very clever heading...and not such interest topic unfortanately...
- #4,103
- Oct 7, 2008 5:50pm Oct 7, 2008 5:50pm
- | Joined Sep 2008 | Status: Lucky Man | 2,267 Posts
forget about tomorrow, just steal away into the night
Personally, it appears that we are all better forgetting about buckets/cups and other shapes and just concentrate on S & R levels... they may happen to form on occasions but it appears very clear that they are not clear as far as trading/mutual understanding is concerned.
Whenever I get confused I just go back to see how little complication/clutter the likes of BRV and Iron-man put on their charts ... they are the professionals and we are the students.
KEEP your bucket and spades for the beach
Willowgal,
S&R levels are exactly what are represented with buckets.
A bucket forms when support is taken out & then becomes resistance which then reverts back to support again.
The opposite would be when resistance is taken out & then becomes support which then reverts back to resistance.
Clear enough.
Regards,
BabeFX.
- #4,105
- Oct 8, 2008 1:56am Oct 8, 2008 1:56am
- Joined Apr 2007 | Status: Trader | 1,522 Posts
Willowgal,
S&R levels are exactly what are represented with buckets.
A bucket forms when support is taken out & then becomes resistance which then reverts back to support again.
The opposite would be when resistance is taken out & then becomes support which then reverts back to resistance.
Clear enough.
Regards,
BabeFX.
yeah, buckets are nice
- #4,106
- Edited 2:59am Oct 8, 2008 2:44am | Edited 2:59am
- Joined Apr 2006 | Status: Trader | 1,459 Posts
- #4,109
- Oct 8, 2008 3:32am Oct 8, 2008 3:32am
- Joined Apr 2006 | Status: Trader | 1,459 Posts
Thanks BRV, looks like I have a lot more work to do before I reach my goal of becoming a full time trader,
Regards,
BabeFX.
Well look at it this way: learn it once and you never have to do it again....just make sure you're learning the right stuff! I'm trying to do my best here on that one
.
Good post, BRV, thanks for sharing
Can you explain a couple of points for me?
'other currencies are being sold as equities are being sold'
can you please go deeper in detail? I saw such a phrase many times and don't get a correlation here. When you selling an equity denominated in some currency you get this currency and its not necessarily followed by selling this currency.
'...because in order to hold an equity investor also needs to hold the base currency'
why it's so, again, can you go a bit deeper in mechanics? If you want to buy a gbp-denominated stock at LSE you have to buy gbp, then buy the stock, and when you want to exit this position you will end up with gbp in hands, but why should you sell it and why an investor should hold the base currency when holding an equity, denominated in it?
The link between current equity markets fall and usd strength as i can see it is consisted of three things:
1) carry-trades connected with eq markets and carry is linked with all-except-usd/chf/jpy majors, so carry decline => all-except-usd/chf/jpy majors declines, and this by any means is not usd strength directly
2) usd is a N1 reserve currency. thats why when people go cash, this cash is mostly $. This creates usd demand and thus usd uptrend
3) nowadays everyone understand that world economies are in crisis. And us is one that entered it first + one with most sophisticated financial government (despite of all its failures, others are even worse + there is some old, for example Greenspan, reputation playing on the fed's side), thus markets are generally expect that us is probably one that will exit crisis first.
And the link between stocks fall and majors falling is (1) from above + general worries about corresponding economies as the main source (which it of course exactly the source of stocks fall itself)
So we have now a 'overall bear trend', when investor confidence in future was faded widely and thus equity markets and carry pairs are falling, while reserve commodities and currencies have an uptrend.
In my view, this picture will be in place at least until the end of current rate-cut circle, that being implemented worldwide at he moment. After that we probably will have a calming-down period with low levels of market participation and then risk appetites probably will come in again and the reverse process will be originated. Just some thoughts, feel free to argue/discuss
Can you explain a couple of points for me?
'other currencies are being sold as equities are being sold'
can you please go deeper in detail? I saw such a phrase many times and don't get a correlation here. When you selling an equity denominated in some currency you get this currency and its not necessarily followed by selling this currency.
'...because in order to hold an equity investor also needs to hold the base currency'
why it's so, again, can you go a bit deeper in mechanics? If you want to buy a gbp-denominated stock at LSE you have to buy gbp, then buy the stock, and when you want to exit this position you will end up with gbp in hands, but why should you sell it and why an investor should hold the base currency when holding an equity, denominated in it?
The link between current equity markets fall and usd strength as i can see it is consisted of three things:
1) carry-trades connected with eq markets and carry is linked with all-except-usd/chf/jpy majors, so carry decline => all-except-usd/chf/jpy majors declines, and this by any means is not usd strength directly
2) usd is a N1 reserve currency. thats why when people go cash, this cash is mostly $. This creates usd demand and thus usd uptrend
3) nowadays everyone understand that world economies are in crisis. And us is one that entered it first + one with most sophisticated financial government (despite of all its failures, others are even worse + there is some old, for example Greenspan, reputation playing on the fed's side), thus markets are generally expect that us is probably one that will exit crisis first.
And the link between stocks fall and majors falling is (1) from above + general worries about corresponding economies as the main source (which it of course exactly the source of stocks fall itself)
So we have now a 'overall bear trend', when investor confidence in future was faded widely and thus equity markets and carry pairs are falling, while reserve commodities and currencies have an uptrend.
In my view, this picture will be in place at least until the end of current rate-cut circle, that being implemented worldwide at he moment. After that we probably will have a calming-down period with low levels of market participation and then risk appetites probably will come in again and the reverse process will be originated. Just some thoughts, feel free to argue/discuss
- #4,111
- Oct 8, 2008 4:36am Oct 8, 2008 4:36am
- Joined Apr 2007 | Status: Trader | 1,522 Posts
Long now ? 
- #4,116
- Oct 8, 2008 5:46am Oct 8, 2008 5:46am
- | Joined Dec 2005 | Status: It's only money | 1,413 Posts
Long now ?
TRADE FOR SWAP
- #4,118
- Edited 6:47am Oct 8, 2008 6:17am | Edited 6:47am
- Joined Apr 2006 | Status: Trader | 1,459 Posts
- #4,120
- Oct 8, 2008 7:16am Oct 8, 2008 7:16am
I've been meaning to write this for a while. Needless to say its on the blog....those on the list might have seen it already. Its in response to one of the most common questions I get about sentiment and fundamentals, and how to use them.
--------------
Part of my daily routine always involves a thorough check on market fundamentals and sentiment in order to forecast price movement for the following day. For me, its not optional, its required, for a number of different reasons. The main ones being:
·Catch the trend and let my trades ride confidently
·Increase my win rate
·Increase confidence in longer term perspective for trades that follow in the days to come
All three of which can be summed up into: increasing profits.
There are a lot of factors that go into the price of a currency, and many different forces acting on them throughout the day. In addition to a technical analysis of the currencies I’m trading, I do a technical/fundamental analysis of the following when I’m preparing for the day.
·Equity markets worldwide (close attention to US, Europe, UK, Asia and Australia)
·Gold
·Crude Oil
·The Dollar Index
The largest thing I care about is what the market is focused on and how will it affect price. I’ll describe the relationships all of these share with currencies in just a bit.
Money is not created or destroyed, it just moves from one place and into another. The money tied up in carry trades could end up in bonds. Euro hedges on equities could be sold off and USD bought in return. An investor sells USD and buys Gold, viewing it as a safer investment, etc etc. The possibilities can be endless, but all we care about are the big ones and ultimately how it will affect the price of what we want to trade.
As I write this article USD is in a huge uptrend. The main cause of this is equity indices declining worldwide, and other currencies are being sold as equities are being sold. When this happens, people need to buy dollars, as USD is pegged directly to most of these major currencies. So as investors sell EURO, for example, they need to buy USD.
Just like anything else, the market trades in fads. One day an issue is hot, the next day its not. Traders across the globe are reading the news and reacting to it. You need to be on the side of the majority controlling price. Its not as difficult as it seems, it just takes a lot of diligence reading the news and understanding everything that’s affecting your trade.
I don’t mean to turn you into an economist here; you’re not. Your specialty is trading. But you have to understand what’s moving price in order to be on the same page as everyone else. At the end of the day you’ll have greater confidence in your trades and a much better understanding of how everything operates in the world’s largest market.
Back to the details. There are certain relationships that all of the above listed items share, and the obvious reason I care about other markets so much is because they are affecting the price of the currencies. In a nutshell, the table below describes the basic relationships between these markets and the correlations they share.
But just because all of the relationships exist, doesn’t mean they move with each other all the time. On one day EUR/USD might be declining because Oil is dropping hard, but on another day Oil will be dropping hard and EUR/USD is moving higher because of interest rate speculation.
There are many other things that can be said about the markets and pairs on the table above; its by no means the full story, but they’re the basic relationships to be aware of.
For the S&P, Crude Oil and Gold, I’ll also do the same technical analysis I do on the currency markets daily. Ultimately I’m just looking to forecast, and realize that these relationships exist. Technicals work in these other markets in the same way they do in the currency market. If the S&P hits major resistance, for example, USD/JPY has a good chance of turning as well.
They key is to zone in on what the market cares about at any given point in time and react to it. Again, they’re all fads, and some last longer than others. Hysteria and human intervention is what ultimately drives any market, so above all, its key to hone in on what the majority of traders/investors care about and trade along with it.
If I make any recommendation, its to simply read the news. Dig through credible news sources like Bloomberg, Reuters or the Financial Times and take a hard look at what the hottest issues are in order to understand what’s moving the value of the currencies you’re trading. After a while you’ll become more and more comfortable at recognizing the factors that are shifting things around. I also have a live news feed from Bloomberg and IFR Markets next to me all day long. Unexpected events can run the currency market like nuts, so its important I know what’s going at all times. This feed has both made me and saved me a lot of money over time, and I would definitely suggest using one.
. I have been looking for simple correlations chart and "boom" there it is. I hope you guys have been making lots of pips in these huge moves. These are the kind of markets that are riff with emotions. You will never find a more fertile ground imho.Jason
May the fish in your stream of life always bite.