The Really Useless Thread

With confidence, I can say that in a Neutral Outlook, we trade from the extreme to the middle, to the inside. So the charter that shared by Sisse and you're making reference is for a Neutral Outlook (I assume). Hence if you want to sell EURUSD, you have to wait and sell it from the the top 1.08. As where we are now you can buy, but it seems like in the border of between a cheap and an expensive ticket considering French election. More probably the top of the range is the flip area 1.07 until French election outcome.

Very good @Fadhl you are really digging into the core of the conversation (For those newcomers reading this Fadhl is the number 1 rank and most consistent trader in the thread since we started last year with the iterations).

Let me address your questions in detail as you clearly have put the time to dig deep in the conversation:

++++ VERY LONG READING POST ALERT++++

all related to the last iteration and the current play ...feel free to skip if you are not into this conversation....

-> - why Sisse cleared his short positions if the ST Outlook is still Sell?

Direct answer: Position management (check some detailed back-posts on this topic last year)

1. Rewards management didn't justify holding the trailing any longer. (remember we manage risk first, second and third and only then manage rewards)
2. As you know some of us are/were holding ST shorts (also MT ones) from the 1.08xx handle (either from all or at least 2 of the plays we discussed @1,087x, @1.079x and the last @1.068x).
3. We already cleared 2 targets and we had 2 targets left open on the ST swing. The next one was as you well know @1.054x but I was expecting to clear it before the long holiday weekend and more importantly before French elections kick start next week.
4. DT Tweet short-circuited the crumbs left to complete T3 and unlocked in the very short term the highs of the 1.070x handle which lead to:
5. Clearing manually the last 2 trailing positions for NY open as you highlight @ 1.063x right after the short-lived tweet knee jerk reaction was over.
6. so Why clearing remaining ST and locking all profits?

First, now with the benefit of hindsight we saw that we retraced 100% the knee jerk reaction but in live trading the fact of unlocking 1.079x in the very ST on a long weekend in thin air and with full on risk via war and conflict was not really the best alternative for reward management.

You don't sit and watch 150 ticks evaporate in a ST swing when you know the odds are(were) against you.

Second and equally important, don't think that clearing manually trailing positions is a negative sign.

The way I saw/see this one was. If I am right perfect, but why if I am wrong and we retrace to square one for the W close on empty markets (as it happened)? nothing in practice if I want to reload ST shorts I will get them prolly at the same 1.063x or even at the lows of the handle? meaning I didn't have much to lose..... you get the point ...

=> Ok so all nice and fine but why not clear all positions altogether including MT? Why? outlooks hasn't change neither TA or FA wise, plus we finally locked 1,087x on the Q close there is zero risk and we have only complete first target in what is expected to be a exhaustion leg?

- Also, Sisse has intention to update on Dollar.
- Many signs of discomfort with Dollar.

Yes indeed... LT top is around the corner. We wont hold Trump, not because of his blah blah trying to manipulate the green but because markets are starting to become a bit more hesitant on the actual Economic plan and the LT impact of isolation, unilateralist, less free trade and restriction and protectionism.

On the MT and ST things have become a lot clearer on the monetary side (FED). We are on track, hikes on track, inflation on track, macro numbers on track. All is in perfect synch with expectations.

However, global and US risk has exponentially increase to levels we haven't see in decades.

1. Risk need buffers to run in the FX board. Dollar is for the first time ever the one that is and is going to create risk meaning it need to be replace / rebalance with other assets.
   1. As you well know CHF* is very expensive now and is dead for large global scale flows because of SNB,
   2. Sterling* is in the way out after Brexit as global currency and with all the negotiations, isolation, and dramatic annihilation in value the last few months is a no go at least for the next few years.
   3. Euro* which is the natural replacement given size and scope. It is not only ST still fighting for survival via election and populist/nationalist flirting to put the whole continent back to stone age but fuelling more RISK until French election are clear ...
   4. Finally the biggest winners, no brainer really. YEN* and GOLD, because it nowhere else to run in case of risk right now.

   
   

As you can see, in the ST DOLLAR will be in strong bid until we clear French election (or if they flop obviously) and while DT plays warmongering (and hopefully doesnt trigger sometime else) but once and if Europe clears election we will start seeing a major reshuffle towards the Euro* as it will be the no brainer place to park your money....

The momentum play was confirmed when EURUSD went up from 1.059 to 1.068. Is it the momentum for BUY outlook? (I'm still not catching this one (among others).

No. The momentum play from a strictly TA/pure price point of view comes @ 1.050x both MT and ST now. There is no momentum play to the upside.

- Why Sisse gave us in this last iteration the option to buy if both ST&MT Outlooks are SELL? is it a hint that we are wrong in the outlooks which why he provided us a neutral option?

Because I always give both options. It's up to you and your views and trading plan to take one side or the other. You will be surprise the data this iterations is giving in terms of W%, dd and r:R . I would wrap it up some other day.

I'm actually confused with ST Outlook.

Yes. I did it on purpose. I left the outlooks blank to trigger the FA conversation in Dollar and Euro* otherwise I would have bias the conversation. That allow some to really dig deep and maybe some get that 'AHA moment' in this last live iteration. If you ask me, thats where the money is ...

sisse

Thanks so much for your compliment and particularly your feedback!
Now I'm quiet sure that the ST Outlook is Neutral until French election clearance.
One comment with regard to YEN which I made. Because of geography and North Korea/US risk, I'm less inclined to consider it as heaven place as Gold which seems the only parking lot for flowing money.

Whether in neutral, sell, buy whichever, I think the question to answer at these levels, at this point in time, has always been whether the leg down will manage to make it to targets south of here before either a rally caused by fr election or something else puts a stop to it, and/or even greater forces turn this whole mid term train around and head for bulltown. Thats expected. But how far down we go before that longer term bottom can be called gets the door prize. Could be here at 1.06 handle i guess. Could be under 1.03 too.
I'm less concerned with squeezing the last 1/200+ ticks out of the leg down (although I'm trying) than I am with trying to recognize when/if eu starts to turn north for the longer term. After all, if I have the conviction to cover my shorts, I should have the conviction to look for entries long. (that's not always true of course, but seems to apply to eu in this area to me anyway).
Nearing the end of the leg, price gets dicey right? Different flow. I thought that was what sisse was pointing out with the comparison of the buy and sell charts re:volatility and compression. To show how a comparison like that can point out that different flow as things shift.

One position open just in case we don't visit 1.09x test ... Anyways nothing much to see ... Until election is cleared ... No new clue given by chart for the resume ...

I strongly disagree with this part. That's one of the myths that is wide spread across the boards. There is no such a thing of a on/off switch either long or short. Absolutely NO !!!!.

=> All markets have 3 states for trading: Buy, Sell or stay the fck out it.

=> Believe me on this one, the moment you stop thinking that there is only buy/sell and start seeing that sometimes (more often than not) there is nothing tradable is the moment you have move on the ladder of experience.

=> The beauty of all this is that you or whoever in the middle of nowhere have nearly 12500 instrument (thats only counting retail available productz) to trade at any given moment with a click . IMO, Its a mistake to think in such a binary way not only because is not realistically R:R wise but also because TA wise markets don't just transition from a strong trend to another on a switch of button. Any change of trend, in any TF will give you no less than 3 or 4 opportunities to load at value without having to call or gamble the ultimate tick high or low ...

Just assume for a second this is going to be the long term bottom in Euro. How many times in the last 2 years we have test 1.061x? sure if price fly to 2.0xx in the next 2 years in a M chart and think oh shit I should have loaded that 1.061x ...but in reality it meant nearly 3 years and 6 test to load that bottom, etc

Or even easier lets assume this is the mid and short term bottom after the DT tweet ....do you really think you missed the bottom and all options to trade long because you didn't gamble 1.057x on Wednesday ...how many times do you think you will be able to load 1.061x of the theoretical same trade until french elections, etc ....you get the point

in TA nutshell, Up/Down - > Consolidation -> Retrace/pullback .... you want to trade primarily the up/down (best r:R, w%) as the path of least resistance, you may even consider trading a retrace/pullback with a good r:r and range but you WANT to stay the FCK out if you are not in position during consolidation .... and consolidation can last for days in a 5M chart or years in a M chart ...and everything in between ...

sisse

Right on. I definitely should have worded that differently. I understand totally that, to quote gator "sidelines is a position" and dont look at it thru a binary lens. I only meant, since like you I'm short from a bit higher, in this particular case, when i see a need to close that short, it will probably be at the time that I look to use the larger consolidation to (like I said) look for long entries because (might be very wrong here) rr in this case will be good for that. To look to build in a long position with proper risk management for when that consolidation breaks to the upside. And that I'm not there just yet at current levels. Perhaps close, hence my neutral call in your last iteration.
Thats all i meant.

I have to admit- I am rather excited to see the North Korean leadership crumble.

Flop in all fronts in US numbers. Things are starting to get a bit more complicate short term. Added to a weaker NFP, we have inflation undershoot that will put all those extreme FED balance sheet tantrum doves to bed for a few weeks.

Day/week will be over right after the opening range bar a last minute Tweet from the usual suspect of course....

Anybody want to call the area for the roll today ?

sisse

Was thinking about this the other day- if US numbers start turning ugly, I could see DJT using this as further attack on the dollar in a "see I told you so, strong dollar only hurts the economy" type tweet.

I am jumping: 1.066 which mike the W close neutral.

New term for 2017: FEDshaming

Ill take 1.061x for the roll

Yeah, I agree- neutral roll for the week.

Considering the flop in US numbers and the tweeter in command I consider us lucky..

1.052 trump will tweet

Right but that will just affect masses perception not really markets perception. What I mean for trading/investing wise that is just discarded as non sense and zero value for actual decision making.

Market-wise a full take over the FED will the one to track. US losing its monetary policy independence in hands of populist politicians (any politician) could trigger a major blast in the the US economy and confidence for investors. Thats not really in play right now except the typical BS noise but that is one of the ones that could put the FX board upside down in 'minutes'.

sisse

What would a US war with NK do to eur/usd? Rush to gold/yen like stated before right? But beyond that? If something happened over the weekend what would eu open look like next week? Drum is beating rather loud at the moment

yen/gold/dollar?

so I'd venture to say gap down in EU. Unless US is struck with a suprise nuke by NK

Seems counter intuitive that the dollar would be a buy when it's involved in a war doesn't it? Then again when haven't we been involved in a war..

Yes it does. And if treasuries were bumrushed wouldnt that dump dollar via yields?

The warmongering is just noise and political posturing for now. DT found the magic key (all nationalistic politician do) in the short term which is just a machine gun approach to keep all talking in different directions.

Only 2 weeks ago the Russia links were about to blow out of control and his popularity was sinking. Just this week he just manage to obfuscate, blur and distract public opinion. It has been a win win (like its usual in the v. short term) Russia suddenly is the enemy (right who bought that out of the blue from best friend to WWIII), showing military strength in NK, Syria and Pakistan in one week and keep everybody talking about everything else ...

At the end the arm and security sector (very close to DT administration) is making a killer, popularity up, Russia 'out of the equation' , whats not to like (for him and pals)...

The problem is not NK war, the problem is that one of this day he will trigger something that is not part of the poor third world country theatre we are witnessing or in one of his usual bullying, somebody will stand up and 'punching back' even if that means total wipe out ...thats how major wars and conflict starts ....you play with fire, until it blows or the other side say enough and do something even more stupid back...

=====

'Opening range' and we'll wrap it up at the top of the hour as all markets will be close for 4 days....

sisse

If we were good traders we'd probably just be holding shorts in UJ and letting Trump make us rich for the next 4 years.