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Jacko's Forex House of Pleasure and Pain

  • #8,941
  • Aug 20, 2009 8:18am Aug 20, 2009 8:18am
Quoting Snr Dinero
If it's going to break lower I'd like to see it retest 1.41 and/or that upwards trendline from below and then go lower.

That could be a big move if it comes off.
Thanks Snr Dinero

Your insight has given me something to think about and learn.

I am appreciative of your views
  • #8,942
  • Aug 20, 2009 9:06am Aug 20, 2009 9:06am
Quoting noobistrader
Thanks Snr Dinero

Your insight has given me something to think about and learn.

I am appreciative of your views
No problem, glad to help. I'm still new to this method myself but my previous experience with forex gives me a good understanding of fibs, support and resistance and trendlines so it's simply a case of putting it all together and giving it some thought. I've not come across a system quite as simple as this before though, I like it.
  • #8,943
  • Aug 20, 2009 9:09am Aug 20, 2009 9:09am
Quoting dwildes
You are too close to the price action right now, check the weekly - draw your fibs and revisit this.
That's something interesting I only just noticed. The 50% fib of the last move up on the weekly corresponds exactly with the major historic support and resistance level of 1.41.

That could be an interesting long if it breaks the top line of that triangle.
  • #8,944
  • Aug 20, 2009 9:29am Aug 20, 2009 9:29am
Quoting dwildes
Close - but not quite. Start with the Weekly and move down to the 4 hour. If you do that, you should see your strategy change slightly, but also give you a better target/safer price.



You are too close to the price action right now, check the weekly - draw your fibs and revisit this.



Personally, I set price alerts, not pending orders. I prefer to watch price for 30min - a few hours to see how it does around the Fib & S/R levels. This is more of a personal trading comfort & one you'll have to try out to find what best works for you.

Thanks for the response. Fair enough point that I'm calculating the retrace points on too short of a time frame.

If I go to the Weekly, then, it seems that I would be looking at two retrace levels. The most recent move is from the low of 1.3748, which was a 40% retrace from the previous high of 1.4336 and low of 1.2885. Since that point, we achieved a high of 1.4447. A 50% retrace is 1.4098, which also seems to correspond with the daily trend line I discussed yesterday. Given that, it would seem that my initial thought to target 1.4150 is too aggressive, then, and I should wait until 1.4100. I agree with trying to watch it and wait to make sure 1.4100 holds as support, or at least to wait until it looks like we're catching the trend up, so I'll have to contemplate how best to do that.

Should 1.4100 fail, it would seem that the next retrace point is all the way down to 1.3666.

Question: Given two potential 50% retrace points that are so far apart, how do you treat the area in between? Suppose we only retrace back to 1.3900 and price movemebt downward seems to stagnate. This is still past a 50% retrace from the most recent move, so I'm thinking the strategy would be to (1) initially target 1.3666 as a best entry, but (2) look for a period of price stagnation between 1.4100 and 1.3650 that may reasonably indicate a resumption of the long-term trend is afoot.
  • #8,945
  • Aug 20, 2009 10:09am Aug 20, 2009 10:09am
Quoting Joe T
If I go to the Weekly, then, it seems that I would be looking at two retrace levels....
Looking better, but I suggest looking back even more to get a bird's eye view. Look at my chart from post #8423 (http://www.forexfactory.com/showpost.php?p=2843131&postcount=8423)

That should help explain why we've been congested for the past several weeks. However, it should show a little of the danger of going long around here (especially if the 50% FIB holds as resistance) - at least for the longer term perspective as we all know the weekly trend takes many, many weeks to develop But it should help you gauge the risk of short vs long.

Once you have that in mind, check out the daily & then the 4 hour which will help you pinpoint other areas of support/resistance in order to help pick the best area for entry.

Quoting Joe T
Question: Given two potential 50% retrace points that are so far apart, how do you treat the area in between? Suppose we only retrace back to 1.3900 and price movemebt downward seems to stagnate. This is still past a 50% retrace from the most recent move, so I'm thinking the strategy would be to (1) initially target 1.3666 as a best entry, but (2) look for a period of price stagnation between 1.4100 and 1.3650 that may reasonably indicate a resumption of the long-term trend is afoot.
Generally speaking, the longer TF typically wins.
  • #8,946
  • Aug 20, 2009 10:17am Aug 20, 2009 10:17am
Quoting Snr Dinero
That's something interesting I only just noticed. The 50% fib of the last move up on the weekly corresponds exactly with the major historic support and resistance level of 1.41.

That could be an interesting long if it breaks the top line of that triangle.
The only problem is price has only recently moved back up to the 50% on the weekly. Most of the time, price will come back to the 50% (maybe a little past) and then continue it's trend. Since price is now back testing it, and with talk of China wanting a strong dollar, and the dollar has bottomed, etc... It appears more likely we are heading down on the E/U than up for the longer term.
  • #8,947
  • Aug 20, 2009 11:19am Aug 20, 2009 11:19am
Quoting dwildes
The only problem is price has only recently moved back up to the 50% on the weekly. Most of the time, price will come back to the 50% (maybe a little past) and then continue it's trend. Since price is now back testing it, and with talk of China wanting a strong dollar, and the dollar has bottomed, etc... It appears more likely we are heading down on the E/U than up for the longer term.
That's true. There is definitely a downwards channel on the 4 hour but quite a bit of support below it. 1.41, weekly 50% fib and the weekly trendline.

What about a possible head and shoulders with the resistance at around 1.4350 on the weekly?

Afterthought: 1.4030 seems to be support too.
  • #8,948
  • Aug 20, 2009 11:45am Aug 20, 2009 11:45am
in situations like these the old saying...what goes up....must eventually come down...seems to fit quite nicely


it's just a matter of exercising the necessary partience now....
Nihil inimicus quam sibi ipse Marcus Tullius Cicero
  • #8,949
  • Aug 20, 2009 11:57am Aug 20, 2009 11:57am
Quoting coscorp
in situations like these the old saying...what goes up....must eventually come down...seems to fit quite nicely


it's just a matter of exercising the necessary partience now....
It's certainly taking time making it's mind up today.
  • #8,950
  • Aug 20, 2009 4:38pm Aug 20, 2009 4:38pm
Quoting dwildes
Looking better, but I suggest looking back even more to get a bird's eye view. Look at my chart from post #8423 (http://www.forexfactory.com/showpost.php?p=2843131&postcount=8423).
Interesting perspective. My first look at the Weekly chart is uptrend, looking at bars from early 2001. From this perspective, wouldn't a long-term potential interpretation be that the correction from early 2008 to mid-2008 was simply a retrace in an uptrend, rather than a long-term change in direction? There was another increase, then nearly a complete retrace, and now another upward direction since early 2009. I could see an argument that the current movement upward is simply a resumption of the upward trend. Or do we expect the market to act like a dampened harmonic oscillator, and see ever shorter up/down cycles until some breakout point occurs?

As I zoom in on the Weekly, the trend since May 2005 is much less evident, though I'd probably still argue an overall uptrend if one was to put a gun to my head and demand an answer.

Zooming in again, the chart since mid-2007 gives little to no indication of an overall trend. Up, then down, then up.

Moving to mid-2008, one would have to say it's a downtrend with a current retrace to 1.4183, and perhaps we should be looking to short.

I have a question/issue on that last view. OK, maybe a couple... First, I am not saying it's not valid, but it certainly is looking at a much shorter time-frame on the Weekly chart than a 10-year view, which shows a long-term upward trend. What is the rationale for overriding the longer-term view in favor of a shorter-term view? Not saying it's wrong, just trying to understand. Second, we already saw more than a 50% retrace on that move downward, peaking at 1.4719. It was my understanding that we generally look at the retrace levels on the most recent major move. This would be a high of the 1.4719 and a low of 1.2456. This puts the 50% level at 1.3588, which we have long ago moved past. The current levels are around a 75% retrace of the most recent major move. Wouldn't a move past all the major Fib points indicate that this is more than just a retrace?
  • #8,951
  • Aug 21, 2009 8:30am Aug 21, 2009 8:30am
Quoting Joe T
Interesting perspective....
Remember, this is the 'weekly' unless you only want to take 1 or 2 trades a year, you'll need to dial in your analysis some. Before you were just looking at around 2-3 weeks, now we're trying to look at 8+ years.

Quoting Joe T
As I zoom in on the Weekly, the trend since May 2005 is much less evident, though I'd probably still argue an overall uptrend if one was to put a gun to my head and demand an answer.
I'd agree there.

Quoting Joe T
Zooming in again, the chart since mid-2007 gives little to no indication of an overall trend. Up, then down, then up.
Moving to mid-2008, one would have to say it's a downtrend with a current retrace to 1.4183, and perhaps we should be looking to short.
That's why it's good to dial it in some on the weekly. What I've seen Jacko do is focus on the 'latest' extreme until it is played out. If you look at my chart from July 1st, that move still hasn't completely played out, and probably won't for several weeks/months. What you have to do in the mean time is align yourself for the best probable trade outcome. Don't overthink it.

Quoting Joe T
I have a question/issue on that last view....
Yes - but if I use your same example and go from the extreme of the low in 10/2000 around 0.8225 to the extreme high in 07/2008 at 1.6038, the 50% is at 1.2135, which we never reached. Some could say that the downward move wasn't strong enough, some could say that the second & strongest move down is coming. Ultimately - no one knows for sure, all we can do is base our judgments on highest probability and leave the rest up to the market.

To put it simply and to my point of all this, that is why you ultimately zoom into the 4 hour. You don't 'start' your analysis on the 4 hour, but you should finish it there to finalize your plan. Vice versa for the weekly, you shouldn't really 'finish' your analysis on the weekly, but help you gauge the market and where we are for the year, or past few years.

Use the weekly to dip your toes into the water to test it before doing a cannonball using the 4 hour.
  • #8,952
  • Aug 21, 2009 8:40am Aug 21, 2009 8:40am
Let's say, hypothetically, that you believed that fiber was going to run up to 4350 in the short term. In other words, 4350 is the top of the entry range.
You could, if price was down around 4200 etc, take a risk and buy your way up to the expected 4350 destination.
However if price is around, say, 4250, then SELLING at that point creates a bit of a conundrum. Namely that , if the trade goes pear-shaped, you would be stopped out at around 4350. Which is your expected top of the channel/range.
Which is where you wanted to sell originally.
But wait, price now has to blow 50 pips up and PAST your calculated prime entry level, in order to give you your entry into the a/h.

I'm going for a lie down.............
  • #8,953
  • Aug 21, 2009 8:52am Aug 21, 2009 8:52am
Quoting Interceptor
Let's say, hypothetically, that you believed that fiber was going to run up to 4350 in the short term. In other words, 4350 is the top of the entry range.
You could, if price was down around 4200 etc, take a risk and buy your way up to the expected 4350 destination.
However if price is around, say, 4250, then SELLING at that point creates a bit of a conundrum. Namely that , if the trade goes pear-shaped, you would be stopped out at around 4350. Which is your expected top of the channel/range.
Which is where you wanted to sell originally.
But wait,...
I think the answer is simple here - if you believe your best entry is 1.4350, you wait for it to reach 1.4350. If you miss the trade, you miss it - it happens. It's happened to me several times as a matter of fact where price only needed to go 20-30 more pips to hit my price alert, but didn't - I'm sure it'll happen a lot more times before the end of the year. It shouldn't be a problem because you need to accept that you are not going to catch every single move.

Now, concerning your buy up to 1.4350 - you have to understand that would be a counter-trend trade to your real trade. That is a risk you'll need to accept and see if it is worth doing. The key here is to understand if your counter-trend fails, there is no AH.
  • #8,954
  • Aug 21, 2009 10:19am Aug 21, 2009 10:19am
Quoting dwildes
I think the answer is simple here - if you believe your best entry is 1.4350, you wait for it to reach 1.4350....
Hypothetically, if you believe that 4350 is the best 'value' area for a short, why would you wish to sell at 4250? And, crucially, 4250 also undermines the possibility of an a/h trade due to the expectancy of 4350 being 'top of the range/trend'.
  • #8,955
  • Aug 21, 2009 10:23am Aug 21, 2009 10:23am
Quoting Interceptor
Hypothetically, if you believe that 4350 is the best 'value' area for a short, why would you wish to sell at 4250? And, crucially, 4250 also undermines the possibility of an a/h trade due to the expectancy of 4350 being 'top of the range/trend'.
I have no idea why you'd want to sell at 1.4250 if you are looking to sell at 1.4350?
  • #8,956
  • Aug 21, 2009 10:39am Aug 21, 2009 10:39am
Quoting dwildes
I have no idea why you'd want to sell at 1.4250 if you are looking to sell at 1.4350?
Neither have I.
Thank God it's weekend!
  • #8,957
  • Aug 21, 2009 10:52am Aug 21, 2009 10:52am
Quoting Interceptor
Neither have I.
Thank God it's weekend!
I think I'm starting to see what you are getting at.
You are right about jumping into the trade early, and this was the point I was trying to make earlier in the week about getting in a trade at a bad level. It throws the AH off, gets you stopped out, etc... It's better to miss the trade than get caught in the middle of the price action, that's why sometimes I have to watch good moves go by me because price didn't reach my area of entry.

I believe that is why lots of traders on this thread are so interested in trading other pairs. This gives them the opportunity to trade only the best setups across multiple pairs. I personally think that is a very, very smart thing to do - but takes practice & time to learn how each pair works (especially the stops range). You can't take all the EUR/USD rules and blindly apply them to GBP/USD, USD/JPY, USD/CHF.
  • #8,958
  • Aug 21, 2009 11:16am Aug 21, 2009 11:16am
Quoting dwildes
That's why it's good to dial it in some on the weekly. What I've seen Jacko do is focus on the 'latest' extreme until it is played out. If you look at my chart from July 1st, that move still hasn't completely played out, and probably won't for several weeks/months.

I thought someone here said Jacko was still going long. Maybe I'm misremembering. Nonetheless, you have provided an interesting look at the charts for me to contemplete.



Quote
Yes - but if I use your same example and go from the extreme of the low in 10/2000 around 0.8225 to the extreme high in 07/2008 at 1.6038, the 50% is at 1.2135, which we never reached. Some could say that the downward move wasn't strong enough, some could say that the second & strongest move down is coming.

An interesting perspective.


Quote
Use the weekly to dip your toes into the water to test it before doing a cannonball using the 4 hour.

Point taken.


This is a helpful post. Thanks.
  • #8,959
  • Aug 21, 2009 11:30am Aug 21, 2009 11:30am
Quoting Joe T
I thought someone here said Jacko was still going long. Maybe I'm misremembering. Nonetheless, you have provided an interesting look at the charts for me to contemplete.
You gotta take what you read here with a grain of salt. Not many turtles will tell the full picture of Jacko's thought process, or his current trades out of respect (myself included).

To answer that question though - he has been both long & short biased a few times throughout this year. There are also counter-trend trades that go on among those trades as well.

Just stick with it on a demo account for a few months. Document to yourself all the reasoning of why you risk your hard earned money on a particular trade, and review it afterwords - especially the ones that go wrong. That is the only way to improve/advance. It will get easier with time.
  • #8,960
  • Aug 21, 2009 12:00pm Aug 21, 2009 12:00pm
I'm glad I stayed flat yesterday now! Taking a closer look at that downwards trendline, it was broken and retested before it took off upwards. Shame I was at work and missed it (or didn't see it coming yesterday)

I have one really simple way to tell if the trend has reversed... If you place a trade, get stopped out, deploy the AH strategy and that order never gets hit! By that time you should have a nice downwards trendline to play with.
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