The Fundamentals of Trading

GBPNZD Up to date Analysis

GN has been a bit of an unruly teenager this week deciding when and how it was going to move regardless of what all its piers have been doing. I will share my top down analysis for you:

1. First Chart is a d1 chart , looking at where price can come too for sell orders
2. Second chart is the 4h chart, this clearly shows the levels that have been filled in a nice cup formation as well
3. The 1h chart showing how price is slowing down, slow grind down, no real seller money driving this, buyers and seller pretty much in balance with a slight downside bias.

Patience will be rewarded in this pair

Simon

The chart 4300 level can be where the next big cash is parking?

Horse

this is what I see on your chart

1. 14050 is not a level its been used and abused last evening so its gone now, wont be respected
2. You are not including enough data on your chart, the level at 13925 is not visible at all
3. When looking for a topside target markets dont work in squares they stagger up and stagger down, so price won't create nice squares on charts. The textbooks will tell you that there is a level at 14450, for now there isn't with the passge of time there maybe a better level later on.
4. Price rallied up to mid 141's last night filling in the cup formation at 14170, the market did this cause of the steep fall we had seen from this level, big cash knew there were sellers waiting.

If I am at my desk at the bank this is what I am thinking now

1. Overall trend is bearish (cant trade this but you need to be aware of it)
2. The next order blocks are on the topside at around 14300 although price has only just been there you need time for sellers to pile in again ( a couple of weeks normally), and on the bottom side around 13925.
3. Consider this if Asia moves this pair up then I am willing to bet that London will sell it, could be wrong just a hunch, based on what looks easier for price to do.
4. Retail market is all long GU, so this means lot of sell orders can be filled.

Simon

Hi Simon,

Good morning to you and it is good night for me (UK), definitely a lot I can learn from you, thanks for the time and effort you are putting in here! I mainly trade GU, GJ, EU and UJ but keep an eye on other pairs as well. I will post some charts tomorrow morning and come back with a few questions, probably can learn something from it for sure. Do you trade/watch EU at all ?1.1390/1.1400 has been holding since last Friday, I see an up moving coming before we go down.

I don't trade EU per say but analysis is analysis
buyers are buyers and sellers are sellers
so post the chart, draw the levels and we can have a discussion about it sure

Simon

Ps - I have had a quick and dirty look at EU

1. 11374 is a level but not enough time has elapsed for it to be respected, buyers won't be queued here.
2. 11202 is where the next tranche of buyers will be.
3. The upside is capped for now - even if it can go higher its going to run into 11480 and 11550 pretty soon after that
4. Buyers and sellers are in balance a range is forming check chart out, longs are getting exhausted. We need to wait patience is key.

Here is the chart I am looking at the min.

Thanks for your analysis

WorkingForex

- none of those levels you have are valid, sorry mate don't mean to be harsh just the way it is. The reason there not valid is cause they are consolidation levels where the balance between buyers and sellers are in balance, the levels we want are where this isn't the case cause that's where price get a kick in the pants.

- one thing you notice about trendlines and that's they are disrespected all the time, I wouldn't use them, textbooks like them cause they make for fun content in the real world no one cares.

Simon

Levels

Lets talk about levels

I am going to say this so we are all on the same page everything you have heard, read, anything to do with levels, get rid of it, burn it, destroy it do whatever you can to rid your mind of it. The text book and the retail world tell you look for levels where there is congestion, where the buyers and sellers come together
COMPLETE BULLSH!T

Levels are only created buy a big imbalances in the market between buyers and sellers and then the first test of them, ok sure this is a little simplistic and I am happy to show examples and certainly when you get good at it we can see little machinations on this theme you can take advantage off.

My advice is remove every piece of crap you have on your charts, strip them all the way back this is the only way to get a clear picture.

lets look at a couple of chart examples

Human Nature

I believe that indicators are useless but popular. Its a study of human nature to understand this. Lets have an example:

This morning I had the TV news on in the background catching up with the world while I was sleeping (that's always fun as an Australian because while you sleep most of the world is awake so always something new to report), anyway I digress, so up pops the finance news and the wrap of the overnight market events. These talking heads that report on finance news are probably very nice people, but really understand 3/5 of F@ckall about what they are talking about.

Their role is to fill the human primal urge for an explanation to everything in life, some things happen that don't require an explanation, let me put it this way that huge sell off in the USD yesterday, who cares what the reason was, what are you going to do with this information. I only care about where the levels are now and the forces behind the creation of them and the retesting of those levels.

The reason people fail at trading is that they want some toy or indicator to tell them when, what, how and why, sorry folks it dosent work like that, use your brains, apply the laws of market forces to your charts, more buyers than sellers mean price goes up and vice versa. Congestion on charts means agreement between the opposing parties, this is absolutely useless to you as a trader. Its the gaps in the balance between the two that create our opportunities.

Don't try and explain everything, except it and move on. I was negotiating for a house sale the other week and can you believe the seller turned down my final offer because we were $3,000 apart in price or 1/3 of 1% of the value I was buying, and the reason because he believed he was absolutely correct with his valuation, what an idiot, his property has been on the market for 46 days now, first offer he gets and he turns it down cause he can't accept not being correct, if this sounds familiar start working on yourself.

I have learned to like being wrong because you see so many more opportunities when you are forced to see it from a different angle.

Welcome to FX Trading a study of 95% self, 4% education and a little bit of luck.

Simon

Video's

I would like to create some youtube videos, I dont really have any skills in this area but I do have screen capture software with audio so I could probably at least talk through some of my methods.

If this is interesting to you then I am happy to accept requests on what you would like to see

Simon

Chart Analysis

One of the core skills traders old and new don't have is being able to explain their chart analysis I can't even count how many times I have sat down with traders, they have shown me a chart, and I say please explain to me why these levels. The blank stare comes back at me.

If you don't understand your analysis then how can you trade it.

Lets take GU as an example with yesterday's session we had the break of 14065 in the days leading up to it I spoke endlessly how I thought this level would not hold and my reasons for it which included:

1. It had been hit already a few times.
2. There was a better level below it and even though we didn't make the level below yesterday 14065 didn't hold.

You don't need to place 30 levels on every chart that's because there simply isn't that many viable levels on any chart, there is only ever a few, multiple ways to trade but a few levels that matter.

If you go to the bank and say can I have money to invest in a business your going to have to explain your plan aren't you, there is zero difference between that and explaining your analysis, its the justification for risking business capital.

This is a core skill a trader in a trading business must posses.

Simon

JPY Analysis

GJ and EJ are getting killed in asia today, this is not some news bulletin doing it despite what the media says (remember they always need a reason for everything), its just order flow and UJ has the best example in the d1 chart.

I want you to look at this d1 UJ chart, on the left hand side we have a big up move from a while ago, and now we have today price action chomping through that with little resistance hence the strong flows in jpy today, and why are those moves so forceful because all of the longs are waiting at

- first lot of buy order- 108.13
- second lot of buy orders - 10600

It could not be clearer than on the daily chart i posted. There isn't a lot of levels on each chart just 2 or 3 that matter on each particular day or few days.

Simon

Pound

Just spoke to a mate who works at a broker 75% of retail traders are now long the pound

Big cash filling their shorts with retail longs could be a snap to the downside when London opens, market will probably make me look like an ASS now I have said that

See how it plays

Simon

EJ

This pair will face the first of two big levels

1. 12381
2. 12315

It looks possible considering its current trajectory

watch the approach and reaction same as yesterday on pound. UJ is a key player here if it remains in free fall these levels on ej wont matter

Simon

CHFJPY

same story as EJ

levels to watch

1. 113.34
2. 112.11

Simon

Pound in all pairs looks like its giving in to the shorters

rolling over like a puppy getting its tummy scratched.

Simon

Hello Simon and thank you for your time and help!

Can you explain how exactly do you chose a level? Do you go to a 5 min chart and check for the first thrusting candle or something simmilar?

Hi Fxlan

can you please read post 15 first of this tread and then come back and see if you still need to ask this question

its super long explanation so please read this first and then I can fill in the gaps

Simon

I can see why the levels are important - they are origins where institutions started selling. But why exactly 1.922 and 1.903? Or it doesnt actually matter if its 10 or 20 pips higher or lower since you are waiting for the price to come here, move down, retest and then you sell?