james16 Chart Thread

I watch with interest AUDCAD close above 1.0065
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Hey Mike!

http://i1243.photobucket.com/albums/...ps6ccaf6eb.jpg

What do you think about taking full profit at FTA and instead of moving to break even wait to price make a retracement (probably wait for pros to trap the BE traders) and then if price goes again at FTA open the position again? In this way if price goes to BE or to your stop loss and doesn't come back you don't give your profit to the market and if price returns to your FTA you can always enter the position again if that's what you want. The drawback is price may break the FTA without making a retracement but I see a lot of times price returns to trap the BE traders. That's just an idea, I am happy with taking full profit at FTA and usually I don't chase runners.

Hey Mike,
What do you think of GBPUSD?
http://i1243.photobucket.com/albums/...ps17605f15.jpg

http://i1243.photobucket.com/albums/...ps355f781e.jpg

Hey Giovanni

I got into this 4 pips off today's low (thanks Jarroo, wherever he is), and for what it's worth I read it pretty much the same as you. I could live without the retrace to 1.60 tomorrow though..

We're going to struggle to get through 1.6260 first time - there's resistance of one kind or another on all the higher TFs, so that's where I'd be looking to take profit if it doesn't come back first.

EUR/AUD could be a nice fakey don't ya think? I believe it is a good level on the weekly as well.

The longer price holds around the more it tilts towards a fake out story. If this closes above 1.35, it could get fairly interesting



g.

I'd be careful there. That looks a minor swing point and the overhead bearish story is quite well established. A tricky one for sure.



g.

Hey ghous

Could you clarify that for me please? The more it tilts towards fake-out because....it hasn't broken down as it would have with a true breach of the level? Something else? Just curious as to the 'why' if you'd be so kind. Thanks man

Hey Stark,

Yes you pretty much got it.

The reason why its always preferable to keep away from taking small bars headed against a major move is because the pin bar itself is weak to allow enough doubt in a conservative traders' mind. We know there is a high probability that it could have been a result of profit taking or other sources of weak order flow. Kind of like a "knee jerk" reaction as price hovers into significant locations.

Point to be taken here is that if the buying contained within this EU pin bar is weak, it really only means that the few buyers that wanted to jump in here are now in the market, and if the stars are favoring the bears then it only means that the path is now clear for more selling to come in right? This is precisely why its so common to see small insignificant pin bars just get totally overridden by the next bar shooting straight into the wick and using that as only a launch pad (the advantage of the vacuum) to launch a fresh assault. You can use this to assume that you have a better chance with a coin flip than take such bars because in doing so you're actually stacking your odds against the market dynamics. Its like flipping a coin for a bet that it will land on the heads and you know the coin is biased in that it will land on tails more often than 50%.

Here's a quick example of a recent failed pin bar. Notice how the next bar just shoots through:



Now consider the situation where that doesn't happen. I.e price hesitates to fill in the wick. Does that mean the wick could actually contain some serious buying? Could it mean, that more buyers are actually jumping in because there is some solid story buildup in to the direction of the pin bar (as in the case of Eu)? Again, we spotted the great location and confluence but the pin bar itself distorted the information by installing a doubt in our minds.

When the next bar started falling into the wick of the pin bar, I was saying "Yeah, that was on the cards" but I couldn't help notice how price didn't quite gather any momentum. From an order flow perspective how does that make sense from a bearish viewpoint? Its a weak pin bar - damn it go fill it! Instead we have price pulling right back above the 1.35 - BIG REASON FOR SELLERS TO WORRY.

With your big bold A+ bars, its not uncommon to see those lovely immediate breaks on them, and a nice strong early run in your favor. With these small bars, depending on the other elements of the story price could either just use them as a launch pad to gather more momentum for the current move or simply "look lost" as it hunts for more order flow.

The simple thing to think about is, if price isn't going down, when it really should - is that good news for the bulls or the bears?



With my fake out method, I would be equally interested in going long, even if yesterday's bar had popped under the low of the bullish pin bar (i.e rendered it as a failed setup as per the basic james16 rules). FANCY THAT!

The real trick to spot the games being played on the charts is to simply notice when price doesn't look to be doing what you think it should really be doing. Because if you have a strong bias, the bigger badder boys want just that. The more obvious the bias, the more trading heads nodding and smiling the more liquidity gets fed into the market.

g.

What an amazing answer, thank you so much.

Having only ever traded 'classic' J16, this stuff is really beginning to crystallise in my head, thanks largely to your fantastic answers to my boring questions. Jim's method is essential in my book, but I always had 'yes, but what about this?' type questions, and in your generosity you've gone a long way to answering nearly all of them.

Your answer was pretty much what I was thinking, so I'm glad to have it corroborated, and in such a comprehensive way.

I'm running out of accolades now..really I just wanted to say thanks for taking the time, and I'm glad I'm on the right lines.

Have a splendid day sir.

any surprise to see the $80 mark hold? Stock, forex, commodities, all that matters is price and it's that simple

Hi Ghous , i saw it this way because i haven't seen a H&S.

Expecting it to sell off from $80 Mike- any target in mind ?

As always, bravo

I think we could see down to around 65 (see first chart I posted here
http://www.forexfactory.com/showthre...44#post7068444 )

Best
Mike

Many thanks Mike - this goes straight into my trading note book

After a period of strong trending, we have, for a long while now gone sideways and choppy. Importantly, price has been spiking its way up and getting rejected again and again. This is what caught my eye more than the H&S as you're right its not as clear but you can still make out a pattern pretty close to the H&S.


And then again, a H&S isn't a magical pattern. It represents order flow dynamics and encompasses a complete rhythm of price action that is very conducive to reversals.

g.

Ghous whats your views on NZD/CAD? Is this a good pin bar to trade or up trend is too strong? Sorry new to PA trading

Correct. I think the pin bar itself is small. The major issue here though IMO, is the lack of space. the 8700 and the minor PPZ at it is not far from the break of the pin bar.

Now looking at the current scenario and seeing how price has hit the FTA and bounced there is no reason to be surprised but every reason to start biting at your nails if you're in short off the break.

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g.