DanUK Trend Trading Journal 2010

I am in at 1.5200 as well, lets see what next week brings.
Good weekend all

i dont tend to post here,as i have a slightly different style...BUT,if you look at the WEEKLY, we have just BOUNCED of 61% LEVEL,and a DOUBLE HAMMER is seen.....we have also move a LONG WAY DOWN..
I dont want to distract you from your position BUT a LOOK at HTF can help..
i am LONG from 1.5025....

baz
GBP_USD Spot.png

Notice daily...a SHORTTERM TL is also broken.....ANYWAY all the best,it can easily TANK on MONDAY or next week as TREND is CLEARLY DOWN...

baz
GBP_USD Spot.png

Hi guys,

Good to see everyone still posting and a couple of new people here who I am glad to see too!

I thought this week was going to be a little more productive for me but it wasn't really! My G/U took 100 pips, E/U broke even and U/J stopped out for -100 pips! My A/U is still going strong though so that is at least something to be pleased about!

I'm sure my U/J trade was a stop hunting exercise - 8 pips beyond and then back down! Doh! Oh well, if we go down further I may look to get back in on it!

Just some thoughts…

E/U looks to be heading higher - if the 1.3850 area can't stop it I may be changing to an E/U bull.

G/U is about to hit some resistance. I'm thinking maybe 1.5300-ish if it gets there!?!

USD/CHF - I'll be looking at 1.0500 with interest.

USD/CAD - still looks like a short to me but so far no value/discount entry has shown itself!

Regards,

Dan

Hi Rob,

Glad to have you aboard. In response to your questions...

1. When it comes to watching price react to what I call an "area of interest" I tend to watch the action on an H1 chart. I will also pay attention to the development of the H4 candles at that area if I am uncertain (i.e. looking for supporting price action / candlestick patterns).

2. I typically use 50 pips... due to the reason that I use round numbers. For example if I am looking for price to reject 1.3700 I would be looking to sell at 1.3650. I should also point out that on occasion... when price is trending and behaving as I would like I sometimes enter exactly on the level that I am looking for a reaction (i.e. 1.3700 in this example).

3. Three favs at the moment.... AUD/USD has been trending very nicely and has provided some great opportunities. GBP/USD has also been a good one this year and EUR/USD (up until this week) has also been moving very smoothly.

Regards,

Dan

Quoting Fx_Genius

Disliked

Have been lurking for a few weeks just to see what was what.

Ignored

Hi Fx_Genius,

Nice to see you here! I see that you are thinking EUR/USD long. Would you mind sharing a chart or thoughts about this? I can see the potential, especially with today’s candle closing above the outer trendline. I still think there is some resistance in the way before trading it but I would be interested to here your thoughts!

Thanks,

Dan

Hi all,

My thinking long on E$ is not entirely based on charts but the news (Not trading news) and history, both here in US and Euro zone. Both economies are still in trouble but the euro zone seems to still have skeletons (Greece for one) in their closet so to speak.

If you look back to when the US tanked what happened to the E$? It dropped like a rock to prop up the dollar. The same thing seems to be happening to the E$. On a longer timeline (Think weekly) we are starting to head up. Maybe. I could be wrooong.

The following is from a free email news letter I get from http://www.roubini.com/. External links have been removed.

From Wednesday's email
~~~~~~~~~~~~~
Greetings from RGE!

Last week, Nouriel Roubini released an analysis exclusively for RGE clients. While maintaining his core projection of protracted U-shaped growth in the United States, Roubini argued that the risks of a double-dip recession in the United States are rising. The following content is excerpted from that analysis, the full version of which is still available just for clients on Roubini.com.

V, U and W

A slew of poor economic data over the past two weeks suggests that the U.S. economy is headed for a U-shaped recovery—at best—in 2010. The macro news, including data on consumer confidence, home sales, construction and employment, actually suggests a significant downside risk even to the anemic levels of growth which RGE forecast for H1. The U.S. faces continued challenges in H2—particularly as historic levels of fiscal stimulus fade—and appears far too close to the tipping point of a double-dip recession.

This is not the conventional wisdom. Heated debate continues to rage in the United States on whether the economic recovery will be V-shaped (with a rapid return to robust growth above potential), U-shaped (slow anemic, sub-par, below trend growth for at least the next two years) or W-shaped (a double-dip recession). The V camp includes distinguished research groups and individuals such as Ed Hyman’s ISI, Larry Meyer’s Macroeconomic Advisors, the research group of JP Morgan, Michael Mussa and others. The U camp includes—among others—Roubini Global Economics, Goldman Sachs’ U.S. economic research group, PIMCO and Ken Rogoff. As early as August 2009, I worried in a Financial Times op-ed about the risk of a double-dip recession even if our RGE benchmark scenario characterizes the risk of a W as still a low probability event (20% probability) as opposed to a 60% probability for a U-shaped recovery. Others concerned about the double-dip risk include also David Rosenberg, Gary Shilling and John Makin.

Ed Hyman and I debated whether the recovery would be U or V-shaped on a February 22 conference call attended by over 2,200 listeners. Since that call, a slew of new U.S. macro data have come out. They have been almost uniformly poor, if not outright awful. Consumer confidence, based on the Michigan survey, has tanked. On the real estate front, new home sales are collapsing again, existing home sales are also falling sharply, and construction activity (both residential and commercial) is sharply down. Durable goods orders are down, initial claims for unemployment benefits remain stubbornly high (way above the 400K mark). Real disposable income for Q4 has been revised downward while real disposable income (before transfers) for January was negative again. The manufacturing ISM index—while still expanding being above 50—has now fallen a couple of notches and its production and new orders index levels are falling, too; and global PMIs suggest a loss of momentum in the global economic recovery. Real inventories look unchanged in Q1 relative to Q4; auto sales were at best mediocre; core CPI was falling and core PCE was close to 0%, suggesting anemic demand and economic weakness. Q4 GDP growth was revised upward to 5.9% but most of it (3.9%) was due to inventories; final sales grew at a 1.9% rate while consumption grew at a dismal 1.7% (down from 2.8% in Q3). Q3 growth has been revised from an initial 3.5% to 2.8% to 2.2%, with final sales growing only 1.7%. So, at the time of maximum policy stimulus (H2 of 2009), final sales were growing only at a pathetic 1.8% average rate.

The eurozone (EZ) debt crisis, which RGE discusses in depth in a major new paper, predisposes Europe to a rising double-dip risk, due to the wave of fiscal austerity sweeping the periphery of the EZ. Even if the EZ doesn’t enter a double dip, the growth of domestic demand there will be as or more constrained than in the United States. This, in turn, will be a drag on the potential for U.S. export growth. The U.S. dollar rally on risk aversion reflects this risk. The U.S. dollar is settling back down and the threat of a debt crisis is headed off by a stronger Greek fiscal adjustment and potential adjustment package. But fiscal spending cuts, confidence hits and the looming threat of either rising unemployment or falling wages in the public sector—on top of private sector retrenchment—will remain. A similar retrenchment may well lie ahead in the United Kingdom, given rising fiscal sustainability concerns and the threat of a sterling crisis. Europe then will have great difficulty being a source of demand for U.S. exports, and may even provide impetus to faltering global demand growth, contributing to the threat of a wider double dip across high-income countries.
~~~~~~~~~~~~~
From today's email.
~~~~~~~~~~~~~
RGE Analysis: [Available only to RGE clients]

The Eurozone’s ‘Bay of PIIGS’ by Arnab Das, Elisa Parisi-Capone, Natalia Gurushina, Katharina Jungen and Jennifer Kapila
Greece is the frontline of the battle to restore eurozone (EZ) fiscal solvency and discipline, improve and better align structural policies, reduce EZ divergences and sustain the euro. The battle encompasses Portugal, Ireland, Italy, Greece and Spain—grouped together as the “PIIGS” because they are at risk from the housing bust, the financial crisis or the ensuing deleveraging. RGE ranks 16 EZ members by domestic and external vulnerability, following the methodology in Gros/Mayer (2010). Their external index shows that Greece, Portugal, Ireland, Italy and Spain are the most vulnerable to external shocks, in that order. Applied to the domestic market, our analysis shows that Spain, Ireland, Portugal and Italy are most vulnerable on the home front (like unemployment and productivity).

February Payrolls: It’s the Economy, Not the Weather by Arpitha Bykere and Christian Menegatti
Although the official unemployment rate remains unchanged, many job market indicators show that the economy is still shedding jobs and is likely to continue. The recent report showing a downturn in payrolls cannot be explained away by recent bad weather but rather is the result of persistent, poor economic conditions. Meanwhile, jobless claims data continue to support RGE’s view of a “jobless recovery.”

Dan,

I ran across your thread a few weeks back. I'm not even sure how I found my way here; probably related to studying Jacko's thread. I would like to join in with you folks, learn from you all and also contribute. I've been watching the E/U relentlessly and have come to the conclusion that there is more opportunity out there. I need to expand my horizons and I like the idea of monitoring more pairs. I will start reading your threads start to finish to get up to speed. Thanks for your contributions and helping us with our trading. Thank you,

T

For what is's worth here are my views.

The dollar is strengthening and will continue to strengthen against most currencies in the short to medium term. There is no fundamental reason for this if you look at the fundamentals, BUT it is likely to be the last currency to fall. I actually expect the demise of the dollar (paper standard) to happen within the next five years. I wonder how many of us heard about "trillions" a few years ago. Quantitative easing? More like quantitative inflation or systematic currency destruction to me! Is this a recovery - more like a cover up! The trouble is, most western economies are "easing" in the same manner, so it is a race to the bottom. Which currency would I bet on in this crazy environment? It would be the USD in the short to medium term. Why do you think people have been investing in commodities, gold, gold stocks and markets where the economy DOES have a productive capacity and their governments don't want to destroy their currencies? Will there be corrections along the way - of course. But some of these corrections (commodities, gold) will be perfect buying opportunities in a world where most governments are hell bent on destroying their currencies.

In the meantime, the "canary" seems to be Europe. It will roll from one country to another and the focus (media) will be deliberately shone on our european friends, including the UK. Why is this happening? Well, the western world has systematically shifted all that private "too big to fail" debt and bad derivative plays onto us taxpayers and savers. Did we have a choice? Don't think so, but that is the fascist world we live in now. Justice (Just Us more like it)...

Knight Rider

Here is my view on the EU from a purely technical perspective.

1. The EU has formed a temporay bottom at the 61.8% retracement of bull run from 4/3/09 to 3/12/09 - it's inability to close below this level supports this as a strong base at the moment for the EU.

2. Price has closed above the downward trendline.

3. I do not give much as much strength to the above as I do horizontal support / resistance areas as there are a more recent representation of setiment.

4. The 50% retracement of the above mentioned high/low and 61.8% of the most recent swing high / low line up together at 1.3800 (to the nearest round number) - this is strong confluence and a PPZ area as can be seen from the previous rejection of this area on Friday.

5. For me, in order to consider to switch to a long bias on the EU we need to break above this area and the 1.3850 support / resistance area just above. I would not consider a long until we have broken above these two areas and indeed closed above them.

6. Ideally for a long position I would want a classic breakout and pullback in order to enter or some price action.

In the meantime I have 11 shorts on the arrows on the chart and have all stops at 1.3880 and my bias remains short until / if the above occurs. In fact I have a pending short at 1.3800 and added an aggresive short at 1.3700 (trendline line) but I have a lot of shorts in profit to play with here.

Once / if a trend change has occured in line with my comments above then I will start going long. But,we could range between the 1.3800 / 50 area and the recent lows for a while yet rather than have a strong bullish move.

But rather than trying to second guess I will act on what the charts tell me in accordance with the above

http://i41.tinypic.com/2cztuad.gif

Wouldn't the weekly trend line have more validity than the daily? What is every ones opinion? Thanks,

T

Depends what timeframe you are trading off IMO i.e. if I am trading off the daily time frame then I trade setups that appear on the that time frame and not higher or lower...each to there own but there is a danger of over complicating things if you refer to many time frames when deciding whether to take a trade setup. If I was trading the weekly then I would focusing on that TL and support resistance...but a deep sloping TL is not that strong IMO and relatively easily broken.

Looks like a correction to me (Elliott) these last seven weeks. I wonder if I could draw a triangle to see where price might go? Having said that, I would be disappointed if it did not break the way I intend it to, given some of the points I've raised before (and on dibs thread).

It is only when the tide goes out do you realise who has been swimming naked and who might have been "bitten". I've "plaiced" my bets, although 3850 now looks a bit steep for me. I think I might "cast" it in a bit.

Knight Rider

lovejoy80

I guess a better question would have been, if price is the same on all time frames then why is the daily showing a broken trend line and the weekly is not? It seems to me that you could have used that trend line for the trade you entered on Fri. With your above logic mentioned, why would you short? Trying to understand. Thank you,

T

The weekly TL will be slightly different to a daily or any other TF because the number of bars within a given time will be different e.g, 4h TF over 12 hours will have 3 bars, on a 1hr it will have 12 bars, so the lower 1h will show a more precise point where the trend is. It's ok looking at lower tf's for entry, but if you are trading off the weekly EURUSD then the trendline has not yet been broken. Try it out on a few charts. Good luck with your trading.

Thanks Tenapenny...you summed it up nicely.

As to why I shorted...the trend is clearly down and I do not give a huge significance to the deep sloping TL as I do horizontal support / resistance areas. Until we can close above 1.3850 then I am short.

Also I have a lot of 'banked' profit on shorts so am willing to be more speculative.

OK, thanks guys, I appreciate your help.

T

Target almost hit, may get a pull back then hopefully going south again.

Yeah, well done Tenapenny.

Classic example of buying at resistance. =)