GU, GJ and EU Analysis Thread

...well, it sort of abandoned me.

As for not taking you too seriously - I happen to try and soak up all that you present to us here. Never read any crap from you, that's for sure.

It is interesting to see this divergence timing itself for what can be be argued to be Thursday trend change day - although that concept is a little hit and miss as of late.

Anyway, top of the mornin' to ya, and all others that are reading today.

Right, that's me, I have an appointment with good people, hearty food, and, erm, shite weather.

and lo, it comes to pass that after the stop out this morning, the suspected divergence appears to have played out whilst this trader has to go out all day, and upon return to the charts, can see the day's movement south.

Ah well, hope others rode it, but I would be careful of holding for too long, as I still feel that the 1.64 level is the target for larger positions.

So close, and yet so far! Still praying we dip one more time on this pair though this may just be wishful thinking on my part because I didn't catch the bottom of this pair's drop for the swing north while I was busy doting over my grandbaby. Not sure that when we do touch 1.64 we won't just fly through this up to 1.658, but the question is when i.e before any interest rate raise or after?

Same with the euro, returned this month and on Monday it looked like we could hit 1.39, then suddenly we turned - though we were always likely imho to close at the weekly open.

Only took one trade this week on my live account i.e bought the swissy at pretty much the bottom i.e. 0.9340, and will leave to run till Monday evening to see if we're on our way to 0.972 or not.

Next week, will be watching the aussie like a hawk, with alerts set for 1.0165 and 1.0200, looking for a potential reversal/formation of the right shoulder on both the daily & weekly head & shoulders emerging pattern, which I could be wrong on of course.

Have a great weekend all.

i

Thanks for the headsup on the Aussie, will be watching.

As for the lost opportunity on the divergence, damn, had to go out, and so had to decide on appropriate stop. Of course, those boys in the city know where we retailers place them, and so hunt them down first. Pff, shame I was not at the pc; I would have reentered. Ah well...

It was also recently found, a natural gas source of about 100 year US supply.

That will be enough to keep prices down for about a decade

They found/surveyed/developed/drilled/mined/delivered a supply equivalent to 100 years of current US demand?

Wonder why the Europe is always in a tizzy over the vice Russia has their collective nuts in re NG supplies? Someone better let them know it's all good so all those old people can get back to heating their homes with cheap gas they can afford on their pensions instead of dying from hypothermia...

http://cdnedge.bbc.co.uk/1/hi/health/1641665.stm

Meanwhile in trading land...

A few scalps on the euro today for me just for a change of pace because I have a bit of extra time. Took a 5 pip loss with the Frankfurt f-around, but up on the current 5min swing down on the Euro, trailing in profit now because it looks like London wants to bounce.

Hope everyone is well, long term views as posted still hold for me. Interesting to note breakout in the 30y was joined a day later by breakout in 10y Treasury yield, taking a look at the TEDspread, we can see it back above its 50MA indicating a bit of short term nervousness against the back drop of longer term complacency.

Oops, trail hit as I type. Out for a cool 5 net pips against the earlier loss, what can you expect for early Mondays I guess, back to it then, hope everyone has a great week good luck on the top picking IbKA and hope to see everyones thoughts as we progress.

Good morning all. Well, long Cable. Based mainly on the assault upon the descending magenta TL of the internal wedge - as seen best on the weekly chart - but also on the fact that all Guppy profiles from the daily down are, seemingly, heading north.

PS. The divergence on EU and Cable last week. Hmm, it was obvious that interest rates in EuroLand were never going to be increased - it would kill any kind of recovery - and I am not sure the UK will raise interest rates too soon.

The cuts are just coming into effect, VAT is starting to bite, and Cameron is asking us to exonerate the financing sector so that it can get back on its feet and help us out again. Hmm, I wait to see that, and most know that I do not believe they deserve the amount of forgiveness that we are seeing them receive. However, this is England, so we just have to take it.

And no sooner do I post, than price decides to take a dive onto the 5min Guppy, but a little too close to take another bite as yet.

I swear, someone, somewhere, just waits for me to post, and then drives price against me.

Pff... still in, but only just.

My quick appreciation of EU.

Hi Sn

Not quite 'top picking'per se. One thing that's rung in my head over the past few months from advice you gave me last year is 'what's my expectancy for each trade I place?' .

That question really helped me no end, as I developed a 4 step strategy from it i.e.

 

1. Determine and write down my expectancy
2. Set alerts for when a pair hits the trigger point
3. View the candlesticks and pa at the time the trigger point is hit
4. Take a trade in my intended direction if it's the right thing to do at the time with a wide enough stop loss to tolerate any slippage

Based on the above, I'm not saying the points I've noted down on the aussie will be the 'top', neither am I saying I'm absolutely going to sell from there without any regard for what the technicals are saying at the time we hit there. I'm saying I'm watching those points to see if we peak there and, if there's any indication once we get there that going short is the right thing to do, then I won't let the opportunity pass me by this time around (if it hasn't already gone). Too often in the past, I've watched a trade hit my projected top or bottom, and not taken the trade out of a fear of 'picking the wrong top', but I've become more comfortable with the understanding that this is what each of us retailers do when we take a position, i.e. when we 'sell' we're speculating or assuming a top has been reached and when we 'buy' we're assuming a low has been reached.

Btw. all, at some point last year, the SNB said they weren't looking to intervene anymore if their currency continued to appreciate - prior to this statement, they just used to intervene impromptu if they feared their currency was getting too strong . Once they released this statement, the swiss franc started this freefall against all pairs. Last week the SNB started making contrary noises suggesting they are a bit bothered now by they swiss franc's strength, hence my decision to grab some from the trenches and see how high we go before the SNB changes its mind again.

Whatever the case, new strategy is to take far fewer trades nowadays, but much more productive ones which is working; next step is to try and tolerate having 2 profitable trades running at the same time!
Good luck this week to everyone.

i

Hi 45Condor,

Nice clear analysis mate.

I will be back posting fulltime by the end of this week. Its taking longer than expected getting back to work after the wedding.lol

Hope to exchange some analysis very soon.

Stocky

...had to take a short scalp on EU upon release of German news, and thankful that I did as it covered the loss from Cable this morning.

As for your return: Anyone that can afford a two month break from work for marriage is surely not in a position to have to rush. Enjoy Sir.

IbKa: Currently looking at AU... hmm, tantalizing.

Thanks mate I will.lol The break was needed and should have me recharged to make some decent first quarter setups. See you soon

Stocky

Hope nobody minds an AU submission on the thread... blame IbKa for stoking my curiosity.

Would have been much more tantalising if one had got in earlier but it didn't hit any triggers for me so I didn't wake up to enter a trade (middle-aged citizens need at least 8 hours sleep, fact!).

Alerts still set for 1.0165 and 1.0220; I won't be going short from where we're at now, will wait and see what the US does with the pair still sitting on this support quite comfortably imho.

Watching and waiting... patiently.

Off for a nap, on leave from work.

i

Now that is the best call I've read all day. May partake a little later.

Awesome stuff IbKA. After a while of this record keeping (unless you want to backtest your orderbook) you will notice a few things about your style which will allow you to fine tune your future trading.

e.g. this week I've been running backtests on a long-only short term trading model of the S&P600 Small-cap index across the last 3 years. The system definitely has merit with no tweaking, it performed with consistent profit even during the 2008 crash and flash crash, outperforming bull markets by a small (but worth chasing) amount and bear markets by a lot.

However what I noticed looking across the per trade stats was that any trades drawing down more than 5% tended to end up on avg costing more than 5% when the model decided to give up its position.

A simple refinement to the max loss parameters and the payoff factor was increased by orders of magnitude. We can look at this as a perfect example of "cut your losers and let your winners run", but to quantify it and apply it to your own market actions moves you a rung above the average retail trader. In the example above we are talking about turning a relatively well known concept into a quantified trading model that at least one hedge fund trader I know would be happy to have.

imho a set of data to test trading concepts over is invaluable. Even if you do it visually over the weekend with a pen and paper or spreadsheet.


Loving the market commentary, keep it up, thanks for reminding me to keep an eye on the CHF


This belongs above the other bit. Position sizing and the "heat" on your book affect expectancy, you need to consider it as part of the whole "system" (although you probably don't like that word for what you do).

Take a look here for ideas (if you haven't already?)
http://bigpicture.typepad.com/commen...urtlerules.pdf

Not saying you need to be following the parameters specified within, but just to give you a broader look at ideas for running multiple positions. If you want to do it, it should be consistently applied.

Hope I'm not pestering.

Managed a few more swings on the M5, after enduring some ranging around the daily pivot. Adjusted trail down to 1.3555 (assume it will be hit shortly but why give up the position just yet) and now I'm off to bed almost midnight here in Melbourne. Good run all up, nice to see markets operating in relatively good order.

Forgot how stressful short term trading can be, even if you're not on size always checking the chart is so aggravating! I like time to think while the bar is closed.

Hi All,

First post this year....put some GU charts together showing my outlook on PA long to medium term.

Monthly: chart shows the important levels I have in mind and will be keeping a close eye on. GU has been making progressive bullish movement on the monthly since we broke out the inside bar setup I pointed out in early July. With 5320 being the setup high we broke out convincingly and re-tested 5320 which held as support. A second retest has been made since in December and 5320/5471 zone has held which shows the smart money is buying around that area. Although we are now at the monthly/ weekly TL (purple) which is valid from far back as 2007 and we will see selling pressure around this area. I still see us breaking through the 6320 / TL zone too make new year highs and approach the monthly 200ma around the 1.68 region. This is given we have had the Inside break setup in july 2010 now followed by another monthly bullish setup at 5320 support.

The weekly daily and 4hr reconfirm this analysis. The 4hr shows a pinbar formation at the monthly TL area 6280 which shows initial selling maybe to around the next major support 1.6067 or 5980 zone. Once this initial selling has taken place I am expecting us to spike through the 6280/ purple TL area once the market net position is short. The monthly close will be crucial in determining long/medium setups for this half of the year.

Stocky

Great to see everyone posting again, didn't realise it until I saw it, but I missed you guys over the holidays!

Last nights price action on the DX at/around 78.3, a very interesting number whether you look on the daily or weekly.

Short term it looks dollar bearish, caution is warranted around here imho, conservative traders not putting new money on the table unless we can get NY closing back outside the Nov-Dec range. For the aggressive, playing within the Nov-Dec range could prove profitable.

A strong reaction move in either direction tonight around this core number could be the market tipping its hand going into the June EOFY.


While nobody was looking, I bought a few cheap puts on the DAX today, 6500 strike expiring 18th March. The incessant melt-up movement in stocks has made the put buying fun of 2009 and first 6 months of 2010 when retracements were actually tradeable swings mostly a thing of the past (my last basket of puts died in the arse and cost me 3%, to put it bluntly), but silly ol' me is still out there in full Talebian style trying to catch those 6+ sigma fat fat tail events when the opportunity presents itself. For the record, puts betting on a 10% decline in the DAX are roughly half the price of those betting on decline in the FTSE. All it cost me was last nights scalping profits. I took that as a signal for DAX complacency. I also ran up a spec long in some ounces of leveraged gold at 1350 during Tokyo today to be held until stopped out with a trailing stop based on H4 parameters. Hope this isn't too offtopic.



http://1.bp.blogspot.com/_2f3AywUkdD.../s1600/594.jpg

I'm expecting the session to be a little up and down until the German production news - about the only news of trader importance today for Europe (yes, CAD is on the list as well).

For me, EU wants to push up, but I have tight compression on the 4hr, and convergence on the 1hr Guppy profiles, and so will stay out until post news.

Cable appears to be sitting atop of a 4hr Guppy profile that is beginning to spread north, but the 1hr Guppy profile is very tight.

Just watching the PA for these two instruments this morning is telling me that there is indecision at present, and that the news from Germany will provide direction for the day.

Would not be surprised to see Cable push for yesterday's lows, in preparation for good news for the Euro, and hence allow the Euro to pull Cable up - assuming we are back on with correlation.

Of course, I could be wrong.

Sinner - again, interesting submission, and I, for one, do not think that your submissions are off topic. Indeed, it only helps to educate.


EDIT: Pff, and as I type, the up and down becomes strong down.