Sultans of Swing

I haven't really studied EW analysis, and I avoid any kind of technical analysis on pairs not involving USD. Euro investors don't value their currency against the yen, and Japanese investors don't value their currency against the euro - all currencies are valued against USD.

Note in my previous post I mentioned trendlines and a MA on eur/jpy, but not before doing a support/resistance analysis on both eur and jpy individually - both against usd. Eur is technically bullish v usd, and jpy is technically bearish v usd, which automatically makes eur/jpy bullish.

The only tools I use are fundamental analysis and very basic support/resistance analysis, analyzing each currency individually then buying the strongest and selling the weakest as the pair bounces between S/R levels. I think these two areas are where the biggest edges can be found in forex, whenever I try to add another tool it seems to contradict what I am already doing so I stick with FA and S/R. EW looks interesting, but I would need to find a way to use it to complement, not contradict what I am already doing. The fact that your EW analysis leads you to virtually the same conclusion as me tells me that it may be compatible with my style.

This is gonna take longer than i thought!

I forgot how easy life is when you have a bloomberg and reuters terminal at your disposal!

I ditched my Reuters terminal last year. I had it on trial for 4 months and I did get value out of it, but I just couldn't do the long term commitment. Month by month would have been fine, but they didn't go for it. I don't know why they insist on a long term contract.

its a bit pricey for sure... but imo its well worth every penny (especially bloomberg which starts at ~$25k/year)

you know, after publishing that last post, for the first time since i went private, do i feel a "slight" handicap because i dont have access to this data at my fingertips... i actually have to dig it out and compile it myself... kinda like the first time i had to do my own laundry... mommy aint there to hold my hand anymore



no matter, i'll get it done (eventually)... i hope

Holy Crap ! 25K !

Alien does not need that kind of witchery..............LOL

Don't forget to put in a AUDNZD,

It is near perfect for a Long term Long in a week to 10 days................

lol!

hows it going dude, we havent coincided in a few days, i hope you managed to navigate through September in a good way!

what is your view on EJ?

This is just a partial................but interesting at that................

http://www.forexfactory.com/showthre...94#post7022594

way ahead of you bro!

http://www.forexfactory.com/showthre...74#post6998274

looks like its doing its thing...

I have not updated this chart since, will be doing it this week

Awwwww you started this thread............I have been looking for when the Time was right for you ! The time is now...................IMO

Thx dude!

... a fantastic article, and very relevant to most of us, it merits a full read through, so i have pasted it in its entirity
link to the original is at the bottom... enjoy!


Utilizing Elliott Wave In Today's Markets
Jay Norris | October 13 2013 11:55 EDT

I was first introduced to trading on the floor of the Chicago Board of Trade in the early 1980's. I first read the Elliott Wave Principle in early 1988 after Robert Prechter gained some acclaim for having called the stock market crash in October of 1987. I also remember the trader Paul Tudor Jones put a lot stock in Prechter's work and of course the original analysis of R.N. Elliott.
Initially there was such a gulf between how I saw how markets moved and who moved them versus Prechter's interpretation of Elliott's work that I put the theory on the back burner. In trying to apply it myself over time I often found no continuity from one week to the next, and even more concerning was the attachment that came from developing an opinion based on the analysis. That's a handicap. "Lose your opinion, not your money" has always been gospel to floor traders. Luckily I never fully dismissed the advantage that 5 wave pattern can lend a trader.
The one thing the trading floor teaches you is that every day is a new day. In other words "time" must be incorporated into your analysis or trading method. In addition every time important news hits the market there's the possibility that the market is going to reset itself, or start over. When that happens there is a change in how professionals and market makers were operating before and after that event, therefore they'll be a disconnect in the shorter-term cycles, or even the longer-term patterns depending on the actual news versus expectations. When that happens, the influence of the pattern on the next higher time-frame or in Elliott parlance "the next higher degree" becomes negligible. Experienced traders get that, and analysts looking for the continuity of a cycle need to accommodate that also. Sometimes that disconnect is as simple as the markets close on Fridays, traders' attention gets redirected while considering the coming week's events, and the market reopens and resets on Sunday. Or on an intraday basis it can be as quick and simple as in-house market makers change shifts between the Tokyo session and the London session. Professionals are good at seeing that, but the chart won't show it unless you already know what to look for. In my initial study of Prechter's interpretation of E.W. it lacked a time element which I saw as crucial. Rather than continue to study E.W. I chose Dow Theory, and took a tenet of that study and combined it with my knowledge of risk tolerance and came up with Risk Tolerance Threshold Theory which became the premise of the method I follow.
While a lot of traders I know had dismissed Elliot in favor of more mechanical approaches don't think professionals don't know about that 5 wave cycle where the market rotates from impulsive behavior to reactive behavior and back to impulsive behavior. That's real, but it is less academic then most books on trading would have us believe. My old friends Bill and Justine Williams, both accomplished traders also consider themselves Elliotticians. Luckily because of the Williams' success I realized I could not dismiss Elliott Wave, and did cover it in my first book with McGraw-Hill, Mastering the Currency Market, 2009. What brought my attention back to E.W. was when a new student of Risk Tolerance Threshold Theory told me of his success in using our collective patterns and levels to frame 5 wave patterns --with no regard to a wave count. And he was beating our benchmarks!
I could see right away that by applying the RTT framework and levels and approaching the 5 wave pattern from an odds-makers standpoint, instead of a speculator trying to predict the next outcome, the wave cycle is an excellent tool / filter. While markets will show predictable retracement patterns, how often do they show repetitive cycles with the level of geometric precision illustrated in Elliott Waves books? Enough to bet our hard earned money on? Not enough in my experience. However when you consider the possibility that the market is more likely to produce a reversal following a five wave pattern than after a 2, 3, or 4 wave pattern, than you have a potential edge because the one thing most analysts are good at is seeing those 5 waves. Add in that every correction according to Elliot Wave ends in a "C" wave which itself is a 5 wave pattern, and you have a good reason to consider E.W., particularly on the intraday charts. In our experience when we see a market complete a 5 wave pattern into significant structure - support or resistance - regardless of the wave formation prior to that, we look for a potential reset and reversal -- Figure 1. Regardless of what experienced Elliott analysts tell us the proper wave count is or should be, if we use basic money management we should stay out of trouble and by default catch the impulse moves when a larger wave pattern kicks off.

Figure 1. USDJPY resets following completion of 5 wave pattern on 50% level on Friday 10-11-13
http://static.cdn-seekingalpha.com/u...Jay-Norris.png
Figure 2. USDJPY Short-term Risk Tolerance Threshold Ratio for 10-11-13
Under the circumstances in Figure 1, most E.W. analysts will try to fit in how to categorize those 5 waves in the big picture so they can predict what will happen next. A trader on the other hand should wait for support to hold -- in this case the buy zone created by the 50% and 618% levels -- then wait for a signal, take a long position, and use sound money management, particularly when we see the majority of short-term patterns are higher on our RTT Ratio - see Figure 2. When you consider Elliot Wave Theory as a tool, or a component in your trading plan to help you shrink your losing percentage, instead of a standalone method, you free yourself from the analysis paralysis which inflicts so many E.W. students. And when you use it on the lower time frames - the graph in Figure 1 is a 3-minute chart - you avoid that cycle disconnect caused by new incoming information and or the daily and weekly closes. In the chart in Figure 1 prices shifted higher following a less than expected drop in U.S. consumer confidence at 9:00 AM despite an ongoing government shutdown. As traders we need to know that we are not here to count and categorize waves looking for the perfect trade; we are here to risk our money to make more money. It is still trading and the key to utilizing EW to your advantage is going to be understanding risk. Man and the markets he created are far from perfect. You are not going to be right all the time. Unless you accept the reality of loss you are setting yourself up for perma-demo status. It is far more important to make money than it is for your wave count to be in agreement with online EW analysts in the blogosphere.
Jay Norris is the author of "The Secret to Trading: Risk Tolerance Threshold Theory". To see Jay highlight trade set-ups and signals in live markets for free go to: Live Market Analysis
Trading involves risk of loss and is not suitable for all investors

source: http://www.forextv.com/forex-news-st...oday-s-markets

the subject covered in this piece was the #1 reason why i started this thread; i am deeply interested in this sort of analysis
this subject can be especially valuable to traders who dont fully grasp the inter-linkages between macro economic fundamentals such as interst rates / risk premiums/ asset valuation/ etc
the subject matter can get pretty heavy at times, but this primer is a great 101; i have just pasted some highlights from the article, with a link to the original
I will try to keep updating this post as the remaining portions of the series come out, but if i miss one, you guys are welcome to pick it up...

enjoy!

Inter-Market Analysis: The Must-Know Primer And Review
Oct 10 2013, 10:41
Cliff Wachtel
source: http://seekingalpha.com/article/1738...mer-and-review

In essence, inter-market analysis is all about:

1. Knowing how and when different assets, asset classes, and markets correlate to the ones in which you trade. Do they tend to move in the same direction (positive correlation) or the opposite direction (negative correlation)? Do they tend to be leading, lagging, or coincident indicators for your market? Once we know if and how and when two separate markets correlate, we can use price movements in one market to help predict movements in our primary market of interest. These relationships can change in the short or long term.
2. Watching for normal correlations or divergences from those correlations:
   1. Normal Correlations: When different markets are moving in the same or opposite direction as they normally do, you can use movements in one market to confirm or even predict movements in another.
   2. Divergences From Normal Correlations: However when markets that normally trend in the same direction start to diverge, those trend divergences are often leading or coincident indicators of changing market conditions. Over time you'll see how some markets tend to react before others, and so provide advanced notice of changes from which you can profit.

Understanding Risk vs. Safe Haven Assets
If you're not thoroughly familiar with this topic do not move on until the below is clear. It is critical to understanding how to do your own inter-market analysis and will save you a lot of time and money.

1. Risk Assets: By definition these rise in times of optimism because they are believed to provide better returns when economies are expanding. For example:
   1. The classic risk assets include stocks, especially cyclical sector stocks that appreciate the most in times of prosperity when consumers want to spend. Construction, discretionary consumer goods, and travel sectors are classic examples of these. So are industrial commodities like oil, copper or iron that are in higher demand in times of expansion. As we discuss in depth here, in most time frames, most major global stock indexes like the S&P 500, FTSE 100, DAX, CAC, and Nikkei trend in a similar manner.
   2. Higher yielding currencies tend to rise in times of expansion relative to currencies from nations with lower benchmark interest rates due to demand from carry trade, a more technical forex topic.

See here for details on that, and on risk vs. safety currencies in general, for a deeper understanding of these and how to use forex trends to improve your performance as a trader or even an income investor.

1. Safe Haven Assets: rise in times of pessimism because it's believed they'll depreciate less or even appreciate in value. For example:
   1. The classic safety assets include bonds with the highest credit rating
   2. Low yielding currencies that tend to be bought as carry traders close out their carry trades in times of fear and seek shelter in these currencies.

NB: THESE LABELS HAVE NOTHING TO DO WITH SAFETY OF AN ASSET AS A STORE OF VALUE. Rather these refer solely to how an asset or asset class typically behaves in response to market optimism or pessimism.
Understand what really drives your asset of interest/Know your market movers: It isn't enough to just know if it's a risk or safety asset. For example as noted above, the USD may generally behave as a safety asset, but more fundamentally it moves with US interest rates and expectations about their future direction. Indeed, as we discuss here, interest rates and expectations about them are prime determinants of whether a given currency is a risk or safe haven asset.

hope everyone has a profitable trading week!

Nice. Thanks for sharing

Nice count and the one I prefer for EJ's PA to date.

Another aspect of note is the advanced divergence in the stochastic. However, as you know, the divergence can continue compounding up to the Larry Summers, so I've decided to use an EW trick to signal a safe entry. Here's the logic:

If this is indeed 5 waves complete to the upside and we are indeed in a protracted wave B then the expectation is that a wave C to the downside will follow. Wave C is always a 5 wave structure. It could be a typical impulse or it could be a diagonal. Either way, waiting for subwaves 1 and 2 (of wave C) to complete will provide us with both confirmation of PA's intention as well as a safe entry point into a profitable subwave 3. Missing out on the initial downside of subwave 1 is mitigated by the fact that subwave 2 will retrace at least 50% of subwave 1 and its signature internal structure will increase our insight into what is to follow.

I'm going to wait for that juncture to take the trade and will post my count as the PA unfolds.

wow dude i had to read that 3 times over before it sunk in!
this is why im no expert on EW...
i do agree that it is possible that we see a move south before the trend actually takes hold
structurally from your EW counts, as well as some basic fib confluences, and it is supported by an expectation of a volatile week while the debt ceiling gets resolved... or not

a very basic chart to show the fib levels i am referring to, note that while my bias is to target the 127 ext on the down move, even if it goes to the 161.8, it would be contained at the 88 of the previous up swing and therefore remain potentially bullish... the highlighted yellow box is a region which should provide some supply and will serve as our early warning signal, like you i have no position in this pair at the moment

EJ
Daily

I should have just put a chart up instead of describing the chart - much easier for everyone!

OK, what I described is actually a possibility right now. We had an EJ decline from 135.00 to 131.14. That is either a wave (x) as shown on the chart or it may be subwave 1 (of wave C). Wave C in the current position is indicated by the green PA path. The notion that this is subwave 1 of wave C in progress has been reinforced by the fact that the present upward correction has retraced 62% of the decline from 135.00 to 131.14. If this notion is correct then we can expect wave C to target 125.xx, but of course what happens at the lower TL is the decider.

At the very least any decline from present levels should enter the yellow supply area on your chart. I'm judging a likely target zone is 132.00-131.70. Then we have to see what PA's condition is and whether it's left any clues about intention.

http://ubuntuone.com/764nIS3XWMGGnm0vRKOj0e

DHT, this is great info. thanks a lot!

Gidday

Will be very interesting to see how the EURYEN

would break down.

As were does that put US/JPY or EUR/US

One off these has to drop a load,or both.

But a lot off talk about staying high.

Got a EUR/YEN short 133.4 TP 130:nerd:

I try not to trade while I'm high.

I am long EUR/JPY and ready to add to the position quickly if peeps in Washington start acting like adults.

People in here seem very bearish on gold, bullish SPX, which is very bullish EUR/JPY. If the US gummint sorts its shit out this week it is hard to imagine anything other than a major rally in equities. As you can see from the intermarket chart below when gold declines and/or SPX rallies, the sentiment is generally reflected in EUR/JPY.

What concerns me now is the volatility on SPX. As you can see below almost every dip on the SPX daily chart correlates with a sharp rise in ATR. The last movement on the ATR is up, which isn't a good sign - but I think it can play out before the debt ceiling deadline hits in three days time.

On technicals v USD I have EUR bouncing off support @ 1.3500 targeting next resistance at 1.3700, while USD/JPY has bounced off support ~96.50 toward resistance @100.00. Since my last post Eurostoxx has continued to diverge further northward from other equity indices, building more upward pressure on the euro.

Everywhere I look seems to be another reason to buy euro and sell yen - IMO there is enormous upside potential if macro events fall into place this week, with limited downside potential if they don't.