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  • #4,801
  • Oct 27, 2008 7:12am Oct 27, 2008 7:12am
Quoting Forex007
BillyRay, thanks A LOT again for sharing you knowledge and experience with us.

Those levels to \"stick\". I took a trade off IB on cable today and used SR as a profit guide. Three levels were hit pretty damn accurately.

P.S. My charts are not as clean as yours, but I simply ignore the \"extras\" (until I need them )

no worries....we all have out secrets
  • #4,802
  • Oct 27, 2008 7:29am Oct 27, 2008 7:29am
2 potential resistance levels on GBP/USD bucket pattern. 5600 and 5680 looks both technically significant levels. Guess we can play both levels if price gets there with tight stops. BRV how would you manage this bucket trade?

Everyones comments appriaceated

Cheers
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  • #4,803
  • Oct 27, 2008 7:58am Oct 27, 2008 7:58am
Quoting smittens4212
... You don't want to be fading support UJ when equities are screaming downwards (I use this example a lot because it's probably the most simple illustration of how fundamentals and technicals can interact)...
Hi,

I am still trying to understand well the connection between currency markets and equity markets. Would a person with better knowledge than me please explain what the above sentence means, exactly? It will be much appreciated.

What I've understood is that "fading" means trading against, which in turn for me on "fading support" above would mean to go short as in S/R trading we expect price to bounce from support. Therefore, going short would mean trading against the expected bounce, wouldn't it? And, since in the above quote we are advised to not fade U/J when equities are going down, are we then saying that we should look for opportunities to go long U/J when equities are going down?.

Thank you in advance. Regards.
  • #4,804
  • Oct 27, 2008 8:38am Oct 27, 2008 8:38am
Quoting belekas
2 potential resistance levels on GBP/USD bucket pattern. 5600 and 5680 looks both technically significant levels. Guess we can play both levels if price gets there with tight stops. BRV how would you manage this bucket trade?

Everyones comments appriaceated

Cheers
FXstreet.com (Barcelona) – The Pound remains bearish against the Dollar, and, according to Valeria Bedarnik, analyst and foreign manager at MolFX Management the pair could test new lows: “The pair has no signs of correction and under 1.5390,we will probably see the pair trying to retest the minimums zone around 1.5270, with an intermediate support at 1.5325. If the floor zone is trespassed, the pair will find next support between 1.5225/40.”

On the way up, Bedarnik advances: “Resistances, in the other hand will be 1.5480, 1.5536, 1.5590 and finally the zone at 1.5640. See the minimums zone; it if holds, a probable double floor will be developing, yet only be confirmed above 1.5930.. so it’s a long way yet, but above that, the pair should rally at 600 pips to complete the figure.”
One Chart is Worth Ten Thousand Words.
  • #4,805
  • Oct 27, 2008 8:44am Oct 27, 2008 8:44am
What he's saying is you look for clues in the equity markets for turning points. The equity markets generally have a positive correlation with JPY crosses (ie, if equities plunge, carry trade loans in JPY need to be paid back so demand for JPY increases, meaning xxx/JPY goes down). We have also seen a similar effect recently with USD, with money flowing back into the USD currency and out of the riskier foreign investments in the emerging markets, or so the theory goes. It therefore follows in my mind that USDJPY is not a particulalrly attractive pair to trade because they are both appreciating, although JPY is appreciating at a greater rate. The optimum trading strategy should be to match the strongest with the weakest, so electing to trade JPY against a currency that is expected to cut interest rates (GBP or EUR) and is over-valued would give a greater profit potential.

These correlations are not set in stone though and they are not 100%, there are a variety of factors that influence the value of a currency. Forget about trying to predict what a currency is going to do in the future based upon equities/commodities/bonds etc - there are much more sophisticated investors than you and I who are better at analysing, have a better quality of information and receive it much earlier - and their market behaviour in response to this analysis will be visible in your technical analysis when they take positions. But, if the equity markets are 'conforming' with what you see on your currency charts according to the theory it can give you a greater confidence and give you some bias. Where watching the equities and commodity markets comes into it's own is when you see a support and resistance level correlate with a significant level on the currency pair you are trading. So if these correlations appear to temporarily break down you might want to consider skipping a trade or reducing exposure until things line up again.
  • #4,806
  • Oct 27, 2008 9:13am Oct 27, 2008 9:13am
Thank you, Birdt, for your excellent explanation. The time you took to address my post is greatly appreciated.

Thanks again.
  • #4,807
  • Oct 27, 2008 9:26am Oct 27, 2008 9:26am
Should be a good level to fade, good s/r, fib level too. Remember, use a little smaller size to cover taking on a little more risk with your stop due to the market volatility.
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  • #4,808
  • Oct 27, 2008 9:44am Oct 27, 2008 9:44am
Quoting linalm
Hi,

I am still trying to understand well the connection between currency markets and equity markets. Would a person with better knowledge than me please explain what the above sentence means, exactly? It will be much appreciated.

What I've understood is that \\\\"fading\\\\" means trading against, which in turn for me on \\\\"fading support\\\\" above would mean to go short as in S/R trading we expect price to bounce from support. Therefore, going short would mean trading against the expected bounce, wouldn't it? And, since in the above quote we are advised to not fade U/J when equities are going down, are we then saying that we should look for opportunities to go long U/J when equities are going down?.

Thank you in advance. Regards.
birdt hit the nail on the head, but basically when the markets are running with certain correlations (which can and do change quite often sometimes), you want to use this to your advantage in terms of your gameplan as much as possible. In other words, you want to be able to adapt your S&R trading to what the markets are doing. Watch for breakouts, support turned resistance, and vice-versa. When the fundamentals are overplayed or misaligned with the technicals is when you have a perfect fade opportunity. For example, BRV posted a trade on the EURUSD at 1.3000 resistance while equities were hurting, and it turned down sharply once it touched it for hundreds of pips.

The basis of S&R trading is the fade, but the currency markets would never move anywhere if not for breakouts, so you just want to be aware of where these may come. It just gives you another tool to work with if you are comfortable trading them. If you don't want to trade breakouts, at least you have a better idea of when to not trade a support/resistance point.

The UJ is in a pretty identifiable pennant/triangle/whatever right now on the H1 chart, with over 100 pips on both sides of the TLs to S&R lines (95.00 and 91.00 respectively). On the northside there are some fib levels that could slow or reverse it, though. Just something to keep an eye on. It has a decent amount of room to stay rangebound, but if we see aggressive moves in the equities markets later there could be a sharp breakout.
  • #4,809
  • Oct 27, 2008 9:53am Oct 27, 2008 9:53am
Quoting FXBeacon
Should be a good level to fade, good s/r, fib level too. Remember, use a little smaller size to cover taking on a little more risk with your stop due to the market volatility.
Hi FXBeacon, I see you have eSignal in your taskbar. I looked at their website wondering if I should use them as a data source and charting package, but it seemed a bit complicated to pick the modules and get prices, etc.. Would you care to comment on your experience of them please?

[Apologies to members for off-topic post - PM didn't work.]
  • #4,810
  • Oct 27, 2008 10:06am Oct 27, 2008 10:06am
7.75 support is being tested
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  • #4,811
  • Oct 27, 2008 10:13am Oct 27, 2008 10:13am
Hi Grath, my apologies, I guess I had my PM option turned off, and since I just turned it on it won't allow me to use it right away! As far as eSignal goes, the charts in the picture are the ones FOREX.com offers to clients with live accounts, it's a little more easy to navigate than the the charts you have to pay eSignal for (as an aside, I don't use FOREX.com as my primary broker anymore so please don't take that as some underhanded pitch to sign up with them!) I prefer to use that package for forex, but I have to pay for regular eSignal for stocks and futures datafeeds and charts. The real advantage to using eSignal (in my opinion) is that you can choose between getting the feed from an aggregate of sources (I think they're showing prices from around 140 different sources) or you can get the feeds from individual brokers. I like the aggregate b/c I think it gives me a better feel for what the overall market is doing. It has actually made me some money b/c certain brokers have had lagging prices on the trading platforms, meanwhile my eSignal charts have been showing big price movements (how's that for arbitrage!). I'm not the biggest fan of the usage of the charts directly from eSignal, but the forex feed is unparalleled and relatively cheap.

Hope this helps, and if you have any more questions please don't hesitate to ask.
  • #4,812
  • Oct 27, 2008 10:56am Oct 27, 2008 10:56am
Quoting BillyRayValentine
no worries....we all have out secrets
hi BRV ,

I took one of your most important advices , don't let a proffit trade turn into losser .
like you suggested , after 20+ pips or so I move my stops to 0+- .
all my last trades closed on the 0 , although they were all good trades evetually and price only checked the s&r again , but I was allready stoped out ....

what is your advice for this situation ?

hope for your answer ,

Barak
  • #4,813
  • Oct 27, 2008 10:59am Oct 27, 2008 10:59am
Quoting Barak's pip
hi BRV ,

I took one of your most important advices , don't let a proffit trade turn into losser .
like you suggested , after 20+ pips or so I move my stops to 0+- .
all my last trades closed on the 0 , although they were all good trades evetually and price only checked the s&r again , but I was allready stoped out ....

what is your advice for this situation ?

hope for your answer ,

Barak
BRV stated in his PDF that he moves SL to BE, when he reaches 20 Pips AND closes half of his position. Sounds reasonable...
  • #4,814
  • Oct 27, 2008 11:07am Oct 27, 2008 11:07am
Quoting Wonko
BRV stated in his PDF that he moves SL to BE, when he reaches 20 Pips AND closes half of his position. Sounds reasonable...
thanks for the answer,

what do you do when prices move so fast , and frqeuntlly you know that the trade can make more then 20 pips - more like 100-150 pips , do you also close half after just 20 pips profit?

thanks.
  • #4,815
  • Oct 27, 2008 11:40am Oct 27, 2008 11:40am
Hi Barak,

I would suggest re-reading the past few pages (maybe the last 5 or 6, it's in there somewhere). The issue of what moving stops around has been discussed quite a bit lately and there should be some useful information that will help answer your questions.

Here's a post discussing stops
http://www.forexfactory.com/showpost...postcount=4770
  • #4,816
  • Oct 27, 2008 12:11pm Oct 27, 2008 12:11pm
Close short at market 116.95, +50 pips
  • #4,817
  • Oct 27, 2008 12:26pm Oct 27, 2008 12:26pm
Hi Folks,

I just wanted to give some back to this thread and thought I'd post a link to a site that I find helpful for assessing the fundamentals of the currency market on a daily basis. It's updated daily and written in an understandable "folksy" yet informative way.

BRV, if you don't feel it's up to par, of course feel free to remove it!

http://www.dailypfennig.com/

Cheers, and thanks to everyone for an incredibly informative and civil thread.
Much appreciated to everyone's contributions and effort to keep this thread on track.
  • #4,818
  • Oct 27, 2008 12:32pm Oct 27, 2008 12:32pm
I'm long UJ right now at 93.22

This trade doesn't quite fit in the 'no brainer' aspect, but I thought I'd post it because there's a lot of talk about fundamentals lately, and equities just started rising within the past hour, and I got in on a bar touching the up trend-line which to me was a nice bit of divergence to fade (equities up, UJ down).

Also you can kind of see the consolidation around 93.50, so my stop is at break-even at the moment. Depending on whether or not the trade breaks consolidation upwards, I will adjust my stop to around 93.50, because there is a longer term descending trend-line on the H1 chart around 93.90.

Hopefully this can give some of you a better idea of what I do when adjusting stops on a live trade. This is a rare occasion I got a live trade in during work hours, so apologies for the crappy charting-- I trade much more in line with S&R when I trade at night
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  • #4,819
  • Oct 27, 2008 12:40pm Oct 27, 2008 12:40pm
I entered a short on this,at 1.2512
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  • #4,820
  • Oct 27, 2008 12:49pm Oct 27, 2008 12:49pm
Quoting smittens4212
I'm long UJ right now at 93.22

Also you can kind of see the consolidation around 93.50, so my stop is at break-even at the moment. Depending on whether or not the trade breaks consolidation upwards, I will adjust my stop to around 93.50, because there is a longer term descending trend-line on the H1 chart around 93.90.

Stop adjusted to 93.50, it's bouncing off the aforementioned 93.90 resistance right now.

We'll see how it does-- I think this is probably a good time to illustrate how dynamic you can be with stops again. I'm only trading a single mini lot (for the time being), so I can't scale out of positions, but this would be a perfect case to. With even 2 lots, I would've been able to close one at 93.90 for a 70 pip profit, and let the 2nd lot run with a stop around 93.50, guaranteeing at least a ~30 pip profit at the worst, for 100 pips total. Of course I'm trading a very small account right now and will be for the next month or so at least, but it's a good lesson in any case

I'm still learning with all this stuff too, and writing out my thoughts helps me process it all, so apologies for cluttering up the thread so much

I know the thread is for S&R, but it's evolved so much into other aspects, it really has been an amazing learning experience and I'm just trying to do my part.
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