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  • #3,241
  • Feb 10, 2011 3:58am Feb 10, 2011 3:58am
Quoting makron
Hi, LJ! I hope, that you sometimes see you thread. =)
Can you advise, why i must not to take this trade opportunity on EurGbp (RN,PPZ,PB)?

And else one question. If you see good enter point on for example EUR/JPY, do you look at eur/usd and usd/jpy to see support/resistance level and make decision? Or you look other JPY pairs?
Okay, I would look at this setup and it would be a definite no for me. You are right it's a pin off a PPZ and RN. But look deeper into it than that. Is that PPZ a strong PPZ, is the pin bar a decent bar in relation to the move preceding it...are there better confluenced areas where price is more likely to head before potential retracement occurs.

For me, I would conclude the following:
1. The PPZ is a minor one.
2. Price has indeed reacted at this area - but it's not a strong reaction compared to the move up preceding the reaction - this is pretty key...if it was a decent confluenced resistance area then I'd be expecting a bigger rejection than the pin bar that formed.
3. I'd also be looking at the location of GU and EU...it's not exact as EG has it's own flows and can lead and cause moves on GU in particular at times but it is something worth looking at IMO.

I've not been looking at charts much this week as been moving house but having a quick look at this pair, my daily PPZ's are as per chart below.

Now what I would be doing is waiting for price to approach one of these areas and then look for additional confluence...so it's easy to see that where price reversed was at a daily PPZ, 50% retracement and divergence. The setup can be seen even more clearly on the 1HR TF.

I'm not saying on another day that pin you marked would have worked out, it's just in my mind it is a lower probability setup and thus you have to adjust your risk accordingly (well that's how I do things anyway). I prefer to wait for what I consider to be the highest probability setups, ones I expect to have a >70-75% probability of going to FTA...and that mostly involves waiting for price to reach a daily PPZ.

I've only taken one trade this week (as I said not had access to internet for most of the week) and I risked 4% on it, and in my eyes I would expect the setup I took to work 9 times out of 10...and it was a touch trade setup...so something some would consider to be high risk and aggressive trading (though I strongly disagree that touch trade trading is higher risk taking than PA trading)....but it's all about waiting for price to reach those strong confluenced areas around a daily PPZ.

I don't really trade the yens at the moment, no real reason just seem to be more comfortable with USD pairs, but normally I wouldn't as as a rule of thumb look at EU and UJ when cosidering a setup on EJ. If the setup is strong enough I wouldn't take into consideration what UJ or EU were doing because EJ could actually be a clue as to what EU and UJ might do next (if the setup is strong enough), but I guess it could be supporting confluence - especially UJ. Normally I would prefer to look at YM, but correlations between stocks and FX is not overly strong IMO at the moment.

I do sometimes, if I'm looking to buy yen or usd look at UJ as that can sometimes tell me which one I'm expecting to be stronger out of the two.

BTW a spread of 3 on EG is pretty poor during liquid trading times!
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  • #3,242
  • Feb 10, 2011 4:13pm Feb 10, 2011 4:13pm
Quote
I've only taken one trade this week (as I said not had access to internet for most of the week) and I risked 4% on it, and in my eyes I would expect the setup I took to work 9 times out of 10...and it was a touch trade setup...so something some would consider to be high risk and aggressive trading (though I strongly disagree that touch trade trading is higher risk taking than PA trading)....but it's all about waiting for price to reach those strong confluenced areas around a daily PPZ.

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  • #3,243
  • Feb 10, 2011 8:34pm Feb 10, 2011 8:34pm
LJ! Thanks a lot for your answers. If you have time...

1.EUR/JPY. BUOB with breakout PPZ. But this PA was during asian session and so, i entered half my normal position. Took SL

2. GBP/USD. BUOB off PPZ zone (or not? maybe good situated about 30pips lower?) + TL. Then... i took SL

3. Now have one position on USDCHF. Touchtrade, PPZ, TL, fibo50 and RN 0.9700. Looks like very strong confluence
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  • #3,244
  • Feb 10, 2011 10:42pm Feb 10, 2011 10:42pm
Quoting makron
LJ! Thanks a lot for your answers. If you have time...

1.EUR/JPY. BUOB with breakout PPZ. But this PA was during asian session and so, i entered half my normal position. Took SL

2. GBP/USD. BUOB off PPZ zone (or not? maybe good situated about 30pips lower?) + TL. Then... i took SL

3. Now have one position on USDCHF. Touchtrade, PPZ, TL, fibo50 and RN 0.9700. Looks like very strong confluence
Makron,

Just for clarification, when you say "took SL", you're meaning your SL was hit? If so, how close are your stops? The EJ and GU trades look spot on and I'm not quite understanding how one would be stopped out??

  • #3,245
  • Feb 11, 2011 4:49am Feb 11, 2011 4:49am
Hey LJ

Did you take GU long of 1.6000 area today?
  • #3,246
  • Feb 11, 2011 5:29am Feb 11, 2011 5:29am
Quoting makron
LJ! Thanks a lot for your answers. If you have time...

1.EUR/JPY. BUOB with breakout PPZ. But this PA was during asian session and so, i entered half my normal position. Took SL

2. GBP/USD. BUOB off PPZ zone (or not? maybe good situated about 30pips lower?) + TL. Then... i took SL

3. Now have one position on USDCHF. Touchtrade, PPZ, TL, fibo50 and RN 0.9700. Looks like very strong confluence
1. Ignoring the fact it's Asia (I wouldn't personally take PA setups in Asia) I wouldn't take this as you're trading straight into resistance.

2. You took the trade before PA broke? The touch trade was much better (see next post) and I would look at the all that choppyness to the left of the BUOB and that would put me off.

Also, this is more advanced, but can you see that out of JPY, CHF and USD...USD has been by far the strongest of the three (these three being the main risk aversion currencies) - look at UJ and UCHF for confirmation. Thus if I was expecting GU to rise further and as long as UCHF or UJ weren't at areas I would consider shorting then I'd actually be using the bullish sign on GU to try and find a setup on GCHF or GJ as these are more likely to bring bigger gains that a trade on GU judging by the recent trend between USD, JPY and CHF...does this make sense? It is making things more complicated and I would consider it more advanced and not for everyone. But the GU PA on it's own would be a no trade for me due to the lack of clear space.

3. I'm guessing where your fibs are drawn from (note you seem to have them the wrong way round...not that it matters for the 50% one) and the TL.

Again this would be a no for me (I know it's easy for me to say no to them all after the event when they failed, but hopefully you can follow my thought process).

- I prefer fibs on the most recent swing - thus can you see from my chart where the previous obvious touch trade opportunity was (the shaded area) - TL (though it was only secnd touch so not a strong one), clear daily PPZ and 1st time back and fib confluence...this is a good touch trade setup IMO.
- Looking at price when it came back to this PPZ now, I would not be using those fibs for confluence any more or would place less significance on them, for me it's 'just' a daily PPZ and aTL over a long period thus I would be looking for additional confirmation before taking a trade (e.g. some PA) at this area.

Hope this all helps and makes sense...remember though, this is just how I read the market and analyse price.
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  • #3,247
  • Feb 11, 2011 5:36am Feb 11, 2011 5:36am
Quoting Greenhaze
Hey LJ

Did you take GU long of 1.6000 area today?
Nope, only casually watching the markets to get a feel for it after not watching it for most of the week.

On the daily chart the 1.600 area is a clear PPZ - however looking at the 4HR char tyou can see there is a better defined PPZ slightly above and a very nice touch trade setup with this PPZ, TL and 50% retracement occurred yesterday and price duly bounced up to the nearest resistance before falling again.

The 1.600 area as whole is quite choppy and there is plenty of support there down to the 61 fib area...thus if I was expecting this to hold I'd be looking to take a speculative touch trade as close to the 61% fib area as possible. If I had signs from elsewhere of either GBP strength or expected USD weakness this would certainly be nice confluence, otherwise if I were to take this it would be a small position and as I said it would be as close to 61 fib as possible and then if it went in my favour I'd look to add further positions etc.

A 4HR close above the 1.6015-20 PPZ would be a good signs for bulls IMO.
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  • #3,248
  • Feb 11, 2011 5:52am Feb 11, 2011 5:52am
Quoting lovejoy80
Nope, only casually watching the markets to get a feel for it after not watching it for most of the week.

On the daily chart the 1.600 area is a clear PPZ - however looking at the 4HR char tyou can see there is a better defined PPZ slightly above and a very nice touch trade setup with this PPZ, TL and 50% retracement occurred yesterday and price duly bounced up to the nearest resistance before falling again.

The 1.600 area as whole is quite choppy and there is plenty of support there down to the 61 fib area...thus if I was expecting this to...


Your trendline is bit different then mine. My buy limit was missed by 5 pips yesterday but yesterdays HH and todays TL confluence added to my confidence about this setup so i had no problem with pulling the trigger... I still lose track of overall market sentiment sometimes... Thanks
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  • #3,249
  • Feb 11, 2011 5:48pm Feb 11, 2011 5:48pm
Quoting sam0182
Makron,

Just for clarification, when you say "took SL", you're meaning your SL was hit? If so, how close are your stops? The EJ and GU trades look spot on and I'm not quite understanding how one would be stopped out??

Yes, i hit my SL. This pictures was made 1 day before
  • #3,250
  • Feb 14, 2011 7:56pm Feb 14, 2011 7:56pm
I have some problems with PPZ definition, but i try to upgrade my skills =)
take this one:
NZDUSD, daily PPZ, TL, 4HR BUOB, divergence
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  • #3,251
  • Feb 15, 2011 9:18am Feb 15, 2011 9:18am
This if for Pmn100 (and anyone else interested) who PM'd me with some questions regarding 4 touch trades he took and my views. Will go through them one at a time when I get a moment starting with GBPCHF:

Short on 1st Feb @ 1.5200, 50pip SL, exit @ 1.5150

I've annotated some charts as it's easier to try and explain my thought process.

At the end of the day the trade management and exit plan is down to the individual trader and what they are comfortable doing. Personally I am a big fan of taking partial profits as it ensures you are rewarded for correct analysis and overcomes and greed / fear creeping into your decision process.

I try to read the market as closely as I can so I do generally have a directional bias on the market based on various factors and thus for GCHF I would have not expected a big reaction at the 1.5200 beyond the FTA for the reasons I stated, but for touch trading I do believe taking half profit at an obvious s/r and moving to BE on the remainder is a good viable exit management process (trailing the remaining S/L below s/r areas that are broken etc until you get an opposite signal i.e. an area you would happily short at if you were long etc).
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  • #3,252
  • Feb 15, 2011 9:29am Feb 15, 2011 9:29am
Quoting makron
I have some problems with PPZ definition, but i try to upgrade my skills =)
take this one:
NZDUSD, daily PPZ, TL, 4HR BUOB, divergence
It's not a setup that would have interested me - the PA doesn't stand out at all, the location is ok but it would have been a pass for me. I also wouldn't like the swing as it's not really a clear swing low to high.

The best areas for touch trades are daily PPZ's where price is coming back for the first time and a clear swing with fib confluence. On this occasion its not the first time back,not a clear swing as price has been ranging and chopping about and the PA bar itself is pretty small and doesnt indicate large bullish momentum...all of this together would mean a pass for me.

I mean look at the NU setup compared to yesterday's AU setup....1st time back to clear PPZ with 50% fib confluence and a big rejectin of this area occurs i.e. price doesnt hang around and a beob is formed which goes to exactly where you'd expect it to go.
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  • #3,253
  • Feb 15, 2011 11:13am Feb 15, 2011 11:13am
ECAD short @ 1.3613, 30pip SL , exit @ BE

I wouldn't have considered this area for a potential short as it's just not a strong enough PPZ for me. The second chart shows the setup I would have taken a very clear daily PPZ area with 61% fib confluence.
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  • #3,254
  • Feb 15, 2011 11:14am Feb 15, 2011 11:14am
Quoting lovejoy80
This if for Pmn100 (and anyone else interested) who PM'd me with some questions regarding 4 touch trades he took and my views. Will go through them one at a time when I get a moment starting with GBPCHF:

Short on 1st Feb @ 1.5200, 50pip SL, exit @ 1.5150

I've annotated some charts as it's easier to try and explain my thought process.

At the end of the day the trade management and exit plan is down to the individual trader and what they are comfortable doing. Personally I am a big fan of taking partial profits as it ensures you are rewarded...
Really appreciate this Mark. Great stuff.
  • #3,255
  • Feb 15, 2011 11:33am Feb 15, 2011 11:33am
EG - long @ 0.8433, 20 pip SL , exit @ BE (on 4/2).

I've been fundamentally bearish EG since late last year, though tecnically the chart is quite choppy. Valid touch trade for sure and indeed we got the reaction to FTA but no follow through...the follow through of course wont happen as often as the reaction does. Again taking some profit at FTA and leaving rest @ BE would have ensured you got rewarded for your risk taking etc.

Note: no surprise where price turned back down again!
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  • #3,256
  • Feb 15, 2011 11:46am Feb 15, 2011 11:46am
AU 10/2 long @ 1.0040, 40 pip SL out for a loss.

1st time back to clear former congestion areawith 61% fib confluence. Your entry seemed a little high...I would have been looking for an entry at parity.

I probably wouldn't have take this trade as it was a Friday, but ignoring this then I would but the only concern would have been all the 'tails' which would have made setting the SL quite difficult as there is plenty of times price has got close to that area and then dropped back and other times when it's broken above then dropped back. I would have either had chanced a smallish SL and gotten stopped out, or more likely wait for some lower TF PA...the 1HR BUOB would have dont it and price eventually went to an obvious FTA and as per one of my previous posts this was a great touch trade short setup....I would have taken profit before Friday close though on any AU long myself.

So the touch trade did work out...you can see the decent reaction on the daily TF by the fact the daily bar closed well above this area.
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  • #3,257
  • Feb 15, 2011 12:14pm Feb 15, 2011 12:14pm
LoveJoy80,

a question on drawing fibs...as I try to learn from you and others, when you drew your EG fibs is there a reason you dont have it drawn from the top down, what is the reason? is it because ot had broken upo above temporarily? Thank you for any help, Justin
DM if you have any questions
  • #3,258
  • Feb 16, 2011 7:35am Feb 16, 2011 7:35am
Hi, LJ!
Did you look at touch trade at 50%fibo and 1st time back to PPZ?
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  • #3,259
  • Feb 16, 2011 7:44am Feb 16, 2011 7:44am
Quoting makron
Hi, LJ!
Did you look at touch trade at 50%fibo and 1st time back to PPZ?
No I did not and here is why:

- I prefer to look for daily swings + PPZ + fibs for a touch trade whereas the one you marked is an intraday swing.

- I am actually short via half a position based on return to 61% fib on the daily swing...it's not the best touch trade setup you'll ever see but the resistance area was clear together with a pretty strong USD this week and deent support holding on USDX my bias was to short USD pairs and that area on GU was a very well respected resistance to take a short position.

- I then added another position on the break of the 4HR BEOB this morning (which had divergence) and the BOE news took us down hard.

- I'm now watching the 1.6000-15 area carefully.
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  • #3,260
  • Feb 16, 2011 7:45am Feb 16, 2011 7:45am
Quoting jkrick33
LoveJoy80,

a question on drawing fibs...as I try to learn from you and others, when you drew your EG fibs is there a reason you dont have it drawn from the top down, what is the reason? is it because ot had broken upo above temporarily? Thank you for any help, Justin
Not quite sure what you mean. I draw fibs the correct way, so from a swing low to high I would be drawing them with 0% at the top and 100% at the bottom of the swing and vice versa for a swing high to low.
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