EurAnalysis

You trade like I trade. I add another layer which helps me very much. That is my money flow strategy which includes Risk On or Risk Off. Have a great weekend.

You are correct and after reading what you have to say, I feel I must make a very important point to everyone who participates here.

The purpose of this thread is to share knowledge and ideas. This knowledge and any ideas posted is meant to be used to augment your existing trading strategy and not to be the basis for it. Everyone has a different trading style and strategy. A 300 to 500 pip drawdown for a positional trader is a normal swing in price, whereas for an intraday trader it means a margin call due to the difference in the leverages used between the two styles.

Point is that if you have a strategy that works, don't change it based on what you see others posting here until you have proven to yourself that such a change will improve your performance.

If you don't have a strategy that works, then you should be trading in demo and doing a lot of back testing until you find one before trading live (unless you're trading with pennies... and you can afford to lose them)

Cheers
PT

well said...

Well, looks like the eur is headed down again. Looking to place a sell at 1.2300 with a sl at 1.2340

http://www.forexfactory.com/news.php?do=news&id=376089

the range is 1.2240-1.2400 for now. This position is an entry in the middle and risky. Good luck on it.


If you are patient, you might get a better short entry higher up ahead of the ECB meeting on Thursday.

Thanks!

Yes a nice spike up to 1.2400 would be lovely as I can then add one more hammer to the pounding this pair is going to take in the weeks to follow.

Schauble's denial will not be a catalyst to send this pair down. It will only limit the move up. The bearish catalyst will be Draghi's press conference, when it is confirmed that there will be no Spanish debt purchases by the ECB.

There is still one risk which can play out though... No, not QE3 (although I am sure the QE3 bandwagon has priced in some token chance of it), but rather another round of LTRO... and this time it may be longer term. If that were to take place, however, and the banks were to participate significantly (Say another Trillion Euros), whilst ECB may see this as a success, I would see it as yet another indication of how bad things really are.

Let's see what happens at Wellington open. I do suspect we may see a gap down on this latest revelation. However one must remember that such a denial was pretty much expected... or at least that is my view on things anyway.

ADD: 1 voucher for you, and zero for Draghi.

http://www.actionforex.com/action-in...0120728170995/

EUR/USD Found a Base, Draghi to Meet Expectations This Week

European officials turned the tide in market sentiments last week. Spanish 10 year yield reached a new record high at 7.751% and just as it looked like yield is heading to 8%, ECB President Draghi stepped in with a strong pledge and turned things around. Spanish 10 year yield closed at 6.744%, a full percent below the historical high and is now below the 7% unsustainable level. Italian 10 year yield also followed and closed at 5.956%, below 6% level. EUR/USD successfully defended 1.2 psychological and reversed. While USD/CHF also reversed ahead of parity. Rally in stocks was equally impressive as DOW broke through 13000 psychological level to close the week at 13075 and is set to take on 13297 2012 high next.

Technically, EUR/USD should have at least made a short term bottom at 1.2042 and 1.2 looks safe for near term. GBP/USD also look set to head back to 1.59. USD/CAD's fall now opened up deeper decline through parity. Meanwhile, AUD/USD extended is rally and is heading back to 1.07.

Yen crosses, including EUR/JPY and GBP/JPY should have bottomed in near term too and more upside is anticipated. Nonetheless, note that firstly, EUR/GBP's recovery last week looks corrective and we're still bearish on the cross. Similar picture is seen in EUR/CAD and there is no change in the near term bearish outlook in the cross. EUR/AUD's price actions also look corrective and indeed, steep selling was seen before the week close. We stay bearish in EUR/AUD and expects a revisit of 1.1694 low soon.

Meanwhile, DOW's strong rise last week firstly ruled out a head and shoulder top (or triple top) scenario. And risk markets are set to continue, with DOW heading back to 13297 high. S&P 500 is also seen heading back to 1422 high. Dollar index's break of 82.73 support confirmed short term topping. So, based on the overall outlook in different markets, risk rally will benefit Aussie, Canadian, as well as Sterling. Meanwhile, we'd expect dollar to stay pressured in near term, including against Euro. So, instead of preferring to short EUR/AUD, EUR/CAD and EUR/GBP, we'd now prefer to long AUD/USD, short USD/CAD, and to a lesser extent long GBP/USD.

And to recap, the turn in sentiments started when ECB Governing Council member Nowotny raised the idea of giving ESM a banking license again. In that case, ESM could tap ECB funding which would then increase its firepower tremendously. ECB President Draghi followed by being strict forward that "ECB is ready to do whatever it takes to preserve the Euro" and he urged the markets to believe him "it will be enough". Also, he noted that "to the extent that the size of the sovereign premia (borrowing costs) hamper the functioning of the monetary policy transmission channels, they come within our mandate." German Chancellor Merkel and French President Hollande then issued a joint statement saying that both countries are "bound by the deepest duty" to keep Eurozone intact and will do all necessary to preserve Euro.

EUR/USD Found a Base, Draghi to Meet Expectations This Week

It's reported that in Draghi's mind, Europe's bailout funds could buy government bonds, in particular Spanish and Italian bonds, on the primary market. While ECB could purchases on the secondary markets. In addition, ECB would consider more LTRO operations as well as more rate cuts. However, it should be noted that Bundesbank poured a degree of cold water onto the idea on Friday and reiterated it's opposition to ECB buying bonds, describing that as "problematic" and "not the most sensible" instrument.

While uncertainty remains, the picture should be cleared shortly. It's reported that Draghi will meet with Bundesbank President Weidmann early this week for negotiation. And, ECB will hold meeting later in the week. Expectation for the post meeting press conference is extremely high this week and Draghi must deliver. So, we'll find out whether a based was formed in EUR/USD very soon.

Also, there are a number of important events this week. FOMC will meet this week and would likely tweak the statement to reflect the deteriorated outlook. The chance of additional easing is low and the Fed could hold its bullets at least until September before releasing its new projections.

Nonetheless, we'll also have important data from US including personal income and spending, ISM indices and non-farm payrolls. BoE will also meet this week and it's likely that the central bank will stand pat. However, last week's release of weaker than expected GDP is raising the odds of additional easing and should BoE act, a rate cut is the more likely result.

Technical Highlights
Dollar index's sharp fall last week confirmed short term topping at 84.10 on bearish divergence condition in daily MACD. Deeper decline should be seen in near term with focus on 81.18 support. As long as this level holds, the medium term up trend from 72.69 should still be intact and another high above 84.10 is in favor. However, decisive break of 81.18 will indicate that the trend has possibly reversed and will turn focus back to 78.60 support for confirmation.

Here are the tradable releases for the week:

1. Tue July 31, 2012 – 8:30am EST – CA GDP m/m
2. Wed August 1, 2012 – 4:28am EST – UK Manufacturing PMI
3. Wed August 1, 2012 – 8:15am EST – US ADP NFP
4. Wed August 1, 2012 – 10:00am EST – US ISM Manufacturing PMI
5. Wed August 1, 2012 – 2:15pm EST – US FOMC Rate Decision

Today’s FOMC Meeting has the potential of setting the market trend for the rest of the year, especially considering how the market has been accustomed to Fed handout in the past few months… However, if we’ve learned anything from the latest testimonies by chief Bernanke, it is just two words – “not yet“; although we certainly can’t stop the market from dreaming…

Since I’ve written extensively on this in my Fundamental Forex Outlook website, I’m not going to repeat it here word per word, but here are what some analysts are saying in regards to QE3:
Citibank: Don’t expect the Fed to make a big policy move ahead of the U.S. presidential election in November, says strategist Steven Englander. Although 80,000 added jobs is a “bad number,” it doesn’t constitute a “smoking gun,” Englander notes. “If this were June 2013, there would be much more anticipation of more quantitative easing.”
Barclays: In Barclays’ view, the jobs report is not weak enough to spur Fed action at the next FOMC meeting in August. Barclays notes the Fed is more likely to take action at the September meeting.
ING: While the nonfarm payrolls number is disappointing, it is not “cataclysmic” enough to get the Fed to embark on QE3, says economist Rob Carnell. He notes that average hourly earnings rose 0.3% month-over-month in June, the fastest pace since February.
With regards to Fed offcials, here are some of their latest comments:

1. (US) Fed’s Raskin: Expects to talk about QE3 at the next FOMC meeting; Low interest rates create the potential for financial market instability.
2. (US) US Fed’s Williams (voter, dovish)sees little progress in dealing with high unemployment before 2014 without further policy easing - He suggested purchasing mortgage-backed securities vs treasuries would have a stronger effect on financial conditions, if the Fed reserve decided on an additional round of QE.
3. (US) Fed’s Bernanke: Reiterates tools include communication about forward guidance; may have to consider additional steps as evaluation of whether the loss of momentum in the economy is enduring.
4. (US) Fed’s Bernanke: Continuing to disuss various tools but have not come to a specific choice on easing tools.
5. (US) Fed’s Bernanke: QE and Operation twist have been effective in impacting rates and the stock market. Reiterates QE programs should not be used ‘lightly,’ but still have some capacity to support the economy.

So here’s the forecast and the schedule rate decision / FOMC Statement:
2:15pm US FOMC Interest Rate Forecast 0.25% Previous 0.25%

1. Wed August 1, 2012 – 9:30pm EST – AU Retail Sales
2. Thu August 2, 2012 – 7:00am EST – UK BOE Rate Decision
3. Thu August 2, 2012 – 7:45am EST – EU ECB Rate Decision
4. Thu August 2, 2012 – 8:30am EST – EU ECB Press Conference
5. Fri August 3, 2012 – 4:28am EST – UK Services PMI
6. Fri August 3, 2012 – 8:30am EST – US Nonfarm Payroll (NFP)

Regardless of what happens over the short-run, and there is a Bullish scenario that allows for more upside over the next several weeks, we take this week's Hindenburg Omen seriously. The Omen has a warning shelf life of four months, which takes us to November 24th. It means a stock market crash can occur any time between now and then, including as late as November. It means market conditions are extremely unhealthy at this time. We have seen time and time again where after a Hindenburg Omen occurs, a stock market rally follows, most likely the Plunge Protection Team pumping up the market. They take this Omen indicator seriously as well. This Omen is saying there is a 28 percent chance that a Black Swan event is out there in the not t00 distant future, and markets will tank off that event. I have no idea what event that could be, but this Indicator is warning there is a far greater than random possibility of a problem event striking global markets before December.

We hope this does not happen, we hope the 72 percent probability that an event does not happen will be the case this time. But we have seen this Omen be right too many times in the past to not take it seriously. We find it fascinating that an Omen occurred as the multi-decade Jaws of Death pattern is finishing for stocks (see chart on page 25). That probably is not a coincidence.

Shorter-term, there is a lot of hope that Central Bankers will stimulate economies and markets soon, with Fed and ECB meetings scheduled for this coming week. There is a Bradley model turn date scheduled for today, July 28th. Not sure if that was an early bottom last week or will be a top this week. No way to tell from this cycle turn indicator since it can be off by as much as a week.

Friday's rally was powerful, but half the buying came from shorts covering. Shorts got their clocks cleaned this week.

http://www.financialsense.com/contri...ph-of-politics

Snippet:

On August 15, 1971, President Richard Nixon declared that the United States would no longer honour its promise to exchange US dollars held by foreign central banks for gold at a fixed price of $35 an ounce. The innocuous term ‘Nixon closed the gold window’ that is now widely used to describe this act does not quite convey its significance. (Was something to be stopped from going out or from coming in through the window? Can the window be reopened again?)

What Nixon did was cut the last remaining official link between the world’s leading reserve currency and gold and thus remove the last constraint on fiat money creation.

Was this a big deal? – It was very big deal. In fact, we are only now beginning to realize the full consequences of it. In fact, the present crisis is nothing but the endgame of this system, or non-system, of this, mankind’s latest and so far most ambitious, experiment with unrestricted fiat money. The first truly global paper standard.

Nixon knew that it was big. On TV that day he felt compelled to reassure the American public that this was only temporary and that the purchasing power of the dollar was secure. Forty-one years later we are still on the same system (or non-system), and the dollar has lost eighty percent of its purchasing power.

But, the mainstream economists, who weren’t even involved in designing this system (or non-system), as nobody designed it, it was simply the result of political opportunism — these economists today tell us that this system is great, it is to our advantage. We should be grateful for it.
Because the eighty percent drop in purchasing power quoted above, isn’t the whole story, that is only CPI, the consumer price index. For the past thirty years, a lot of the newly created money was channeled predominantly not into the markets for consumer goods but into the stock market, the bond market, the real estate market, and again the bond market. This created illusions of wealth. It also created a lot of debt, overstretched banks, a gigantic financial industry, various bubbles, and yet more debt. It did so around the world. And whenever this house of cards looks like it could come crashing down on us – we print more money!

Market Perception

There is a saying that when it comes to trading, perception is everything… But I believe that sometimes perception is even more powerful than the actual event. That’s why we hear the term “Buy on rumor, Sell on news” being thrown around almost daily. So what is perception? It is when the market believes something, it doesn’t matter if it is true or not, market will act on it… Case in point, if market believes that the Federal Reserve is going to announce a rate hike, then we will see USD getting bought off sharply… As a matter of fact, market will position itself so much in advance (Buy on rumor) that at the time of the actual announcement, traders may even SELL USD as the effects of the Rate Hike have already been priced in, thus the term “Sell on news”. This is one of the strong reasons that drive the trend, and if you can just pay attention to what’s happening in the market today, it will certainly helps you to stay on the right side of trend…

For those people that are hardcore Technical Analysts and wouldn’t consider anything else, here is a news flash for you: All major hedge funds, banks, financial institutions pay close attention to fundamental news releases… there are TV stations dedicated to reporting financial news… And these are very smart people graduated from top universities… Need I say more?

Risk Sentiment

Trend may sometimes may be driven by emotions… When the market crashes or there are fears of crash, traders will sell off on their riskier holdings in order to minimize loss, and that can turn into a snowball effect… The opposite is true as well when the market is optimistic and everything goes up, because everyone and their cousins are trying to get a piece of the action… these are risk sentiments, or risk appetite / risk aversion sentiment.

In Forex, if you see a combination of safe-haven currencies get stronger, then it is probably risk aversion… For example, when you see USD, JPY, and CHF gaining across the board, then that is probably because traders are afraid and want the safe-haven status that these currencies provide…

On the other hand, when you see EUR, GBP, AUD, NZD gaining across the board with USD and JPY weakening, then it is probably risk appetite as traders demand more return on their investments… Usually the higher the interest rate a currency provides, the higher the risk.

In conclusion, I think one can accurately determine the trend by looking at what the market is focusing on. If the market is focusing on a particular upcoming event, then that event will be the driving factor. You may ask what are these upcoming news events? Well, you’ve come to the right website because this is what we are all about, we dedicate this site exclusively on helping you determining the upcoming trend…

If you want a few pointers to get started, I’d recommend to start with the weekly news calendar.

I hope this article helps you understand Forex better and points you to the right direction…
Thanks,
http://www.henryliuforex.com/wp-cont.../henry-sig.gif

Daily E/U peaked Friday at

daily bollinger bands (never underestimate large time frame bollinger bands, ever)

new rising channel top,

top of falling channel from 1.3280,'

78.6 retracement (blue fib) of the June relief rally (2287 to 2745)

(this fib is very important for some reason, we could not get any 4hr or daily close below the 150 extension of this relief rally, and then we shot up 330 pips this week).

It is also 50 retracement of 2745 to 2040 (green fib)

As if there wasn't enough resistance here, it is also the 23.6 retracement (yellow fib) of 1.3480 to 1.2040.

Oh yeah, and the market was very overbought (330 pips contra trend in a few days? overbought for sure and needed to pull back).

Expecting some more selling on Sunday before the hopium addicts think about attempting 1.2440 which is historically a very important area

13.0 retracement of the weekly downtrend from May 2011 (1.49 high) comes in just above 1.24 handle


Daily E/U chart

Also a weekly bullish engulfing pattern.

Just so many things to pay attention to while trading. To be the best you can be you truly do need 4-6 monitors, there is absolutely no question about that.

Didn't even think to check monthly bollinger bands, which is about 100 pips above where we bottomed this week.

I definitely think a retest of 1.26 is possible this week, although not likely.

If history means anything, we should see one more leg down to 1.19 or even likely 1.15 before any serious retracement. My charts are glitched before Summer 2009 and its shows two bars, one for the month end close, and one for the close of the first day of the new month. strange glitch

I politely question that

Opposite opinion I suppose, I think that if you can't trade with one monitor, the extra 5 aren't going to be much help. They will probably make you more confused and prone to analysis paralysis unless you need to be (and are good enough to be) tracking 6 markets at once, but you can do that with one monitor if you really wanted. Though it depends on your trading style, for sure.

Simplicity is the key for me. Buy low, sell high, forget most of the BS figures that come out and the market's strange reactions. 6 Monitors would cost more than any benefit I would gain.

Just playing devils advocate

P.S. Have you tried importing/downloading data from metaquotes to fix this? Not sure if it would work but worth a try.

While I agree with simplicity, at the same time I need multiple converging indicators before I will make a trade and it's hard for me to notice these with just 1 monitor (or just 1 chart on available at a time)

With 1 monitor I am constantly clicking through time frames. I may change time frames 10 times in a 1minute to check everything (divergences, rsi, EMAs, bollinger bands, all of these are VERY VERY important, and these all vary by time frame). Just too much stress for me to constantly be clicking and my wrists get sore, not kidding. Not to mention each TF has different fib levels drawn as drawing all of them on one makes me go blind.


Then of course there are bond markets and other currencies to monitor.

I can fit a 1m, 5m, 15, 30, 1hr and 4hr on 1 monitor, but the charts are quite small and I can't see them as well.

Do you just click to switch TFs? Not all my charts have the same trendlines either so this can get a bit overwhelming if say I view the daily chart with 30m trendlines drawn then everything will be covered by the recent trendlines and I will be blind


I can't believe I never had the primary bull trend drawn on my weekly chart, especially considering the importance it has played lately. Wow.

Reposting weekly E/U with it (green line).


I do agree with analysis paralysis however. I get it without multiple TFs to look at as I just don't have confidence in only one TF.

My goal is 50-75 pips a day, max loss 25 pips a day (day trade positions). I find if you are good with entries, 25 pips rarely get stopped out and 50 pips will almost always be achieved.


E/U Weekly

Thanks for the suggestion, I will definitely give it a try.

Ok now I'm off. I'll be back to full time trading the week after next (although I am going to try and be on as much as possible for next weeks very important data and news)

In case you haven't done it before: