Technical Analysis Fallacy

If the market gets boring later on, here a little background about recent market sentiment regarding EU debt problems ...

Splitting the EURO Zone damages the EURO

By Nicholas Hastings A DOW JONES NEWSWIRES COLUMN LONDON (Dow Jones)--Good news for Germany is now bad news for the single currency as the euro zone splits even more obviously into two.

Up until this week, the strength of 'core' euro-zone economies was seen as a good thing. Larger members, such as Germany, would eventually drag smaller weaker members into growth and secure an end to the current financial crisis.
But, this has now all changed.
The failure of European leaders to provide a convincing rescue package for Ireland last weekend has only raised the risks of contagion.
The lack of political consensus in Dublin means that the risks of an Irish default, or debt restructuring, remains high.
As a result, the costs of both insuring and servicing the debt of Ireland and other peripheral euro-zone debtors, such as Spain and Portugal, will continue to rise as investors pull back even further from the region.
So, while economic improvements in Germany and other 'core' members increase pressure on the European Central Bank to exit its ultra-easy monetary policy sooner rather than later, the deteriorating conditions in peripheral countries will do just the opposite--emphasising the growing split within the euro zone.
This is not a recipe for euro recovery.
On the contrary, negative pressure has already pushed the single currency down through support at $1.3360 and it now looks set to make a run for the key 200-day moving average at $1.3136. A break of this would no doubt pave the way for a return to the sub-$1.30 levels that prevailed in late spring and early summer.
The pace of the euro's decline will of course depend on developments in the peripheral member states.
Ireland is likely to provide enough of a problem on its own. Recent opinion polls show that the opposition will more than likely topple the weak ruling coalition in a January general election.
That could end support for the country's important 2011 budget plans and make a debt restructuring much more likely. The cost of insuring the country's debt already suggests that there is a 40% chance of default in the next five years.
At the same time, rising debt costs will put Spain and Portugal under scrutiny. Although neither country has the sovereign debt problems of Greece, or even for that matter of Ireland, they will still suffer from fears of rising debt costs.
In the case of Spain, which is many times larger than Ireland, much of its government debt may be held domestically, but with its banks so heavily exposed to the plunging real-estate market, the financial sector is highly vulnerable to any hint of higher euro-zone interest rates.
Portugal's sovereign debts may not be so large but most are held by foreign investors, and with Portuguese growth in recent years proving more sluggish than most other euro-zone members, Lisbon is also ill-placed to cope with rising debt servicing costs.
In both cases, each uptick in bond yield spreads raises the cost of debt servicing and brings the possibility of debt default that much closer.
At this rate, investors will not only start pulling out of peripheral euro-zone countries, they could also start questioning support for the euro itself.
Bloomberg TNI FRX POV Reuters USD/DJ Thomson P/1066 or P/1074 (Nick Hastings has covered the foreign exchange markets and industry for more than 20 years. Apart from his written commentary and analysis, he also appears on Fox Business News and CNBC television in Europe, Asia and the U.S. He can be contacted on +44-20-7842-9493 or by email: [email protected].)

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I'd like to wish everyone good health and fortune on the third anniversary of this thread.

Just for info:
May be the reason for the move in that very dead market ...

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Hey guys, just a question. What is a real man? Hope u r ding great, I plan to go to korea next summer for one semster,but now things are heating there, so we'll see. All the best

Someone who can take something not good and turn it into something good.
..my 2.


And Happy Anniversary to the entire thread here.

Good morning Friends!

Just for info:

SYDNEY, Nov 26 (IFR) - In headlines over Reuters, it is being reported that in an radio interview the German FinMin has said it is against demands to top up EURO rescue fund. It should be remembered that a German election is due in the new year and with any additional financial support for these and other bailout measures by the Germans likely to be very unpopular with voters it is likely that this is the common response we should expect, at least until the election is out of the way. The comments have seen EUR/USD hit fresh 1.3255 lows for the day with USD/SGD responding by trading up to a high of 1.3195, the highest level traded since the Sept 29 1.3200 high. [email protected]
Copyright 2010 Thomson Reuters - IFRMarkets

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Just for info:

LONDON, Nov 26 (IFR) - INITIAL TONE: Another day dawns with yet more pressure being borne onto already sagging shoulders of the Eurozone periphery markets. And before you say it, no, it's not Ireland! This time it will be Portugal in the markets sights after FT Deutschland reported that Eurozone nations and their central banks were urging Portugal to apply for a financial rescue package in an attempt to prevent Spain, Europe's 5th biggest economy from doing the same. This, in addition to worse than expected Chinese inflation data, has put markets on the back foot in early trading, with European stock futures down across the board.
[...]

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Hi Guys
I have a question for you about compound patterns.
What time frame we have to look on compound bar charts ?
Is it on the daily ? or is it on every timeframe that i am working with ?
Michael

Smaller time frame charts are just a snip-it of the larger charts. The larger charts, 4hr, Daily, Weekly show you the over all direction, or lack there of (Range)....... 5 minute charts are a microscopic view of the larger, they show you the smaller infrastructure waves and patterns. So if the daily charts are pointing up per say, then trade the small charts in that direction.

Hi Friends,

this text was brought to my attention by a more silent reader of this thread. But because it intrigued me very much, I will offer it to you ....

MaMood

[The following story was recently posted to an e-mail discussion list. It illustrates the importance of attitude to emotional control.]

Attitude Is Everything
By Francie Baltazar-Schwartz

Jerry was the kind of guy you love to hate. He was always in a good mood and always had something positive to say. When someone would ask him how he was doing, he would reply, "If I were any better, I would be twins!"
He was a unique manager because he had several waiters who had followed him around from restaurant to restaurant. The reason the waiters followed Jerry was because of his attitude. He was a natural motivator. If an employee was having a bad day, Jerry was there telling the employee how to look on the positive side of the situation.
Seeing this style really made me curious, so one day I went up to Jerry and asked him, "I don't get it! You can't be a positive person all of the time. How do you do it?" Jerry replied, "Each morning I wake up and say to myself, Jerry, you have two choices today. You can choose to be in a good mood or you can choose to be in a bad mood.' I choose to be in a good mood. Each time something bad happens, I can choose to be a victim or I can choose to learn from it.
I choose to learn from it. Every time someone comes to me complaining, I can choose to accept their complaining or I can point out the positive side of life. I choose the positive side of life."
"Yeah, right, it's not that easy," I protested.
"Yes it is," Jerry said. "Life is all about choices. When you cut away all the junk, every situation is a choice. You choose how you react to situations. You choose how people will affect your mood. You choose to be in a good mood or bad mood. The bottom line: It's your choice how you live life."
I reflected on what Jerry said. Soon thereafter, I left the restaurant industry to start my own business. We lost touch, but often thought about him when I made a choice about life instead of reacting to it.
Several years later, I heard that Jerry did something you are never supposed to do in a restaurant business: he left the back door open one morning and was held up at gunpoint by three armed robbers.
While trying to open the safe, his hand, shaking from nervousness, slipped off the combination. The robbers panicked and shot him. Luckily, Jerry was found relatively quickly and rushed to the local trauma center.
After 18 hours of surgery and weeks of intensive care, Jerry was released from the hospital with fragments of the bullets still in his body. I saw Jerry about six months after the accident. When I asked him how he was, he replied "If I were any better, I'd be twins. Wanna see my scars?"
I declined to see his wounds, but did ask him what had gone through his mind as the robbery took place. "The first thing that went through my mind was that I should have locked the back door," Jerry replied. "Then, as I lay on the floor, I remembered that I had two choices: I could choose to live, or I could choose to die. I chose to live.
"Weren't you scared? Did you lose consciousness?" I asked.
Jerry continued, "The paramedics were great. They kept telling me I was going to be fine. But when they wheeled me into the emergency room and I saw the expressions on the faces of the doctors and nurses, I got really scared. In their eyes, I read, 'He's a dead man.' I knew I needed to take action."
"What did you do?" I asked.
"Well, there was a big, burly nurse shouting questions at me," said Jerry. "She asked if I was allergic to anything. 'Yes,' I replied.
The doctors and nurses stopped working as they waited for my reply... I took a deep breath and yelled, 'Bullets!' Over their laughter, I told them, 'I am choosing to live. Operate on me as if I am alive, not dead."
Jerry lived thanks to the skill of his doctors, but also because of his amazing attitude. I learned from him that every day we have the choice to live fully. Attitude, after all, is everything.

I agree, but again, you need to see on the charts the same pattern in the past and also the situation from the stand point of fundamental analysis should be neutral.

Great story and a good lesson.

Want to add to Auxesis answer that basically patterns on a longer timeframe are of more relevanz, than on M1 for example. If you spot a strong reversal pattern on H4 for example, it has a good chance tol provide a very good (reliable) bias for the next 2 or 3 hours.

In general it depends on which timeframe is your trading Timeframe. If trading M5, I would take my bias from analysing the Daily and H1 chart. Would only trade (send in a scout), when daily and H1 are in sync. For attacking and rescueing I would wait till M5 is in sync too.

Of cousre you will spot a change in dirtection at first on the shorter timeframes. Means when I have an indication of a reversal on M5 I take it just as an info or small "headsup" signal. When this reversal get's some support from M15 too, I'll take it as a serious alert and would try to reduce exposure and finish any rescues. When H1 is following I'm going to change my bias and switch trading direction.

Of course this procedure is not set in stone. If I have very strong monentum with M15 already, maybe I switch faster. If I have some "fundamental" based explanantion for the reversal on M5 or M15, may be I'll switch faster as well. If I see, that the reversal pattern is supported with good momentum by all 3 kgds, may be I'll switch faster.

You see, your question is not easy to answer. It depends on a lot of details. Formulating some strong rules will make your mind rigid. So the best way is to stay nimble and alerted, when some strong reliable pattern show up on the shorter timeframes. Keep your former "old" bias till there is an indication, that let's no room for doubts ....

Hmmmh - hope I could give you an idea of the timeframe-Pattern-thingy ...

MaMood

Wow - Deutsche Bank is quoting EU with 1.3315/19 right now

1.08
"All men can see the tactics whereby I conquer,
but what none can see is the strategy out of which victory is evolved.
there is nothing more difficult than tactical maneuvering,
The difficulty of tactical maneuvering consists
in turning the devious into the direct, and misfortune into gain."

... try this puzzle
http://www.manbottle.com/trivia/einstein_s_riddle
If you want everything to gain a similar approach in this thread as a riddle ...

I think there here is a lot of hairy ...

PS fti "Understand where you are coming from, as in your case, you are trading on the 5 min charts. But what are your thoughts if one is trading on a longer timeframe?Although the trader may like to manage trades on longer time frames, their orders however still have to be filled in the "now" ie short time frames."

Rgs

In the past hour Oanda's high 3357

Juts for info:

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Juts for info:

SYDNEY, Nov 28 (IFR) - In an interview with the Sunday Telegraph - Jim O'Neill, the new chairman of Goldman"s Asset Management division, said the euro should carry a "risk premium" and that it was over-valued by at least 10%. He said that the only reason it was not weaker was because many of the eurozone"s problems were being masked by events in America and worries about weaknesses in the US economy. O"Neil was quoted in the article as saying: "there are elements of the black swan concept that seem rather applicable to the EMU story." He added: "I think fair value for the euro is 1.20 against the dollar and anyone buying it 10% above that is not very sensible". O"Neill agreed with the argument that looking over a 5 to 10 year time horizon there will either be a break-up of the single currency or a fiscal union. [email protected] Copyright 2010 Thomson Reuters - IFRMarkets

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Just for info:

SYDNEY, Nov 29 (IFR) - Whether this is just another knee-jerk reaction to a bailout package or something more concrete but EUR/USD has traded over 100 points higher from its NY close (1.3241) hitting 1.3355 before pulling back to 1.3310. The Irish bailout news is much better than expected with an interest rate on the package around 5.8% (as much as 6.7% had been mooted on Friday) whilst no senior holders of Irish bank debt debt have to take a haircut. This relieves the pressure on all the banks, especially the UK ones. All up the terms are a lot better than most expected but we so far this morning we have seen the path of least resistance taken (through topside stops), now we need to see how the big investors react. [email protected]
Copyright 2010 Thomson Reuters - IFRMarkets

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One long rescue