Cat's whiskers

Yep Cat; cricket was a bit of a stunner....

FDAX..... yep liking it more and more....

No didnt take anything down; sent a PM bout couple of other things but that was all; short and sweet

Ah that was it, it was the pm I saw in my morning stupor! Just sent you a short reply.

Thought I'd post this screen shot of this morning's long on the Dax, because it shows perfectly how the 76.4% fib was used to get an entry. Iposted earlier on the Carpe Diem thread that I was expecting support arounf the 11,295 level, so I was ready to go long as soon as support was confirmed and I had a signal to trade. This is the 3 sec TF, which I've recently started using to really nail my entries with the smallest possible SL.

I waited for the gap between the 200ema and the price to close. The first entry opportunity comes when the price finds the first 76.4% fib level on the left. However, I took the next one as I knew the price would most probably come back off the 200ema and I didn't want to get caught out. Again the price finds support on the 76.4%, and this time, with the 200ema just above, so far better chance of punching through, the trade was on. As I posted at the time, I was looking for 1,,400 which I got, actually just above it, which was wise, as that is where it was held before falling back.

Obviously this trade was only entered on the 3 sec. I used higher frames for my main analysis and got good entry confirmation on the 10 sec and 1 min TF as well.

Today someone asked on one of the threads how best to filter noise. Before the big drop on the Dax this morning, the price chopped about as it normally does. I answered this on the Carpe Diem thread , and posted a chart. I've copied and pasted the explanation here, but I've also included the 3 sec chart so you can see how I used the trend line in conjunction with the 20ema to get a pretty clean entry -

I'm sure Islander will answer you, but I thought I'd also drop you a post in answer to your question. First I determined momentum. As you will see from the screenshot, the hefty MAs on this 1m chart are all above the price, as they are on the 5m, 15m chart, and 30m chart. To me this says only one thing - it's going to fall. Usually before a big drop like we had this morning, you get a period of chop like this. What I try and do is as I did here, get some kind of a trend line in, and watch how the price behaves when it butts up against the 200ema. When you see an inverted hammer formation close to the ma combined with a crossing of the trend line, that it your signal, you press the sell button, without a seconds hesitation. There were three clear chances to enter on this TF, each requiring a bigger SL, which is why it is always best to get in as close to the 200ema as poss. Hope this helps.

Ps - a 20 pip SL would have been required on the first of these entry arrows to clear the Bollinger, so if that's within your risk toleration, that's fine. However, the only way you can safely trade with smaller than this is to lower the TF. My 3sec TF gave me a 10 pip SL well clear, using the trend line to enter. Not everyone's cup of tea trading off such small TFs, but to minimize your risk, it's the way to go.
Attached Image (click to enlarge)

Another example of selling out of chop, although today's, unlike the previous post from yesterday, wasn't just after the London open, but mid-morning. Momentum was down, and again, getting a trendline in and using it with the moving averages was the key. The 20ema, which I always use as my central moving average around which the price moves, gave the entry on the 1m chart, and as you can see, this was replicated on the 10sec chart by the 200ema. These period of chop may look hopeless, but using the MAs and the good old trendline like this, you'll be surprised how often you will be able to pin down the entry. Oh yes, almost forget, the price will very often put in a fake as the trendline comes into play, so don't get caught out, and these can be a great place to enter, though not for the faint hearted!

I trade the Dax, a volatile market with plenty of opportunities to make money throughout the day. I've chosed this day, because this morning offered a great example of a typical counter/fake move against the trend/momentum following the London open. The key characteristic is as I've outlines above, and that is the counter move to an area of support before returning to the direction of the trend. Many traders miss these for the simple reason that they are least likely to buy just when the market has moves aggressively against them, but this, is very often the best place to enter a trade as long as it is in the direction of the trend and you have anticipated the fake beforehand. It takes a bit of practice, but it's worth it, as the market more often than not moves off quickly.

I've attached a 5m, 1m,. and 10 sec charts. The 5m to show you how the Frankfurt and London open moved back towards the 200ema ( sometimes it'll reach it, sometimes not) The 1m min to show clearly how the London fake found support on the 76.4% fib ( you got to try and determine where the fake is going to stop, and ehre fibs, especially the 61.8% and 76.4% will help) And the 10 sec which pins down the entry. The SL is placed below the 10 sec Bollinger at 12 pips ( no need to risk any more than this if you're entering off of small TFs as I do.

With these, sometimes it is possible to get a trendline in to help nail the entry, even on the 10 sec TF, and sometimes not. Today there was no chance. I will usually wait once the price has closed above the 20ema ( blue/red ) on the 10 sec TF if there is no trendline, just to make sure it doesn't come back, but what will usually happen, especially if the 200ema is just above as it is on the 10sec chart, is that there will be a few consolidating bars, and these are a really good place to enter because they are a clear sign that the price is about to move away.

I should also add that as you see on the 10sec TF, the price usually comes back to test the 200ema before going off again, which gives another entry opportunity if you are not yet in the trade. The key thing to remember here is that these fakes are precisely what the big players are looking for, in fact, they cause them, not so much to take out stop losses, though there is that, but more to bring the price up or down to a level of support or resistance where it is safer for them to enter.

Any ?s please ask

Hi cat, beautiful charts you have there. Very cool and informative!
One question about your last post...
Where are the Hi and the Low points which construct Fibo retracements? Is the low point at Frankfurt session low and the hi is at the current London open high? (Excuse my poor English!)

Thanks Black Fox. To answer your question, my fibs are always plotted from the most recent major low or high on any time frame, so the 76.4% fib level for the long entry posted above was taken from the low at around 7.50 am you can see clearly there on the 1m chart.

I've attached today's 15m chart for the dax to show you how the 76.4% level came heavily into play today as well, though certainly the 200ema also presented a big support level. That's what it's best to do when looking at the day's support and resistance levels, try and combine the fibs with other areas of potential support and resistance such as moving averages.

Today's low 76.4% was plotted from yesterday's low to yesterday's high, and the high was plotted from yestwerday's high to the low at 1am this morning' Also notice how on the chart the 100sma ( dark blue/orange dotted ) came over the top of the price. I posted this earlier today on the Carpe Diam thread, warning people who were going long to be careful as the price usually reverses back up towards a big Ma like this before dropping again, and this is exactly what happened again today.

Have a great weekend, and I'm glad you find the charts and explanations useful.

Look out for really long extended candles because time and time again, such candles will be a good place to exit as the 8am push down on the Dax today so proved on this 10 sec chart. It is my preferred strategy to exit on this sort of candle, especially when the price has moved a long way from the 200ema, even when the trend looks strong. Far better to take profits and wait for another entry, because you never know how far it will re-trace.

Been neglecting this recently but I'm taking it easy this month not trading too much, but I just wanted to say something about trading using multiple time frames, say more than two, an approach I sincerely believe in, but one that can be a devil in disguise.

the rationale for using several time frames to pick trades is that it enables you to see the macro as well as the micro picture, giving you what we hope are nice clean entries coupled with a broader vision of what's going on in terms of support and resistance on the higher time frames. That sounds great, but in the past I got myself into a real muddle and sometimes still do, because I was trying to focus my attention onto all of the time frames at once, allowing higher time frames to influence my trading decisions on the lower time frames, and by lower in my case, I mean those that I use to enter trades, namely 10secs ( sometimes 3 secs), 30 sec and 2 min. This would result in perfectly good trade set ups not being taken because the higher time frames looked not to support the trade, yet time and time again the trade I would have taken raced off, blasting through what I had seen as support or resistance on a higher time frame.

I have since realised, over the years, that it is far better to take a trade opportunity which looks good on the smaller frames even though the 5m, 15m or whatever shows it to be running into an area of support or resistance - after all, you can always move your SL to BE after which it really doesn't matter what happens. In short, allow the higher frames to guide you, but don't let them influence your trades too much, especially with a market like the Dax, which I trade, which can give 30 or 40 pips in the time many of the forex pairs take to move 10 pips.

Hope this will resonate with a few of you out there.

See you later

Here's the two minute Dax chart from Tuesday. There were three fantastic opportunities to go short on Tuesday morning - the momentum was already down and the price quickly fell away and continued falling strongly with hardly any retrace for two days and 650 pips to the Daily 76.4% where it stopped. The purple MA is the 200ema, and I find the 2 min chart backs up my 30 sec and 10 sec beautifully. Add the 10 min and the 30 min, and you have a complete picture for the day's trading. If you break all support/resistance on the 30min, then move up to the hour, H4, and Daily if necessary to find your S&R. This week was an incredible week for the Dax, just hope it continues into next week.

Here's a trade from Wednesday i wanted to post because it shows a clear example of something I always look for, and that is a combination of signals to enter a trade. Anticipation is always key - you have to have a clear diea of where you think support and resistance will come in. For this trade, the price had come back off the 30 minute 200ema, and I plotted both a 61.8% and a 76.4% level as either of these was the level I was expecting the price to find support. This happened on the 61.8%. I was also keeping my eye on a possible diversion set up with MACD. The chart I am showing here is the 3 min chart, one of the main time frames I use, and you can easily here here that the closure of the candle following contact with the 61.8% was a perfect Doji. Now I would say that it would have been a pretty safe trade to have pulled the trigger as soon as you say this candle close, but actually, waiting for the next candle by way of confirmation is a good idea. I still maintain that trades going in the direction of the trend/momentum are the best trades, but you also have to know how to recognize reversal signals, and this example was clearly one of them. Profit was taken on the 30m 200ema for 135 pips. I've included a close up shot as well.

Thought I'd bring this thread back, mainly because I can post whatever I like without invading anyone else's thread or offending anyone, and those who want to can drop in to see what, if anything, this mad cat is posting on his own journal, and those who wish to comment, then please, you are more than welcome.

I will post trading stuff related to whatever I happen to be trading or looking at, though this won't necessarily be regular, but I'll try and put a few levels and my directional bias for the immediate trading sessions as well, similar to what I was doing for my Dax thread whilst it ran. At the moment I am trading GJ as for me equities, particularly the Dax which I have traded on and off for years, has run into a brick wall, with crappy volatility and virtually untradeable range. GJ has been much kinder, and it has been behaving itself pretty well, offering up in the main, purely technical moves with good volatility.

MIAOW!

Good 45 minute workout on the cross trainer this evening. Post trading aerobic exercise is an absolute must for me, and I always feel 100% better after it. For those looking for a quick, effective aerobic workout without having to go running, which is hard on the joints, I thoroughly recommend it. Early morning it's yoga and core strengthening exercises which take about an hour, and again, although it can be hard getting up so early, the benefits are enormous. I feel sharper and healthier as a result. I also live by the sea, and have done ever since I first began trading. Being able to chill with a walk by the sea has been a great stress buster over the years.

My point here, is to stress the importance of being able to unwind as a trader, because it can be stressful. When I stand alone on the beach in the evening, with the night sky in all its mind boggling magnificence stretched out above me, the relative insignificance of what I do and who I am in the grande scheme of things helps to keep me in the neutral zone I need to be in to function effectively as a trader.

Because the single biggest obstacle to our success in this business is ourselves, there can be no limit to the amount of effort we need to bestow upon ourselves to achieve that which we so strongly desire. There is more to trading than sitting staring at computer monitors day after day, so much more.

Glad to you see you in this part of the town !

I wish I lived by the sea, we only have mountains around here, isn't as effective as calming the overthinking mind. But I have been thoroughly enjoying Eckhart Tolle. He's the medicine I reach for whenever I feel like I'm losing touch with my core.

I love mountains, but none here unfortunately. Closest ' mountains ' to us, in the British sense of the word, are in Wales, about six hours by car, and we usually go there for both a Summer and Winter hiking trip each year. But I'd find it hard to live without the sea I have to say. Here's a shot of the Snowdon Horseshoe in North Wales, the highest mountain outside Scotland.

On GJ today. Nice move up yesterday which I got, but didn't stay with it all the way as it went higher than I figured it would. Today it's near the top, so a tricky one, but on the smaller tfs, ie 10 min, it looks like it's going to come down. For R, I can't really see any, only the H3 20osma which held it al last week, sending it back down whenever the price was up there. Now it is at around 14,972, with S1 just above at 984, so it could make another push up to that, so have to wait and see. First level of potential support I have is the 10m 100sma currently at 14,910.

Still pitch black here this morning, but really warm. Big storm on the way for Saturday, so I guess this is the calm before. Did my exercises this morning, so I'm feeling energized and ready to do battle!

As I said yesterday, great volume and volatility on GJ, just what we traders need to make money. GJ 48 pips so far since the London open, Dax 20. Is one more difficult to trade than the other? Definitely not.

GJ currently back on the 90m 200ema which is also the CP today. Lower, 14,860 looks to be a strong S area for me if it gets there. Retail sales at 09.30, so that's likely to have a big impact either way.

Telltale pre London move today, one to watch out for in the future, My R levels looked quite strong on the 5 and 10m tfs, and the pre London ' fake' pushed up to test these, which is where the big money piled in. A small pullback right at the open gave another chance to get in.

CP now broken, so it's game on . S1 @ 14,840 also looks like strong support, and it has the 61.8% fib just above it. That level is actually my lowest for today, so see how that pans out.

Dax sure caught up. Some pretty big selling going on around the circus this morning! GJ now blasting south again. Super Thursday sure living up to its name!

76.4% now reached at 14,817, and with UKretail sales coming up in 25 mins, this should stop for a breather now.