james16 Chart Thread

hehe so heart warming benji.

this is way more impressive.

LOL

Good God Benji, now I have to take a break, beautiful.

Ref, to post 58320

Cute

lol....OH MY GOSH!!!!!
LOL

Say GJ glad you enjoy my tag line. You might be the only one. Must be a Netherlands humor thing my family is from there.

im actually english, i just live here for now.
it does make me smile. at least thats something we can all say, hehe

jon

I just wonder if it's as much fun for the kids as it is for their parents... Another Michael Jackson upbringing?

o u lucky dog. i am a huge fan of living in the netherlands. one day i will, i will be a part of that club.

lol, i actually dont like it much, although it has its perks i suppose. i am gonna go live in portugal in maybe a year or so. i want the sun sand and sangria!!
i came here from mallorca in spain and i got to like the med. life style, and i intend to live it!!

jon

beautiful thing about trading forex, you can go anywhere at any time. friday evenings hop on a train to belgium, france or spain. or why not in the middle of the week. ahh yes. this is how i want to live my life.

Hi all,

I believe currently this pair is forming a BOVB. But somehow i got resist line above this bar. so how do i know if my S/R line are valid (normally if it break the price already move too far and miss the trade, or if it is resist mostly will get stop out.) I am still learning to draw good S/R line. And how about the fibo, i will say pt 4 will be my 0%. But where should i start to draw it (1, 2 or 3)?

Thank you.
skin

I dont really see anything there that indicates weakness. Or a triple bottom.

Probably want to shoot for the swing low at the 8th, that's the start of the latest move - and so any meaningful retracement will be based on that.

It's a tricky one, but you want to look for major turning points - the one you have chosen there is more of just a pause, if that makes sense?

I think living in Amsterdam would have a negative impact on my trading. And make me listen to Dark Side of the Moon and say 'dude' alot more

-------------

Anyone have any new trading/eco book recommendations? Going to NYC for a week, so 23ish hours stuck on a plane each way... and i need something to keep me occupied.

I've got Larry Williams' new book on COT reports (interesting so far), Currency Trading and Intermarket Analysis which I never managed to get through, and a copy of Forex Patterns and Probabilities... but wouldnt mind something new if anyone can recommend something. Always works out better than buying something at random off the shelf and finding out it is written for either six year olds or used car salesmen.

I've read all the standard stuff - Schwager, Murphy, Pring, Nison, Elder (bleh), Van Tharp (stop after TYWTFF), Bernstein, Bulkowski, Williams (both Larry and, unfortunately, Bill), Mark Douglas, etc.

(I've also got like a dozen of Mike's webinars to catch up on)

For lighter stuff, I've just finished Lecturing Birds on Flying (great, even NTT couldnt ruin it) and The Big Short (average - its no Liars Poker). Unfortunately, Roger Lowenstein's new book, The End of Wall Street isnt out until after I get back. Something along those lines would be great - not too taxing, but still interesting. I also really liked Outliers/Blink/Tipping Point and Myth of the Rational Market) if that helps.

I gotta admit, though, that I am almost tempted to buy this book based solely on the cover...

Thanks for the reply. Is this how it should be drawn? BTW if this fibo is correct we have got nice confluence here, PPZ, BRN 1.05, 50% retracement and 150 EMA so some PA there would be fantastic. Or am I wrong? Still learning..

Bingo

I think Covell wrote a book on Trend Trading that you'd really love...

That's probably where I would do it from. You could probably also use the big swing low below it and not be wrong - its all pretty subjective, but i think you've nailed it.

Which leads us to... ramble time!

...everyone should stop here.

...seriously.


Fibs are kind of weird. People love to think they have discovered a 'magic formula' that unlocks the key to the markets and gives you the opportunity to make unlimited wealth! I'm guessing most of us here dont believe in that, but there is definitely a perception out there among amatuer traders aka liquidity.

My take on it is that it is a representation of profit taking/trend resumption.

As a trend gets moving, you are going to have alot of people piling in - insto traders, hedge funds, big momentum traders, and chumps who read the 'book' referred to above. At some point, some of those players are going to want to reduce their exposure, so you are going to get some profit taking - this is the top of the movement, where the retracement starts. Could be fundamentally based (ccy driven too far from its underlying 'true' value), could be technical (BRN, strong s/r level, whatever), could be newsflow. Often, it could just be that they had an exposure to cover, and you have done so. Point is, a couple of big players start to take money off the table.

Why do they do it now, rather than wait for the trend to die out? That part is easy. In the case of a bullish move, you want the market to bid into you. You dont want to be selling into a flat/falling market. Ask Arizona condo owners how that works out. You especially dont want to be doing it with the kind of volume these guys are moving.

As a result of the selling, you see the trend start to peter out. Which leads to momentum traders exiting. Which leads to more of a reversal. Which leads to reversal traders entering the market with new orders, pushing price down more.

But, that doesnt necessitate a fullblown reversal. If there is underlying strength to the trend - alot of big holders accumulating positions, strong economic fundamentals, etc - then the trend is going to continue in its initial direction. Eventually. But when?

As the market starts falling, you are going to have a couple of effects. The big players who caused the retracement in the first place are going to stop selling at some point - either they have unloaded their whole position, or at least the portion they wanted to. But more importantly, there is someone on the other side of those transactions. Because we arent seeing a full trend reversal, there is probably some big money on the buy side that is happy to let the fresh short money offer into them. Usually institutional banks which are acquiring a position for their clients - buying on dips is a prime way of lowering your VWAP and squeezing some profit (and bonus!) out of a client position. So they start accumulating a position.

This will be particularly apparent in a rising/falling market, because companies are going to want to hedge their exposure to a rising market. If you are buying and importing Dingoes and price is at .7500 AUDUSD (ie, each AUD costs you 75c US) and trending upwards, you want to cap your costs. You dont want to have to pay 90c for an Aussie dollar, because then you have to try and pass it on to your customers, and the dingo market is fairly price elastic. So you call your bank and ask for $100m AUD at a max of 77.5 cents. And so they tell their traders to buy them a whole bunch of AUD. In a flat/ranging market, there isnt that imperitive.

You might even see the initial big players who took profit re-enter. Traders love to use intermediate moves to shake out a bit of extra profit for themselves or some clients. Sell into the market when it slows, take profits, buy back in on the dip in the direction of the trend. It's like Ryan says, but on a multibillion dollar scale.

So, as this big money buys up all the shorts and the initial selling from dry up, the market flatten a little. That's going to lead to all the reversal traders closing their shorts, which adds a bit of buying pressure into the mix. That leaves no more sellers, and plenty of buyers. So the retracement ends, and the original trend resumes.

And that's where your fib levels come in. All they are doing is measuring the effect of the profit taking. The numbers themselves dont really matter, its the resumption of the trend we are interested in. Does selling pressure naturally drop and buying pressure increase once price hits the 38.2% retracement level because Fibbonacci made up some magic numbers? Of course not. But are these levels specifically watched by traders? Sure. They dont make a retracement end and a trend resume. But they give people a common line to watch - conveniently, at around 25%, 33%, 50% - and once price starts to flatline at that level, more bids come in. Which turns the market back up. Which brings more people in. And so on.

And that's why you might see a 23.6 or a 38.2 fail. If there is still more selling than buying, the level isnt going to matter at all. That's why we wanna see some strong PA there, it tells us that the buying is starting to overwhelm the selling, and so we expect more money to flow in behind us.

And that's the point of the story. Fibs dont reverse a market. They dont even tell us that a market is going to reverse. That's why we have all those lovely PA bars that Jim and Mike have taught us. These PA bars tell us that we can reasonably expect a movement in the direction they point (ie, a bullish pin at the bottom of a retrace tells us that we can expect some upwards movement), and when those PA bars occur in confluence with a fib level, it tells us that we could also reasonably expect a nice strong movement in the direction of the original trend as more money flows in.


...I warned you to stop reading earlier.
And you didnt listen.
Dont ask for that 15 minutes of your life back.

HA!

http://img231.imageshack.us/img231/4282/whatwhat.gif

No, no - - I'm joking I did read it. But based on what you're saying here, you must not put much faith into fibs? Are fibs your least important element of confluence behind PPZs/round numbers/trendlines?

Please do ramble more often Joelcf!

This stuff is of great interest to me. I love to know how things work.
Especially the markets!!!!

I would love to get inside the heads of some of the big traders.

Can anyone point me to more of this type of stuff?