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Cable Update (GBPUSD)

  • #270,741
  • Feb 1, 2011 10:05am Feb 1, 2011 10:05am
Quoting lechidi
hi Dr D. Believe me i am getting ever so interested in your compression pattern approach. kindly tell me for instance, at this point that on the 15min, ur MAs are all fanned out, what would be ur next approach? always grateful for your tips. its still a serious learning process for me.
regards

Simple answer: when the EMAs are widely separated prepare to take profit, then either wait for the EMAs to gather again and trade another compression pattern after it re-forms on that same tf in the same direction, or drop to a lower tf(s) and trade another compression pattern as it forms with or against the trend.

If I were to practice the same restraint and discipline in my trading as I do my writing, I would limit my entries only to breakouts off of compression patterns. To trade anything else unsupported by these patterns on a given tf is a gamble in my view. This doesn’t prevent me from counter-trading since within each trend (wave) are smaller reactive, supportive or compensatory trends (waves). Some might call these consolidations or retracements. To guess at these, anticipating tops and bottoms without supporting patterns again is only gambling.

Back to your question, (in the 15M chart) and relative to every tf, when the EMAs are greatly extended, (‘fanned out’) I would recognize a disparity in price is developing that likely cannot indefinitely continue or be supported. At some point the move will become exhausted (relative to the tf) and either pause or retrace or reverse. In any case, I could look to lower tfs for compression patterns to re-form and trade off of (with or against the direction of the trend of that original traded tf) respecting the strengths of the immediate and prevailing trends surrounding it. In either case, I would only trade a compression based breakout.

So it’s really a simple visual approach. Currently with the cable on most tf’s (15M – 4H) the EMAs are widely separated (‘fanned out’). We know that EMAs are the reflection of price point variations and the collective movements patterns of MMAs are repeating. There is a continual gathering and compressing together or breaking apart and become extended and widely separated. All of this in accordance to the prevailing mood of buyers and sellers… even on multiple tfs.

Good luck,

Dr. D.
  • #270,742
  • Feb 1, 2011 11:17am Feb 1, 2011 11:17am
Quoting fourxtrader
Simple answer: when the EMAs are widely separated prepare to take profit, then either wait for the EMAs to gather again and trade another compression pattern after it re-forms on that same tf in the same direction, or drop to a lower tf(s) and trade another compression pattern as it forms with or against the trend.

[i][color=blue][font=Arial]If I were to practice the same restraint and discipline in my trading as I do my writing, I would limit my entries only to breakouts off of compression...
tanx Doc. meanwhile, the thread is so quiet. looks like a lot of people got hit by the GU uncanny moves. the big boys are really having fun with the retailers arent they. its so much so i'll wager one can find himself on the same side with the market makers by only taking a counter side to popular sentiment on this thread...lol.

cheers man
  • #270,743
  • Feb 1, 2011 11:45am Feb 1, 2011 11:45am
well...it will touch the 1.6298 and go all the way to 1.64 acc to my calculations.....but lately I stopped thrusting the news and the mentality of the traders

at either 1.6298 or 1.64 it will eventually come down but only time will tell
  • #270,744
  • Feb 1, 2011 11:49am Feb 1, 2011 11:49am
Hi Lechidi,

I, too, am a proponent of compression patterns as defined by a set of MAs. Unlike Fourxtrader, I adhere to classical Guppy profiles, and am in no way trying to confuse your interest in MA studies, nor dismiss the system that Fourxtrader uses. If one looks closely enough, both directions of compression appreciation can show the same thing.

I include below a link to a response I wrote some time back, explaining how I would trade off of a 4hr chart. Not shown in the response are lower TF studies to compliment the entry points as outlined in the response, but as Fourxtrader notes, I tend to trade in the direction of a 4hr chart, and choose pullbacks onto the 4hr trend line, and then look at lower TF compressional signals, that allow for entries that return to the prevailing 4hr trend.

http://www.forexfactory.com/showpost...&postcount=323
Author of: For Pip's Sake! (Available at Amazon... :-) )
  • #270,745
  • Feb 1, 2011 11:54am Feb 1, 2011 11:54am
Quoting redbeben
well...it will touch the 1.6298 and go all the way to 1.64 acc to my calculations.....but lately I stopped thrusting the news and the mentality of the traders

at either 1.6298 or 1.64 it will eventually come down but only time will tell
im still swing buy right now... im agree with u...
  • #270,746
  • Feb 1, 2011 12:02pm Feb 1, 2011 12:02pm
Quoting lechidi
tanx Doc. meanwhile, the thread is so quiet. looks like a lot of people got hit by the GU uncanny moves. the big boys are really having fun with the retailers arent they. its so much so i'll wager one can find himself on the same side with the market makers by only taking a counter side to popular sentiment on this thread...lol.

cheers man
Well, a chart like this makes it fairly straight forward.
This move of ~300 pips was triggered from c.patterns
in lower tf's (5M) and this 15M shows the continuation.
Even the higher tf's support this move.

It there is confusion it's trying to second guess the basic
charts and complicating the issue by using too many
indicators.... more than one is too many for me.

Dr. D.
"Simplicity is the ultimate sophistication." - Leonardo da Vinci
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  • #270,747
  • Feb 1, 2011 12:12pm Feb 1, 2011 12:12pm
Quoting Ctic
GS,

From my point of view, if that does become support, the dollar can bend over and kiss it's own ass goodbye. But bottom line is like I have been saying, no one can really be sure which way it's going. It could very well head to 6250. It could very well head back to 5350. Look at this daily chart. The two horizontal red lines are (roughly) the side ways channel we have been in since July 2010. We broke out a couple times but nothing really to speak of. Until we get a clear break of this channel, who can say for sure which way it's going....
The dollars lips are firmly pressed to its ass. I got stopped out on my gu short but my au long is performing nicely.
  • #270,748
  • Feb 1, 2011 12:22pm Feb 1, 2011 12:22pm
Quoting Ctic
You all look at this from a narrow minded point of view. Lets look at exactly when the gdp news came out.

DOW Jones = 12000
Nasdaq = 2800
S&P = 1300
E/U = 1.3750
G/U = 1.5950

etc...

Now what happens historically when people buy stocks. They have to take their cash... i.e. the dollar... and sell it to purchase equities... Stocks.

What has been happening lately... Stock markets have been rising with absolutely zero resistance.. What does it mean????

Dollar drops.. equity rises..

Before the news where are we at... Dow =...
I knew the stock markets were bullish but I think I underestimated how bullish they really are. After a very small bounce off these levels we blew through them like they were not even there.
  • #270,749
  • Feb 1, 2011 12:55pm Feb 1, 2011 12:55pm
Quoting yasi
are u kidding me?! of course i have money management its my strategy to use a lot of position with very little volume. hello i am trying to learn hear that's why im looking for your confirmation and if i ask you questions;it doesn't mean that i have a position
Hey Tiger !
If you're looking for help, which you obviously are, its best to listen to posters more experienced with this thread AND more experienced at trading.
I'm not referring to myself here but Java,who is way more experienced than myself.
Respect.
All systems of divination, like music itself,work through patterns.
  • #270,750
  • Feb 1, 2011 1:12pm Feb 1, 2011 1:12pm
Quoting Ctic
I knew the stock markets were bullish but I think I underestimated how bullish they really are. After a very small bounce off these levels we blew through them like they were not even there.
Hi Ctic,
I'd read your post and was very grateful for your clear explanation of the opposite correlation between Stocks and Forex. Something i've been trying to wrap my head around for a while now.
Would you say that the unusual patterns that we are experiencing are down to uncertainty in the markets, emotional response ( climatic volume)to recent fundermental issues ... or perhaps that these movements have been anticipated and priced in by the Giant Traders for a while...just looking for the right level of uncertainty to jump in and buy.
Or have i got it all arse backwards as usual?
All systems of divination, like music itself,work through patterns.
  • #270,751
  • Feb 1, 2011 3:09pm Feb 1, 2011 3:09pm
Just a thought, I see a possible reversal here as we are at a Gartley 222 level on the 4 hour i.e. 1.577 to 1.599 down to 1.582 up to 1.614 for the expansion 161.8 level. It could struggle at these prices and retrace and test to at least 1.600. A buying climax was attempted at the close of the US session. I'm rarely right though!

Thanks
  • #270,752
  • Feb 1, 2011 3:32pm Feb 1, 2011 3:32pm
well your right maybe i was a bit harsh but i didn't mean to offend him i will apologize and thank you to remind me about my bad behavior. by the way do you think im tiger because i like the idea
  • #270,753
  • Feb 1, 2011 3:38pm Feb 1, 2011 3:38pm
Quoting bucko
Just a thought, I see a possible reversal here as we are at a Gartley 222 level on the 4 hour i.e. 1.577 to 1.599 down to 1.582 up to 1.614 for the expansion 161.8 level. It could struggle at these prices and retrace and test to at least 1.600. A buying climax was attempted at the close of the US session. I'm rarely right though!

Thanks
I'm rarely right either. In fact, I've flipped a hundred coins, and have been wrong 98 times. Is that possible?

In fact. if you just trade the opposite of what I do, you will be rich beyond your wildest dreams.

The market are losing their enchantment for me. I've tried everything: fancy indicators, neural nets, astro projection, praying... nothing works.
The markets seems to be getting more 'rigged' all the time.

I remember back in the 1980's, we used to go to Vegas alot. Because we always won... something... And I always remember seeing a flashing light on top of a slot machine, indicating that someone had just won a small jackpot.

These days, you won't see the flashing lights on top of the slot machines very often. The casinos have severely tightened up. Now Vegas is nothing more than a grand fleecing operation.

They seem to be doing the same thing to the markets.

My head is spinning. I'm ready to give up on this casino; for good.

PS - I'm short since 1.6045 - margin almost gone - praying for a miracle.
  • #270,754
  • Feb 1, 2011 3:59pm Feb 1, 2011 3:59pm
Quoting bucko
Just a thought, I see a possible reversal here as we are at a Gartley 222 level on the 4 hour i.e. 1.577 to 1.599 down to 1.582 up to 1.614 for the expansion 161.8 level. It could struggle at these prices and retrace and test to at least 1.600. A buying climax was attempted at the close of the US session. I'm rarely right though!

Thanks
I like your analysis.

Have a look at this screenshot of the recent 15 chart:

http://img.villagephotos.com/p/2009-...15MINChart.jpg

Then compare it to the daily. Are they trying to tell us something?

I still have a mustard seed of hope left.
  • #270,755
  • Feb 1, 2011 4:02pm Feb 1, 2011 4:02pm
Quoting yasi
well your right maybe i was a bit harsh but i didn't mean to offend him i will apologize and thank you to remind me about my bad behavior. by the way do you think im tiger because i like the idea
JavaPips, i believe, is female.

I referred to you as "tiger" because you were being defensive to the point of aggression, behavior of a cornered animal.

Please dont wink at me...i am certifiably female.

Unless you're male of course.
G/L
All systems of divination, like music itself,work through patterns.
  • #270,756
  • Feb 1, 2011 4:06pm Feb 1, 2011 4:06pm
Hai I'm new here but not a newbie to fx. I agree with bucko that its going to be a reversal but how soon? I believe that the surge was triggered by the big players. Hope the Sydney and Tokyo market players will reverse the pattern.
  • #270,757
  • Feb 1, 2011 4:06pm Feb 1, 2011 4:06pm
Quoting kaspopsicle
Please dont wink at me...i am certifiably female.

Unless you're male of course.
G/L
Money Can't Buy Happiness. Poverty Can't Buy SHIT! You Choose!
  • #270,758
  • Feb 1, 2011 4:09pm Feb 1, 2011 4:09pm
Quoting Magix
Do you ever get around.... coming over this way anytime?
All systems of divination, like music itself,work through patterns.
  • #270,759
  • Feb 1, 2011 4:13pm Feb 1, 2011 4:13pm
Quoting kaspopsicle
Hi Ctic,
I'd read your post and was very grateful for your clear explanation of the opposite correlation between Stocks and Forex. Something i've been trying to wrap my head around for a while now.
Would you say that the unusual patterns that we are experiencing are down to uncertainty in the markets, emotional response ( climatic volume)to recent fundermental issues ... or perhaps that these movements have been anticipated and priced in by the Giant Traders for a while...just looking for the right level of uncertainty to jump in and buy.
Or have...
Hi Kas,

It's real hard to say what eveything is attributed to. I think it really is a combinatin of many things. Stocks in of themselves are a different beast than the Forex is although the principals are the same.

When you go to buy and sell a stock or whatever, the market maker sets a firm bid and ask price. What makes the markets liquid is that there you can get in and out of your positions at will. Here is the problem. In order to have a transaction you need to have a buyer and a seller. Without it you can't have the transaction. So if everyone is selling and no one is buying how can you do this? The market maker will buy your position from you. Then are then trying to sell it, but since no one is buying they lower the prices and buy more, and keep lower pirces and keep buying more. So they are buying in the weakness. Now people want to buy, but no one owns anything to sell except the market maker..... guess what.... Prices rise and they sell into strength.

So what happened.. In 2007-2009 market crashed.. market makers had to buy the positions.. now they are offloading. How much do they have??? who knows.. Dow can go to 15K, 17K whatever. But once their done selling off their positions, you can expect a crash.

Is this attributed to fundamentals, could very well be as well. All the news reports that are coming out do point out to the economy improving. Even though some come back less than expected, it is still an improvement. People's risk appatite is improving.

Bottom line is it's hard to figure out exactly where it will turn, just keep trading in the direction it's going until it does turn. I got thrown for a loop with G/U. I still think it will drop but it does not look like it atm. My A/U longs though are making up for my losses here nicely.

The head and shoulders is still valid. We have some major fibs coming up, so that could be the turn around.. That obviously doesn't mean go short, just wait to see what it does. I think the dollar may be oversold hence we may be getting the turnaround, but until we get downward action, I will sit on the sidelines.

I can go on for hours but probably a conversation left for elsewhere.

C.
  • #270,760
  • Feb 1, 2011 4:16pm Feb 1, 2011 4:16pm
Nick, Im not sure if a agree with your H&S pattern formation. However, I do expect a slight correction around the 1.6220, that is where I will look for a reversal signal to retest support. Unfortately that price is above your stop. If price on the other hand breaks through the daily focal point, around 1.6270, then I would expect a retest of resistance around 1.6400. Trade well my friend.
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