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Forex Market Deciphered: The Equilibrium Cross

  • #81
  • Jan 9, 2011 8:46pm Jan 9, 2011 8:46pm
Time now is 10/01/2011, 13:40, AEST(GMT+10)

EUR/JPY

An upward equilibrium cross has just formed at 107.14 level, so close all previous short positions and enter new long position at the entry candle.

Fundamentally I think there's tremendous downward pressure on this pair as EUR continues to trend down on debt crisis concerns, this temporary pull back upward might be short lived. (You might choose not to trade today due to jpy bank holiday)

Attached Image (click to enlarge)
Click to Enlarge Name: eurjpy10012011.gif Size: 21 KB


Feel free to add your opinion on the fundamentals of this pair
  • #82
  • Jan 10, 2011 3:19am Jan 10, 2011 3:19am
"Für Die Stiftung!" ?

What's up with the signature ?

Let's see how the equilibrium crosses pan out.
  • #83
  • Jan 10, 2011 4:05am Jan 10, 2011 4:05am
Quoting sophos
EUR/JPY

Feel free to add your opinion on the fundamentals of this pair
I don't have much to add, but from a purely fundamental perspective, taking a long position in USDJPY should do relatively well. Comparing the 2 and 5 year US-Japanese yields and the UJ cross gives us a target of 86 ceteris paribus. The variable here, of course, is the possibility of a fall in US yields. The 86 target is from a chart posted by Kathy Lien a short while ago, I'm not so smart to figure out a target myself.
If you don't risk, you don't ever have to lose.
  • #84
  • Jan 10, 2011 6:28am Jan 10, 2011 6:28am
Quoting bug
I don't have much to add, but from a purely fundamental perspective, taking a long position in USDJPY should do relatively well. Comparing the 2 and 5 year US-Japanese yields and the UJ cross gives us a target of 86 ceteris paribus. The variable here, of course, is the possibility of a fall in US yields. The 86 target is from a chart posted by Kathy Lien a short while ago, I'm not so smart to figure out a target myself.

Well said bug, I basically concur with you and lovely Kathy Lien about the target 86 within next few weeks, the only difference from my opinion is that 84 - 84.5 area could be a potential big resistance to the upward momentum.

As said a while ago, the EUR/JPY upward trend is to be short lived, I just took a look at it and it seems to be confirming my read as my position is only 25+ pips. Also AUD is very very oversold since the new year started, the Queensland flood and data on Chinese contraction weighed big time on it, but the fundamental still remains strong and will turn back on bullish track soon, just sit on it.

Arh....it's late, I'm gonna call it a day. I have a poker tournament to play tomorrow so ladies and gentlemen, feel free to hijack this thread and tell everyone what you trade and what you think
  • #85
  • Jan 10, 2011 7:16am Jan 10, 2011 7:16am
Quoting sophos
Time now is 10/01/2011, 13:40, AEST(GMT+10)

EUR/JPY

An upward equilibrium cross has just formed at 107.14 level, so close all previous short positions and enter new long position at the entry candle.

Fundamentally I think there's tremendous downward pressure on this pair as EUR continues to trend down on debt crisis concerns, this temporary pull back upward might be short lived. (You might choose not to trade today due to jpy bank holiday)

Attachment

Feel free to add your opinion on the fundamentals...
I try to entry such as what you describe.
Attached Image (click to enlarge)
Click to Enlarge Name: equilibrium.gif Size: 22 KB

although I do not really understand about this system.
but I am really eager to learn this system.

  • #86
  • Edited 12:47pm Jan 10, 2011 12:34pm | Edited 12:47pm
Hello Sophos,

thanks for this thread. Hope you're doing well at your poker tournament - i am playing poker too

Now on topic :

Can you confirm an upward EQ-Cross of the EUR/USD today around the 8:00-12:00 candle +1GMT ?
Attached Image (click to enlarge)
Click to Enlarge Name: EQCrossEU.jpg Size: 98 KB
  • #87
  • Jan 10, 2011 4:21pm Jan 10, 2011 4:21pm
Quoting tex
Hello Sophos,

thanks for this thread. Hope you're doing well at your poker tournament - i am playing poker too

Now on topic :

Can you confirm an upward EQ-Cross of the EUR/USD today around the 8:00-12:00 candle +1GMT ?

Hi there! I can confirm that an upward equilibrium cross occurred last Friday on second last candle of the week, about 1.292, but I didn't trade it because I had more than 4 other opened positions, and pardon me for not getting a screenshot for everyone. So if you entered a long position on the start of this Monday, it's a very comfortable situation to be in. But still as mentioned in the EUR/JPY post, I still see heavy downside pressure on EUR, don't see this one going too far.

Btw I sincerely hope all traders in the world don't trade like how Mr. Hellmuth plays! We must hold our mind together all the time, never trade on tilt, never blow up on a trade!
  • #88
  • Edited 2:15am Jan 11, 2011 1:14am | Edited 2:15am
hello sophos ,

to know the equilibrium point must be calculated by the algorithm, right?
and how is it calculated?
  • #89
  • Jan 11, 2011 5:49am Jan 11, 2011 5:49am
Quoting gege.aig
hello sophos ,

to know the equilibrium point must be calculated by the algorithm, right?
and how is it calculated?

Hi there! I will have in depth discussion on the math as we go along, in the mean time I am in the process of writing some useful stuff, and I will post it soon as I finish.

Alternatively if you can't wait anymore, I suggest you get into Kannan Lakshmikantham's book: Handbook of Stochastic Analysis with Application, it's a very practical book and useful for basic modeling. Read chapter 8 about games and get a general idea about how to approach market participants, in a referential way of course......
  • #90
  • Jan 11, 2011 7:10am Jan 11, 2011 7:10am
Quoting bug
The book is Day Trading the Currency Market by Kathy Lien. I've made screenshots of some of the more important things to me from the book and I can upload it here as a zip/rar file if there is interest (the charts posted below are both from the book).
Hi Bug,

I would be interested in the book.

Many thanks
  • #91
  • Jan 11, 2011 7:52am Jan 11, 2011 7:52am
Quoting krunofx
Hi Bug,

I would be interested in the book.

Many thanks
Then buy it, get it from your local library or use Google.
If you don't risk, you don't ever have to lose.
  • #92
  • Jan 11, 2011 8:24am Jan 11, 2011 8:24am
Quoting bug
Then buy it, get it from your local library or use Google.
My apologies, I misunderstood your initial post re the book.
  • #93
  • Jan 11, 2011 8:57am Jan 11, 2011 8:57am
Quoting krunofx
My apologies, I misunderstood your initial post re the book.
I'm still up for uploading the screenshots taken from the book containing the info that I found most useful on the topic of fundamental analysis (7 shots all in all). Let me know if that's a yes or a no.

When it comes to uploading whole books, I'm not going to test my luck. I think you will find that Google has indexed quite a few sites that are just fine with hosting this particular book as long as they get a few dimes in return from ads.

Sophos,
do you consider interest rate differentials when you do your analysis? Also, do you pay attention to option volatility and/or CFTC data? The latter is not fundamental information, but it's something that should be pretty easy to feed into an algo. I'm not making a suggestions here, just wondering what info you consider 'worthy' of your algo.
If you don't risk, you don't ever have to lose.
  • #94
  • Jan 11, 2011 9:23am Jan 11, 2011 9:23am
hi sophos,

what I see here the emergence of the EQ-cross can be seen with the indicator,
what about the influence of other market? like the dow jones index, DAX, bond, etc.
what affects the equilibrium also?
  • #95
  • Jan 11, 2011 2:14pm Jan 11, 2011 2:14pm
Quoting bug
I'm still up for uploading the screenshots taken from the book containing the info that I found most useful on the topic of fundamental analysis (7 shots all in all). Let me know if that's a yes or a no.
Yes definitely, I would be interested in those screenshots.

Thanks a lot
  • #96
  • Jan 11, 2011 9:29pm Jan 11, 2011 9:29pm
Quoting bug
do you consider interest rate differentials when you do your analysis? Also, do you pay attention to option volatility and/or CFTC data? The latter is not fundamental information, but it's something that should be pretty easy to feed into an algo. I'm not making a suggestions here, just wondering what info you consider 'worthy' of your algo.
Hi bug. The IR differential is one input that is not involved in real time calculation and serves as a constant, because it stays constant for a longer period of time, so every time it changes I update them manually. Things that are worthy of input should have strong time impact that can be expressed in f(t).

Option volatility and other data might be useful, though it's very hard to put into the model because the level of correlation sometimes behaves rather unevenly. This is something that need to be worked on, but so far I hadn't found a way to do this right. Thank you for reminding me.

Btw how's everybody's EUR/JPY long position going? It's scaling up so awkwardly like fat cow......I will post the opposite equilibrium cross soon as it forms. Since you mentioned options, I forgot to say that I bought 100 weekly EUR/JPY call options on Monday, strike price 108.000, expiration date 14/01/2011...maybe I should do more on options, what do you reckon?
  • #97
  • Jan 11, 2011 10:24pm Jan 11, 2011 10:24pm
Sophos,

Nice on EURJPY on the call options! GBPJPY hit the 130 target that you mentioned a while back ...

Regards,
EZ
  • #98
  • Jan 12, 2011 2:22am Jan 12, 2011 2:22am
Quoting krunofx
Yes definitely, I would be interested in those screenshots.

Thanks a lot
Added as a zip archive. If you can't open it, then Google it.

Sophos,
when it comes to posting more information on options, I really don't have an opinion here. I don't trade in options myself so I don't really care for them but I can't speak for the rest of the crowd. Thank you for answering to my questions.
Attached File(s)
File Type: zip Fundamentals.zip   892 KB | 549 downloads
If you don't risk, you don't ever have to lose.
  • #99
  • Jan 12, 2011 3:23am Jan 12, 2011 3:23am
Quoting sophos
Btw how's everybody's EUR/JPY long position going? It's scaling up so awkwardly like fat cow......I will post the opposite equilibrium cross soon as it forms. Since you mentioned options, I forgot to say that I bought 100 weekly EUR/JPY call options on Monday, strike price 108.000, expiration date 14/01/2011...maybe I should do more on options, what do you reckon?

I got long EUR/JPY as per your post, unfortunately only in my demo account.

In my real account, I took a scalp to the short side for some nice 30 pips ,lol.

I really need to learn how to trade longer moves, your long would have been much more profitable !!
  • #100
  • Jan 12, 2011 5:41am Jan 12, 2011 5:41am
Quoting bug
Added as a zip archive. If you can't open it, then Google it.
Many thanks Bug, much appreciated
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