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Identifying Market Swings - Medium and Long Term Trading

  • #241
  • Feb 16, 2010 1:38pm Feb 16, 2010 1:38pm
It has to be a "complete" picture, you'll always be more successful combining good basic sound TA with fundamentals, and perhaps not just those two, but also good old cunning, understanding the market is complicated, and will almost always take the less anticipated (by the crowd) road.
I'm sure most of you understand the basic structure of a trend, and yet most choose to ignore it in favor of: ohh the stoch's are about to turn, or, the MACD is diverging....
The only time I'm prepared to hold on to a trade medium term, is when i entered on a fast TF with a longer term view, and have limited exposure, or I'm at break even, hard thing to do, without the ability to identify rock solid levels, and, as the price will retest a level most of the time.
My hat's off to Razor for being able to hold on to long term trades, something i find almost impossible to do.
Biggest joker
  • #242
  • Feb 16, 2010 3:15pm Feb 16, 2010 3:15pm
"and will almost always take the less anticipated (by the crowd) road."

I agree this almost always happens. The trend and the crowd both show midterm AUD and Euro weakening, and look what has happened both have gained. Perhaps others can shed some light but I feel this is the case only in short term trading when we have overbought/sold levels. In the end fundamentals will take prices where they should be.
I am glad to hear Razor used a SL while he was still in his profit range even though he knows it will go down, i guess I just assumed when trading midterm it was expected for the price to go up and down and figuered he would just stay in as he got in at .93. Doesn;t this count as a short term trade you did though? How did you come up with 89.50 as your SL? Things fundamentally have NOT changed so the AUD short is still in play for the midterm but how do you decided now when to reenter as you are now out? Do you use FIb levels? Entering now will mean you will no longer have that nice cushion you had shorting at .93, if the midterm trend was to change to long while you have shorts opened at these levels now you may loose a lot as you wait for to go down.
Thank you for this great thread, I have always known that midterm trading is the only safe way to trade but I would get impatient and trade on the short term which looking back I feel is much more of a gamble.THANK YOU!
Former Trader Of the Year of the 95% losing club! Retired
  • #243
  • Feb 17, 2010 3:54am Feb 17, 2010 3:54am
Quoting Stock_Rocket
Razor,

The analysis of Aud/Usd targeting 38% retracement looks great for long entry.

Im curious of your patience/trade style considering that this price target is weeks away at the least.
The 38.2% fib level looks like the target now. Remember that this can change depending on when the Fed decides to hike interest rates. The timing of these rate hikes can push AUDUSD down to the 50% fib level, before turning upwards again.

What I'm starting to realize more and more is that there are certain price levels that once hit, won't be hit again for months or even years. My goal is to recognize and then to get in these price levels and then to hang on until the end of the business cycle.

And if I have to wait weeks or even months for the right price level, then there's not much I can do about it, that's up to the markets.
-Razorjack
  • #244
  • Feb 17, 2010 4:13am Feb 17, 2010 4:13am
Quoting baron193
It has to be a "complete" picture, you'll always be more successful combining good basic sound TA with fundamentals, and perhaps not just those two, but also good old cunning, understanding the market is complicated, and will almost always take the less anticipated (by the crowd) road.
I'm sure most of you understand the basic structure of a trend, and yet most choose to ignore it in favor of: ohh the stoch's are about to turn, or, the MACD is diverging....
The only time I'm prepared to hold on to a trade medium term, is when i entered on a...
Holding on to long term positions is really difficult if you don't have a firm trading plan. And the trading plan MUST work with the trader's own personality and this is the hard part. I'm still working on this, so don't believe I'm there yet.

It's a lot of trial and error until I come up with the little intricacies, tricks, schemes, etc that can be integrated in to my trading style. I'm constantly looking to fine tune it until it feels perfect or in this case doesn't feel at all and maximizes profits.

Who knows I may never get there, maybe no one does, but right now this is what's driving me to continue to reach the "perfect" system.
-Razorjack
  • #245
  • Feb 17, 2010 5:13am Feb 17, 2010 5:13am
Quoting Rgali1
"and will almost always take the less anticipated (by the crowd) road."
..........

The trend and the crowd both show midterm AUD and Euro weakening, and look what has happened both have gained. Perhaps others can shed some light but I feel this is the case only in short term trading when we have overbought/sold levels. In the end fundamentals will take prices where they should be.

Usually the fundamentals do drive the markets over the long term, but yes in the short term the markets can swing quite a bit. The great trades come when you can see that fundamentals are telling you one thing and the short term pushes prices in the other direction to extreme price levels.

I am glad to hear Razor used a SL while he was still in his profit range even though he knows it will go down, i guess I just assumed when trading midterm it was expected for the price to go up and down and figuered he would just stay in as he got in at .93. Doesn;t this count as a short term trade you did though?

Yes, you can call this a short term trade. I never looked at AUDUSD as the pair to trade down in the medium term. Another poster wanted to use AUDUSD as an example. I mentioned in earlier posts that the strongest performing currencies, i.e. AUD, NZD, etc are not the ones that you want to short, instead I look at shorting the medium performing currencies like EUR and GBP. Take a look at EURAUD and EURUSD to see what I mean.

The problem with AUDUSD is that AUD is getting a lot of support from China and the downtrend isn't going to be as strong as the uptrend. So I have to play it differently by trading the channel. I just saw that it was at a price extreme at 0.93 and saw a shorting opportunity.

It's different if you compare it to a strong down trending pair like EURAUD or EURUSD.

Remember when I mentioned in the beginning that you have to look at the overall conditions to find the strongest trending currencies? This means that AUDUSD and AUDJPY are the strongest for the UPTREND and the strongest pair for the DOWNTREND are pairs like GBPAUD, EURAUD, EURUSD, etc.

So the goal should be to identify the best trending pairs during risk aversion and the best trending pairs during risk appetite then to trade them appropriately.

How did you come up with 89.50 as your SL? Things fundamentally have NOT changed so the AUD short is still in play for the midterm but how do you decided now when to reenter as you are now out? Do you use FIb levels?

89.50 was above the 50% fib level of the downswing. Yes, the AUD short is still in play but as I mentioned AUD is a fundamentally strong currency and won't fall as hard as EUR or GBP. So the ideal is to play AUD, NZD and CAD to the upside at the same time playing EUR, GBP and JPY to the downside.

AUDUSD is not the optimal pair to short, but it is now at the 61.8% fib level, I'll watch the price action around this area. If it breaks above 0.9050, I'll be looking to get in around 0.92, otherwise I'll wait for it to break below 0.8950.

Entering now will mean you will no longer have that nice cushion you had shorting at .93, if the midterm trend was to change to long while you have shorts opened at these levels now you may loose a lot as you wait for to go down.

As I mentioned AUDUSD is not the optimal pair for shorting, so holding on to it was only an option if it behaved like a strong downtrending pair. Otherwise I can short again close to where I got in the first time!

Thank you for this great thread, I have always known that midterm trading is the only safe way to trade but I would get impatient and trade on the short term which looking back I feel is much more of a gamble.THANK YOU!

You're welcome.

I've also had problems with patience and waiting for medium trends to develop, but I'm starting to get better at this. I want to move over the LONG TERM, it's unbelievable how much money can be made there with little risk. I'm still trying to develop a system where I can trade both the medium and long term, so I can stay in trends for years.
-Razorjack
  • #246
  • Feb 17, 2010 8:49am Feb 17, 2010 8:49am
hi Razorjack

can you pls give me an openion about gj
thx a lot
  • #247
  • Feb 17, 2010 10:42am Feb 17, 2010 10:42am
Quoting shamstec
hi Razorjack

can you pls give me an openion about gj
thx a lot
Hi Shamstec,

I have a better suggestion.

Why don't you give your opinion, so we can discuss it.
-Razorjack
  • #248
  • Feb 17, 2010 11:59am Feb 17, 2010 11:59am
Looks like price action is indicating a potential reversal in the commodity currencies, in particular AUDUSD, AUDJPY CADJPY and USDCAD.

I'd like to see NZDUSD hit 0.7120 and NZDJPY hit 65.60 before feeling comfortable shorting these 2. I'll still trade them to the short side but will reduce my exposure on these.

We'll see how the daily candles close today, this should give us a better idea of possible reversal.
-Razorjack
  • #249
  • Feb 17, 2010 5:42pm Feb 17, 2010 5:42pm
Quoting Razorjack
Looks like price action is indicating a potential reversal in the commodity currencies, in particular AUDUSD, AUDJPY CADJPY and USDCAD.

I'd like to see NZDUSD hit 0.7120 and NZDJPY hit 65.60 before feeling comfortable shorting these 2. I'll still trade them to the short side but will reduce my exposure on these.

We'll see how the daily candles close today, this should give us a better idea of possible reversal.

Hi Razor
I agree - just waiting for my daily candle to close on the usdcad. Its bouncing off my support and TL. .....patience......
  • #250
  • Feb 17, 2010 6:59pm Feb 17, 2010 6:59pm
Quoting Razorjack
Looks like price action is indicating a potential reversal in the commodity currencies, in particular AUDUSD, AUDJPY CADJPY and USDCAD.

I'd like to see NZDUSD hit 0.7120 and NZDJPY hit 65.60 before feeling comfortable shorting these 2. I'll still trade them to the short side but will reduce my exposure on these.

We'll see how the daily candles close today, this should give us a better idea of possible reversal.

Razor
Do you take much notice of the COT data.??
Just looking at the (COT) data, and it is showing that there is an extreme level of net short positions in the Euro against the US dollar - levels never seen before. If thats the case, I couldnt see it dropping too much further without a "breather".....
  • #251
  • Feb 18, 2010 2:54am Feb 18, 2010 2:54am
Quoting Yebisu
Razor
Do you take much notice of the COT data.??
Just looking at the (COT) data, and it is showing that there is an extreme level of net short positions in the Euro against the US dollar - levels never seen before. If thats the case, I couldnt see it dropping too much further without a "breather".....
Hi Yebisu,

Have you found a way to trade COT reports?

I find that COT can confirm established trends and indications of possible reversals but due to the one week delay, it's hard to see when the reversal will occur.

As for the Euro, it's hard to say how much further down it will go. I have no plans to trade the Euro to the upside, I think there are other currencies that will have stronger uptrends.
-Razorjack
  • #252
  • Feb 18, 2010 8:16am Feb 18, 2010 8:16am
Quoting Razorjack
Hi Shamstec,

I have a better suggestion.

Why don't you give your opinion, so we can discuss it.
hi Razorjack

thx for reply good idea

1-mn : last candle was bearish (engulf or beircing or...??)
2-w1 : bottom formed at 139.72and 2 times to hit it deep till 138.23
3- d1 : s/r level at 143.03 which is 38 fibo of the previous down move
so rejection is possible ( 50/50 ) to continue downwards -i hope- we
need to break 23 fibo at 141.17 with d1 candle close
nothing is perfect so i guss some times it s nothing to lose but alimited sl.

regards
  • #253
  • Feb 18, 2010 8:38am Feb 18, 2010 8:38am
Quoting shamstec
hi Razorjack

thx for reply good idea

1-mn : last candle was bearish (engulf or beircing or...??)
2-w1 : bottom formed at 139.72and 2 times to hit it deep till 138.23
3- d1 : s/r level at 143.03 which is 38 fibo of the previous down move
so rejection is possible ( 50/50 ) to continue downwards -i hope- we
need to break 23 fibo at 141.17 with d1 candle close
nothing is perfect so i guss some times it s nothing to lose but alimited sl.

regards
sorry the chart
Attached Image (click to enlarge)
Click to Enlarge Name: 1.gif Size: 25 KB
  • #254
  • Feb 18, 2010 5:18pm Feb 18, 2010 5:18pm
Quoting shamstec
hi Razorjack

thx for reply good idea

1-mn : last candle was bearish (engulf or beircing or...??)
2-w1 : bottom formed at 139.72and 2 times to hit it deep till 138.23
3- d1 : s/r level at 143.03 which is 38 fibo of the previous down move
so rejection is possible ( 50/50 ) to continue downwards -i hope- we
need to break 23 fibo at 141.17 with d1 candle close
nothing is perfect so i guss some times it s nothing to lose but alimited sl.

regards
I'm not sure I understood everything you wrote.

Basically my analysis tells me that the markets are in a correction after the 1st leg of the bull run. This tells me to expect GBPJPY to head down to around the 135 area.

The pair found support on the 50% fib of the long term upswing and found resistance in the 38% fib from the last down swing. Right now the price action just doesn't seem to be there. I'd wait for Friday's close to see how it looks next week.
Attached Image (click to enlarge)
Click to Enlarge Name: gbpjpy_20100219.gif Size: 31 KB
-Razorjack
  • #255
  • Feb 18, 2010 5:22pm Feb 18, 2010 5:22pm
Quoting Yebisu
Hi Razor
I agree - just waiting for my daily candle to close on the usdcad. Its bouncing off my support and TL. .....patience......
Great price action in USDCAD , NZDUSD and AUDUSD. Big big move towards the medium term trend!
-Razorjack
  • #256
  • Feb 18, 2010 5:25pm Feb 18, 2010 5:25pm
last night action shows fundamental matters.


with the trend of US int rate up and with current EUR problem,
it seems that EUR/USD is on downtrend for medium term

1. is there a way to judge whether
the EUR problem has been discounted by market ?

2. what is the trend of EUR int rate ?

thank you
  • #257
  • Feb 18, 2010 6:06pm Feb 18, 2010 6:06pm
Quoting peter lee
last night action shows fundamental matters.


with the trend of US int rate up and with current EUR problem,
it seems that EUR/USD is on downtrend for medium term

1. is there a way to judge whether
the EUR problem has been discounted by market ?

2. what is the trend of EUR int rate ?

thank you
1. is there a way to judge whether
the EUR problem has been discounted by market ?

Yes, the EuroZone debt problem was factored into the market several weeks ago. The way I read the markets is to do a comparison analysis, just using the analysis techniques we discussed on this thread.

First of all the debt crisis pushed the markets into risk aversion. During risk aversion the Euro strengthens against currencies like AUD and NZD. Take a look at what happened in the EURAUD charts. The green ellipse is when the medium term risk aversion hit the markets but there was no trend change.

This is a pretty big clue that debt crisis has been factored into the market.

That Euro horse seems like it's been flogged to death. It's very late in the trend, if you're not already in, it could be a tough trade.

2. what is the trend of EUR int rate ?

I assume you're referring to yield curves?

I use German yield curves, since it's the largest economy in the EuroZone. Here's a link:

http://www.bloomberg.com/markets/rates/germany.html
Attached Image (click to enlarge)
Click to Enlarge Name: euraud_20100219.gif Size: 29 KB
-Razorjack
  • #258
  • Feb 18, 2010 6:45pm Feb 18, 2010 6:45pm
Quoting Razorjack
1. is there a way to judge whether
the EUR problem has been discounted by market ?

Yes, the EuroZone debt problem was factored into the market several weeks ago. The way I read the markets is to do a comparison analysis, just using the analysis techniques we discussed on this thread.

First of all the debt crisis pushed the markets into risk aversion. During risk aversion the Euro strengthens against currencies like AUD and NZD. Take a look at what happened in the EURAUD charts. The green ellipse is when the medium term...
Good chart that razorjack

Much appreciated.
  • #259
  • Feb 19, 2010 12:47am Feb 19, 2010 12:47am
The Fed just hiked the discount rate by 25 basis points.

This is the first signal that the Fed is withdrawing emergency stimulus and tightening credit by via reduction of money supply.

The all important Fed Funds Rate is unchanged, but this is a signal that the US economy has recovered and will continue to accelerate.
-Razorjack
  • #260
  • Feb 19, 2010 12:56am Feb 19, 2010 12:56am
......aaaaaaand we have trend structure (hourly) change,
i thought the AUD might do a fake off the previous high, but no.
Razor, i'm happy i finaly seen a chart with properly drawn classic TL's,
Biggest joker
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