem to fulfill much of a ret. Taking a look at the past week or so, seeing a follow through after such a big drop, seems a bit out sync to me. Can someone help me out on why we wouldn't expect to see Cable get to at least 1.9855 (if not 1.9900), or EUR ret. to at least 1.5680?

I am long GBP/USD from 1.9769 - it's been a good trade so far - not sure why it has not been posted on page 1 yet as it was a possible trade put forth by BRV...

I assume he's probably sleeping. I'm long from 1.9800, so you're getting the better end of this one

It is NFP day this friday so is the U/J short still valid?

Hi,

looking at a long trade 213.70. You can take this level all the way back to February.

Have a good day guys

When UJ hourly closed above 108.00, did that signify a past resistance becoming support situation. Is the best approach now to look to go long UJ @ 108.00?

BRV, this is a great thread! Thanks to all for sharing valuble insights.

Also, with the downside momentum being soo strong , why not go short @ 1.5590 - 95 looking for a downside run to 1.5555? (looking at 15Min charts)

I am new to this strategy and appreciate your patience with my novice idea's. With that said please feel free to point out corrections and/or holes in my understanding of the methodology. How else will I learn?

Thanks.

Hi BRV,

Considering the magnitude of todays collapse in the eur/usd, do you believe the 1.5635 area to be a reasonable retracement, or, will 1.5610 cap the upside?

Just wanted to comment on today's movement and whats so striking to me in the midst of all this action. Foucusing on EUR and CHF as they're the easiest to guage at this point.

Im just going to go down a list here of all the puzzle pieces, techincal and hype (I dont call it fundamental, I call it hype, because that's all we're trading here) and do a basic analysis of what to expect for today and the upcoming days.

First, a bit about trading the hype:

1. European and UK stock indices spent most of the day in the red before making a tiny recovery at the end of the day. Merrill news seemed to get then there as they were the first to react for it....overall situation bad, bad sentiment, etc.

2. EUR took out 1.5718 early in the session, with little retrace. There's your short signal.

3. Oil got clobbered for most of the day. Everytime I saw a deep spike in oil, I noticed EUR generally following suit. This is helping SPX futures at the same time. Oil commanding a ton of attention and any drops in oil helps out the US.

4. Consumer confidence survey a whopping 1 point greater than expected (being sarchastic this is nothing to go "wow" over, but take it very seriously because it drove much of the action in the market today). In bad times, little glimmers of hope cause the market to go wild.

5. SPX rallied like crazy on this news and lower oil while EUR and GBP equities were generally flat for the day. Treasuries obviously did the opposite.

So you have a mediocre equity market in europe, strong market in the US, lower oil, and technical levels broken and bang, the market sank about 200 pips.

Finding the reversal on a day like today:

As I explained in a previous post, on days like today, start watching price action when you are nearing the 200 pip mark for the daily range on the pair.....this will normally be the cutoff area. EUR and CHF are very correlated, so a high range on one that hasnt gone as far can easily affect the other. 250 pips is the most youre going to see in a day, and that is extremely rare. 200-225 is normal before everybody starts to reposition.

When EUR neared the 200 pip mark, it hit a 618 retracement almost right on the head, but CHF had another 20 pips to go before it hit a .782 retracement, where there is going to be some selling interest (big resistance in general). CHF got the push it needed, but it also dragged down EUR a little bit.

At this point EUR was over 200 pips, and both had hit very significant levels for the day, so at this point you are pretty safe to reverse on both. The most either could have gone would have been perhaps another 20 pips, though very unlikely based on where they were.

2 days now:

Today marks the second day in 2 weeks where the market is running very violently on nothing but fluff. This is why I, along with others, argue about market efficiency, etc....it's entirely based upon speculative action and traders making the most out of what they have on hand. Human interaction outpacing any form of scientific analysis. So what do we do? How do we take part in this nuttiness and make money off of it?

A. Recognize it when you see it.

World economy is bad right now. Any country that stands up on its feet and says "we're ok" gets a lot of attention. Put all the factors above together and you get a move like today. The second that consumer confidence number came out I pretty much knew that was it......here we go again. Be there or be square.

So what do we do?

Play the hype. It makes you rich. Here's what to look for:

1. Interest rate announcements/talk or rumors
2. Anything related to consumer spending
3. Employment data
4. Oil prices
5. World equity indices
6. Other commodities

But you say: "But BillyRay, I'm no economist I came here because it says "No Brainer" right on the thread name!" Ok, fair enough, so let's make it easy.

1. We're day traders, so we take all the news one day at a time.

2. We play into market hype, and what people are looking at here and now, not in 6 months from now.

3. We are playing one curreny versus another at all times, so we need to look at how each country is doing in relation to the big picture.

4. Look at the equity markets. Go to marketwatch.com and there's a little box in the upper right hand corner that tracks the markets. Bad markets usually equate to bad news for the currency, unless there's some interest rate agenda on the platter or comments made by Fed members or other government officials hinting at a better longer term output.

5. Look at the news, and what's driving any hysteria in the equity markets; stupid little things have a big impact on prices, as we have seen.

6. Look at commodities that have a strong impact on the currencies you are trading, and track them. Today oil tanking, good for US economy. They follow support and resistance rules as well, so keep this in mind.

7. Contrast the daily action of one market versus another. If its before the US open, track SPX futures. Today, EUR economy bad, SPX futures doing well. Good for shorts.

Northfinance demos have all the information you need for the above, and the rest you get between here (FF news), marketwatch.com (or any other) and bloomberg.com. That's all you need.

When markets are thin, watch out for the runs. It happened today, and with a lot of force.

What to expect coming up:

After a day like today upside recovery is going to be very sluggish. People are still looking at the daily action and responding to it. But tomorrow we have a whole new can of options; Japan and Australia are up right now, I'm sure in respondance to things going on here in the US and other data (exports, etc). This being the case, near levels should stick fairly well and smaller bounces to be expected.

Ok I didnt expect to write this long.....but be back in a few. Thread pretty busy I'll get to what I can when I can - I had a busy day in and out of the market myself. Go make money in my absence please.

Hi BRV,

Thank you for this thread. Your method looks very solid but we definitely need to get a bigger and (more importantly) more consistent sample to analyze the statistical significance of "No Brainer Trades".

I would like to propose a more consistent way to gather this sample. Can you please maintain a table of officially suggested/approved trades, something like this http://sites.google.com/site/nobrainertrades on daily basis?

I understand that you are busy so as my contribution to this thread I can maintain this table myself. We can ask everybody to submit their proposals by email to me, I can publish them on the URL above, you can revise them and either mark as approved or rejected. After that I can prepare the same performance stats as yours only on approved trades.

Please let me know if you or anybody are interested

Thanks
Oleg

Hi BRV,

There is upsloping daily TL on EURUSD @ 1.5505 and rising. Not a big fan of TLs but this one seems to be major one. The closest level is @ 1.5525. Do you think it will be good idea to fade that level when it crosses with that TL?
Thx.

http://www.whcmarket.com/trade/whctrader
Found this one recently. It has tons of quotes on different markets. Oil and YM I was looking for. Just 2c.

tanx for the info, how long do you think this dollar apprecition would last since its based on sentiments,looks like its continuing from where it stopped yesterday

Ok so level got hit today, but trade not as planned due to the obvious conditions, which we've already talked about. Not stopped out, however, and I think it has some life in it yet on some GBP recovery today. .93-.97 is the exact support area I was expecting a reaction from. Being fair I'm going to go with the top of the range at 9800 and the most we've got +21 pips so far.

From 9800, it reached 9760, so that would be stopped out, wouldn't it? Maybe it would be better to measure from the middle of the possible range?

Just an idea to try and help with keeping the records consistent. Maybe in combination with Observer2000's generous offer?

Yes - it was stopped out and should be added as a loss. Market conditions or not

Mmmm

That offer is indeed generous and also seems a little odd as to why you think i'ts such a good idea