Jacko's Forex House of Pleasure and Pain

The euro is smack at the edge of a decent size resistance area centered around 1.36 from a LT MP perspective. The LT trend is down. This is either a PB to this resistance area to be followed by a resumption of trend. or a change in the LT trend to UP. The entry range is from 1.34 to 1.36 for a short, stop out between 1.36 to 1.38. The risk at this point is that you don’t get short and miss out on the move down. I wouldn’t even consider a long unless we went to 1.38 and then PB’d to around the 1.30 area, I am in at 1.34 and I will get another at 1.36 if we get there. I am confident that this resistance will hold and the bigger trend will simply continue and possibly go to new lows.

have a short position at 1.3450...but for London open have another long sitting at 1.3510....


kinda reminds me of fishing....

Thru my trendline, and heading towards the 50% fib.
Anyone 'calling' this one?

the only direction I would follow this pair is up, and price right now is way too high so I'm staying out untill we have a retracement to about 1.30000 .

Howsabout 3050 to 3100, previous area of S & R?
I'm also wondering if the fib @ 3290 may slow things down a little?

Trendlines?-KAPOW!!!
Fibs?-WHAMM!
Mid October S & R?-WHACK!
All aboard the runaway train?

Even from a newbie perspective, I'd say right now is more of a market for shorter timeframe day traders and scalpers. I would suspect the achilles heel of Jacko's system is when the trend reverses. No one really knows when it will reverse, but when it does, the way you will know is everyone following the long trend will have a rash of trades that lose far more than they win since everyone is going counter-trend but doesn't realize it yet. That's just my guess.


I'd say right now may be more important to keep a hawk's eye on changes in fundamentals as opposed to price action and technical indicators.

The dollar has enjoyed a great ride since summer, but the trend is counter to the fundamentals of what is going on in the U.S. economy. It is just that everyone assumed Europe has and will be worse off than the U.S. But is it/will it? You have to remember the mortgage lending is what is really at the root of this recession. Other countries didn't have as bad of a problem with mortgages (even though they bought securities backed by U.S. mortgages.) I think we are looking at the dollar dropping like a rock in 2009 as the government prints trillions and trillions of dollars. But I'm no professional analyst, this is a hunch, but my hunches have been wrong as I called a major recession when I e-mailed a friend of mine at Morgan Stanley 14 months ago. We were thinking of making a sideways move earlier in the beginning of 2007 into a brand new house and I couldn't believe that in the new development a little bit farther from the city than us what they were asking for a 4000 sq ft house - 1.1 million, in a FAMILY oriented development. I guess it was for family's with parents who are doctors and lawyers or trust fund recipients - oh and brokers, of course. I thought how the hell can home prices skyrocket way faster than incomes. They can't. The fact our government didn't catch this earlier is a testament to the lack of intellectual capital in the Bush Administration and/or the abundance of greed in this country -- with consequences that have yet to be fully felt by the U.S. Economy (I predict the bottom will be 6-12 months from now.)

The question of the week is, are we seeing the beginning of the trend reversal? Or is this a false alarm?

I anticipate though that the dollar will do well in the weeks following President Obama's inauguration despite whether the dollar turns now or later due to a more positive sentiment as he announces all his economic plans. But the worst of the recession is yet to come. And that worst is going to be worse than Europe, Japan, and Australia's worst.


Might it be a good time to change to a different pair? what about a pair involving AUD. I think the South Eastern Asian economies, including China will be less effected by the global recession than the U.S. Economy (they WILL and ARE being effected though, but long-term I think they are hurt less.) AUD relies heavily on "AsiaZone" economies . Oil may sink lower before it goes back up. If that is the case the CAD will be getting drug down not only by the U.S. neighbor, but by low oil prices (being the 3rd largest producer of oil in the world.) AUD/CAD could be a great pair to go long on until oil makes a strong reversal and heads above $65 a barrel. (That too though could also be beginning right now.)


Just some rambling thoughts I wanted to kick around. Bottom line is traders that are sitting out of the EUR/USD for now, may be the smartest ones out there. I already see a few here are doing just that after getting burned more than usual lately.

Speaking of fundamentals, does Jacko ever discuss them in his blog? Or are they totally left out of the "equation" so to speak.

They certainly get mentioned. Indeed, some of the analysis is a little deeper and of a different nature than I was hitherto used to.
However, the technicals are what are actually traded.

Kaunasny, so are you saying you think the trend is reversing? Because the cornerstone of Jacko's system is trade in the direction of the trend and that has been short, not long.

I'm trying to get the hang of his system. In a market where the trend direction may be coming into question, would it be wise to then start trading both long and short so if there is a reversal at least you have a chance of coming out in the direction of the new trend?

Or do you just stay out of the market?

Hasn't the market been more or less ranging since 10/28? Is Jacko's system effective in a ranging market or does it need modification?

On a daily chart, if you look at the Fib for 9/20 (high of 4865) to the low on 10/28 of 2328, then the 50% Fib retracement is 3588. Wouldn't people using Jacko's system have took 3600 today to be a good resistant level being a whole number very close to the 50% Fib retracement? If so they would have lost today with a high at 3702, that is just enough to have stopped everyone out with 100 pip stops if their entry was 3600 (which is supposedly what he uses these days?) Looks like the next resistance would be at 3900, very close to the 61.8% Fib. But Jacko doesn't use 61.8 he uses 50.

Did I read somewhere that you should put the stop just beyond the whole number. If so, it better have been more than 2 pips past 3700.

So if it blows past 3900 and stays above the high of the previous 2 days about 3400 for ?? days, do we have a trend reversal? I'm curious what criteria must be met to acknowledge a trend reversal.

I'd love to hear what Jacko has to say about identifying a trend reversal and comment on the pair's behavior in the past week.

hi all

as usual i'll preface this by saying that i'm no expert but i think a key point is being missed here in discussing Jacko's method.

yes we look at 50% fib numbers, round numbers, long term trend etc but something being left out is price action around these areas. i'm sure scattered through this thread are pieces of advice from jacko saying that when it hits one of these areas he wants to see price reverse and head in his direction. we talk alot about catching falling knifes etc in a uptrend and so we are in the same position on the other side of the ledger here.

i'm a reluctant poster but i posted quite a bit yesterday and most of it was to do with price action and short term momentum swinging in your favour. the eur/usd didn't do that so i didn't short yesterday. we pretty much had a bit of a stall near the longterm trendline and then blew through it.

alot of people seem to be just setting orders at certain levels and ignoring PRICE ACTION and bar analysis and in my view more importantly short term momentum. I guess we have the AH to use if necessary but i think paying more attention to what the market is actually telling you will serve you better than a bit of setting and hoping. each to their own here though.

as far as the current situation goes then i think for a change of trend to occur then we need to find a top out of this current move and see price retrace and form a higher low and then move on and take out the top that will form from this move.

a thing to consider is what took around 2 years to go up has taken approx 4 months to come down. we have done a lot of price in a short amount of time so it's not surprising that we are having a substantial pullback.

By the way, personally, i don't see a reversal as an achilles heel for jacko's method as he says not to trade countertrend trades so by rights and according to the rules everyone should sit it out until we get signs of trend continuation. i'm sure with practice and patience though there are many that do trade countertrend trades. the achilles heel of this system as it is with many i think is a ranging period. you need a way to identify these as early as possible and then have the patience to sit that time out and a new trend to form or a continuation of the old trend.

cheers and happy trading

Zorroz,

You have me a little confused though. I thought the backbone of Jacko's strategy was only trade in the direction of the trend. I take "the trend" to be the long-term trend, not short-term momentum. Right?

Meaning the "big picture" trend has been short on EUR/USD for what, the past 5-6 months?

So are you saying that a lot of Jacko's followers have been going long on the upward swing even though it would have been counter-trend?

That's one thing I see in Jacko's method, it is not for a trader I think that likes to be "in the action" having a position most of the time. If you are only trading one way, then that means you are sitting out when the
pair is swinging up, then getting back in anticipating for it to go back down, following the trend.. I know the tendency for most traders is to try to make money both ways. But the risk in going counter trend is that you will get stopped out more times than not because the trend continues even if it doesn't look like it does when you start looking at smaller timeframes.

Seems like things can be very slow going using Jacko's method in a ranging market. Maybe a could tweak would be to start going counter-trend with a smaller trailing stop (say 30-50 pips instead of 100) to pick up some extra pips in a short-term momentum that is counter-trend, and if the market reverses the mid-term trend, you get to go along for the ride and cash in big time instead of miss out?

Sorry if I repeated what I wrote in an earlier post.

Hi Mr Kiss

No you are exactly right. Jacko says to only trade in the direction of the main trend.....however...he did dabble for awhile with countertrend trading i think due to pressure of some students wanting to trade more. pretty sure he felt kind of obligated to do so as some were worried there weren't enough trades. this only turned out to be shortlived though. in saying that i know he quite often mentions more aggressive students doing their OWN countertrend trades. strictly speaking you aren't meant to do it though.

and yes there could be a bit of sitting on your hands with his method if you are trading it to the letter.

all i meant with the short term momentum was to wait until it turns back in your favour.....meaning in the direction of the main trend. take the recent hit of the trendline for example. short term momentum stayed up so i didn't enter even though we were around and hit the trendline quite alot.

instead of just saying on the way up to it that i am placing an order right at it and being entered into the trade on the first hit. wait and watch what price does around the trendline to see if it is in fact going to blow through or if it kind of stalls and heads back down and the trendline rejects the price. i'm sure jacko mentions that he likes to see what price does around those particular levels.

placing orders right at the level and getting in on the first hit will quite often work i'm sure but also be prepared that there could be a lot of times where it goes through and you go into drawdown for awhile and sometimes a decent loss. there is of course the AH to implement if that is the case so i guess it gets back to each persons comfort level.

i'm not saying either is right, that is up to the individual trader. all i'm trying to do is add in some analysis that may help with risk control.

hope that clears some things up.

cheers

if it breaks its current resistance, we might see it going back up all the way to 4200 from the looks of the weekly chart

now we`re all waiting for a confirmation of the trend, we might have a discussion about the 4H chart.

Jacko looks at the 4H and higher TF`s.
the daily and higher TF`s have all been very well explained, but what to look for on the 4H chart is a bit of a grey area.
sometimes Jacko says things like: I looked on the 4H chart and it might be about to fall over; I tightened my SL to 1.5800.

so what is he looking at? do we get 3 consecutive lower highs and lows on the 4H chart or ???????????????

what do people on this forum look for on the 4H chart to make them act?

Here's one large article for you Jacko trade with the trend that is predicting the dollar will keep gaining over the next 5-7 years. If they are right, then the market is simply in a big retrace possibly? But when will the trend resume is the question?

Fibs, S & R , trendlines smashed?

Maybe that's because they do not work better than 50% ? I'm not stating, I'm just bringing up this thought. I do not put too much weight on all these reversal points, I do not really find them too helpfull. Do they really work?

Anyway, back to eur/usd.
Yes I think we might very well be in the reversal of the trend. Why? Because I've been waiting for USD to lose its strength for a long while now. The fundamentals and Kiss pointed out are much worse for USD than lets say EUR, so USD strength is not based on strong economy or fundies, its based on the situation in the world and maybe china supporting strong dollar who knows? Hence this strong dollar can only be temporary.
Market has showed me in the past days that Eur is again gaining strength and switching my bias up for eur/usd . Should we wait for a better confirmation of resuming the uptrend ? Maybe so if you want to miss the move back to maybe 1.60000 , maybe higher ? Do you remember who was here back in July ? Most were only going long, while USD was crushing Euro. And when USD was crushing euro even more, most thought that its bottom already. Most of us missed 70% of this 3000+ pips move down by eur/usd.
Now lets look at the daily chart. Market has already retraced almost 40% of the whole move down since July. If we wait thinking that we should go only in the direction of long term trend wich is down any longer, we may very well miss another 3000+ pip move... . After saying all this, I'm not waiting for anymore signals of trend reversal. Right now I will wait for a retracement, and I'll start buying eur/usd picking my buy points carefully , trying to avoid getting stabed by a falling knife.

Sorry for making this so long. Good trading everyone.

I've tentatively decided to enter long upon a retracement to my upper trendline @ 3450.
Any thoughts?

Entering at 1.3450 . I think is too risky. eur/usd was rising very fast without major correction. The correction will come sometime. I think we should wait for a bigger correction than this to go long otherwise you have to be very carefull entering and enter only when price starts to show turnaround signs before buying to avoid catching a falling knife. I see this retracing to 1.3000 easily.

Trouble is, if we take a look at some previous moves, 23 September-06 October, 20-27 October etc, significant pullbacks aren't always there.
Do we do as the market tells us, or as we hope the market will act?