The pair has bounced and is up 40 pips so I've moved my stop to breakeven.
© Dianne Fecteau, 2010. No part of this material may be reproduced in any form, or referred to in any other publication, without the express written permission of the author.
My purpose in writing this blog is to show you how one trader, me, makes trading decisions and survives while trading Forex. One of the biggest problems I had when I first started trading was trying to apply the “rules” to actual trades. Another was the psychology—limiting losses and letting profits run. If you study my blog, you’ll see how I deal with both those issues. So my writings are not trade recommendations but rather educational in purpose. You have to decide on your own approach to trading. Remember that trading is risky.
Showing posts with label usd/chf. Show all posts
Showing posts with label usd/chf. Show all posts
Monday, June 28, 2010
Thursday, October 8, 2009
Euro, Cable, and Swissy
EURUSD and GBPUSD are up; USDCHF is down. With equity futures bidding up so strongly over night as I wrote in my last post, there was little doubt the dollar was in for a drubbing today. I went long both the Euro and Cable and short the Swissy earlier today. They’re all in about 45 to 50 pips profit and all are profit stopped. I had to use both the USDCHF chart to decide to buy the first two and short the Swissy. It was the only definitive chart.
Someone emailed me the other day and asked me to please give signals in advance. First, I’m not a signal service. They don’t usually work, anyway because the market can change in an instant—start contracting whereas before it was expanding and vice versa, etc. Second, I hope that by showing why I did something (and actually showing I’m in the position—let’s lynch all these so-called gurus who only talk and don’t trade but are still out there pushing their signal services) that someone will be able to learn to trade on their own. Besides, often I do give levels I plan on buying or selling. You just have to stay alert and take the trade at those levels. If anyone has a pair they want me to specifically comment on, just post a comment here asking and I will.
Getting back to the Euro, it hasn’t found its way to a definitive close above 1.48. Heaven knows its bulls have pushed and pushed and pushed. As long as that’s the case, I’d prefer to be short, but the buy signals were just too compelling on the shorter term charts this morning. I’m keeping my stop close because I expect to be stopped out on all of these at a small profit. Should the Euro manage to start decisively closing above 1.4868 then I’ll start looking for long positions. Here are the hourly charts for both the USDCHF and EURUSD. The GBPUSD is too boring to throw up at this point:
None of the above are trade recommendations. Remember that trading involves substantial risk.
© Dianne Fecteau, 2009. No part of this material may be reproduced in any form, or referred to in any other publication, without the express written permission of the author.
Someone emailed me the other day and asked me to please give signals in advance. First, I’m not a signal service. They don’t usually work, anyway because the market can change in an instant—start contracting whereas before it was expanding and vice versa, etc. Second, I hope that by showing why I did something (and actually showing I’m in the position—let’s lynch all these so-called gurus who only talk and don’t trade but are still out there pushing their signal services) that someone will be able to learn to trade on their own. Besides, often I do give levels I plan on buying or selling. You just have to stay alert and take the trade at those levels. If anyone has a pair they want me to specifically comment on, just post a comment here asking and I will.
Getting back to the Euro, it hasn’t found its way to a definitive close above 1.48. Heaven knows its bulls have pushed and pushed and pushed. As long as that’s the case, I’d prefer to be short, but the buy signals were just too compelling on the shorter term charts this morning. I’m keeping my stop close because I expect to be stopped out on all of these at a small profit. Should the Euro manage to start decisively closing above 1.4868 then I’ll start looking for long positions. Here are the hourly charts for both the USDCHF and EURUSD. The GBPUSD is too boring to throw up at this point:
None of the above are trade recommendations. Remember that trading involves substantial risk.© Dianne Fecteau, 2009. No part of this material may be reproduced in any form, or referred to in any other publication, without the express written permission of the author.
Thursday, October 1, 2009
Thursday morning trades, canoodling with EW Theory, and other thoughts
GBPUSD
Yesterday's short trade is still on. I took a third off the table earlier and have my stop at plus 60 pips. I may move it again soon. I also took another short position earlier this morning and have the stop at breakeven. Note on the three hour chart below how RSI respected its Fib levels. The horizontal orange lines are why I said yesterday I wanted to short around 1.6150. I explained yesterday that I shorted under that because of price behavior. The thing to watch now, in my mind, is how the pair begins to behave as it nears the short uptrend line. Here’s the 3-hour chart but I’ll be watching shorter time frames.
USDCHF
My short was obviously taken out yesterday morning at profit. I entered long on the pullback where it continues to do well. But it’s nearing the top of that channel I’ve shown on prior charts so I need to assess this.
EURUSD
I got in and out of a quick short yesterday. I’m carefully analyzing the recent price activity. My “belief” is that the pair is headed down but you know how beliefs can blind you to what’s really happening? A good price analysis will tell the story.
AUDUSD
Yesterday I wrote that I was out of the Ozzie until I could form a clearer picture. I hypothesized that perhaps we could be in some sort of B wave (Elliott wave speak for corrective waves that are often choppy and difficult to decipher).
I’m not a big fan of the Elliott Wave Theory (EWT) for actual trading because it’s difficult to use it for trades by itself (although I know some people do and more power to them if it is profitable for them). I do, though, count waves. I do spend oodles of time canoodling with my Elliott Wave Principle book (Frost and Prechter).
Why does EWT appear so difficult? Why is it that there are so many interpretations? One reason is that while there are several rules—and these are inviolate—there are many more guidelines. These are just that—guidelines. The guidelines lead to arguments among EWT practitioners. Another reason is that many so-called EWT practitioners don’t seem to have memorized the rules and say things that simply aren’t true. A third reason, as I’ve mentioned before, is that the corrections are devilishly difficult to identify until well after the fact as to what they are and what they mean. While they’re in process they can lead to some strong arguments among practitioners.
Arguing over interpretations of anything on the charts is a valid activity. After all, if one person or theory held the absolute answer then that would be the fountain of youth, Eldorado, and the lost city of Atlantis rolled into one. Wouldn’t all who practiced that theory be lucky? But people that hold strongly to any given theory get extreme in their arguments, often using emotion where reason fails. So you hear such phrases as “I have this on absolute authority from a close relative of Elliott himself who verified it had never been written down and therefore I’m right and you’re not and you’re also stupid.”
Where I find EWT most useful is in gauging market psychology. It supplements my other analysis. I won’t necessarily act on a wave count that seems to be present if it goes against other factors I consider more important.
Briefly, since I don’t have the time to write a treatise on the topic, certain waves are technically strong and have real oomph. Others are not strong at all. Often, such as the B wave I mentioned as a possibility yesterday, they exhibit divergences, non-confirmations and the like.
Getting back to the AUDUSD, I studied charts dating back 30 years yesterday, in an attempt to clear up my confusion over what the pair was doing. I can make a case for three alternative wave counts based on the monthly chart. This is not helpful. One can’t trade this. But it’s a good exercise to write down the reasons for each. Briefly, though, my favored wave count is that we’re in a primary wave two correction (wave one being the steep drop from July, 2008). If this is true then it could retrace most or all of wave one. So it can’t exceed .9851. Since its high yesterday was .8860, this isn’t helpful, either. At least not to me, a small trader, who is not going to buy now, damn the torpedoes, and put a stop quite a distance away. I can make a good case for why I should have gone long at .8590 and stayed in. Had I done that I wouldn’t be doing all this work right now. I didn’t buy but should have doesn’t cut it in trading. Or anywhere else.
So I need to work on a smaller chart, right? Yes. But before leaving the monthly chart I drew an uptrend line from the lows earlier in the decade and it is coming in right about where the pair traded yesterday. Sometimes these old trend lines, once violated, serve as resistance. If I draw a horizontal line back in time to the early 80s on the monthly chart, I also see this is an interesting area known as polarity. Price has roughly used it for support and resistance.
Is it worth a short then? Well this would tie in with my belief we might be in a B wave correction. But there’s a bit of cognitive dissonance here. I’ve been calculating resistance ever since the secondary low in November, 2008. At each key resistance level I dutifully lightened or closed my longs, only to have to find a way to get back in. I’ve been trying to go long since the beginning of September and had some decent trades, e.g. one at 90 pips, but, for the last couple of weeks, have only found short setups where I’ve made small amounts of pips or taken small losses. (I’m not trashing 20 pip profits—they can add up—but one hopes for better than that, usually).
Here’s my opinion. It’s in an uptrend although it seems to be struggling with robust, sustained up moves. It’s at a resistance level that held once, yesterday. I may short it if it reaches .8860 again, depending on the behavior on the charts. Or I may go long if I can find behavior to support that position. That’s the best I can do at this point. Wait and see.
None of the above are trade recommendations. Remember that trading involves substantial risk.
© Dianne Fecteau, 2009. No part of this material may be reproduced in any form, or referred to in any other publication, without the express written permission of the author.
Yesterday's short trade is still on. I took a third off the table earlier and have my stop at plus 60 pips. I may move it again soon. I also took another short position earlier this morning and have the stop at breakeven. Note on the three hour chart below how RSI respected its Fib levels. The horizontal orange lines are why I said yesterday I wanted to short around 1.6150. I explained yesterday that I shorted under that because of price behavior. The thing to watch now, in my mind, is how the pair begins to behave as it nears the short uptrend line. Here’s the 3-hour chart but I’ll be watching shorter time frames.
USDCHF
My short was obviously taken out yesterday morning at profit. I entered long on the pullback where it continues to do well. But it’s nearing the top of that channel I’ve shown on prior charts so I need to assess this.
EURUSD
I got in and out of a quick short yesterday. I’m carefully analyzing the recent price activity. My “belief” is that the pair is headed down but you know how beliefs can blind you to what’s really happening? A good price analysis will tell the story.
AUDUSD
Yesterday I wrote that I was out of the Ozzie until I could form a clearer picture. I hypothesized that perhaps we could be in some sort of B wave (Elliott wave speak for corrective waves that are often choppy and difficult to decipher).
I’m not a big fan of the Elliott Wave Theory (EWT) for actual trading because it’s difficult to use it for trades by itself (although I know some people do and more power to them if it is profitable for them). I do, though, count waves. I do spend oodles of time canoodling with my Elliott Wave Principle book (Frost and Prechter).
Why does EWT appear so difficult? Why is it that there are so many interpretations? One reason is that while there are several rules—and these are inviolate—there are many more guidelines. These are just that—guidelines. The guidelines lead to arguments among EWT practitioners. Another reason is that many so-called EWT practitioners don’t seem to have memorized the rules and say things that simply aren’t true. A third reason, as I’ve mentioned before, is that the corrections are devilishly difficult to identify until well after the fact as to what they are and what they mean. While they’re in process they can lead to some strong arguments among practitioners.
Arguing over interpretations of anything on the charts is a valid activity. After all, if one person or theory held the absolute answer then that would be the fountain of youth, Eldorado, and the lost city of Atlantis rolled into one. Wouldn’t all who practiced that theory be lucky? But people that hold strongly to any given theory get extreme in their arguments, often using emotion where reason fails. So you hear such phrases as “I have this on absolute authority from a close relative of Elliott himself who verified it had never been written down and therefore I’m right and you’re not and you’re also stupid.”
Where I find EWT most useful is in gauging market psychology. It supplements my other analysis. I won’t necessarily act on a wave count that seems to be present if it goes against other factors I consider more important.
Briefly, since I don’t have the time to write a treatise on the topic, certain waves are technically strong and have real oomph. Others are not strong at all. Often, such as the B wave I mentioned as a possibility yesterday, they exhibit divergences, non-confirmations and the like.
Getting back to the AUDUSD, I studied charts dating back 30 years yesterday, in an attempt to clear up my confusion over what the pair was doing. I can make a case for three alternative wave counts based on the monthly chart. This is not helpful. One can’t trade this. But it’s a good exercise to write down the reasons for each. Briefly, though, my favored wave count is that we’re in a primary wave two correction (wave one being the steep drop from July, 2008). If this is true then it could retrace most or all of wave one. So it can’t exceed .9851. Since its high yesterday was .8860, this isn’t helpful, either. At least not to me, a small trader, who is not going to buy now, damn the torpedoes, and put a stop quite a distance away. I can make a good case for why I should have gone long at .8590 and stayed in. Had I done that I wouldn’t be doing all this work right now. I didn’t buy but should have doesn’t cut it in trading. Or anywhere else.
So I need to work on a smaller chart, right? Yes. But before leaving the monthly chart I drew an uptrend line from the lows earlier in the decade and it is coming in right about where the pair traded yesterday. Sometimes these old trend lines, once violated, serve as resistance. If I draw a horizontal line back in time to the early 80s on the monthly chart, I also see this is an interesting area known as polarity. Price has roughly used it for support and resistance.
Is it worth a short then? Well this would tie in with my belief we might be in a B wave correction. But there’s a bit of cognitive dissonance here. I’ve been calculating resistance ever since the secondary low in November, 2008. At each key resistance level I dutifully lightened or closed my longs, only to have to find a way to get back in. I’ve been trying to go long since the beginning of September and had some decent trades, e.g. one at 90 pips, but, for the last couple of weeks, have only found short setups where I’ve made small amounts of pips or taken small losses. (I’m not trashing 20 pip profits—they can add up—but one hopes for better than that, usually).
Here’s my opinion. It’s in an uptrend although it seems to be struggling with robust, sustained up moves. It’s at a resistance level that held once, yesterday. I may short it if it reaches .8860 again, depending on the behavior on the charts. Or I may go long if I can find behavior to support that position. That’s the best I can do at this point. Wait and see.
None of the above are trade recommendations. Remember that trading involves substantial risk.
© Dianne Fecteau, 2009. No part of this material may be reproduced in any form, or referred to in any other publication, without the express written permission of the author.
Wednesday, September 30, 2009
GBPUSD Entry
I wrote earlier this morning that I wanted to short the pound “hopefully around 1.6150.” I ended up entering at 1.6106 after seeing it briefly touch, then back away from, 1.6126. That was my clue that it might not reach 1.6150. Why that price? Based on some calculations using Fib ratios, I believed that was a vulnerable area. But the pair started stumbling on lower time frame charts—15- and 5-minute—and a doji formed on the hourly chart. So I held my nose and jumped in. Remember, I was struggling with the drop in the USD/CHF earlier as well and that pair tends to drop when GBP/USD goes up (not always but often). Also equity futures were bidding up earlier this morning so I thought perhaps the USD was going to take a beating today. These are the kinds of things that make it psychologically difficult to trade. Price on the pound chart was clearly speaking to me and yet my “beliefs” formed from other data were kicking in, making it difficult to take the trade. Regardless, I plunged in. My stop is now a profit stop and the pair is currently down 148 pips.
Let’s take a closer look at the doji on the hour chart below. It’s a honey. Not only does it form after an uptrend (as it must), but there aren’t a lot of them on the chart. The market is overbought so why is there such hesitation which is what the doji represents? It’s at an area I’ve identified as resistance. It’s also at 50% retracement. Finally, one could make an argument that it goes on to become part of a larger candlestick pattern, the evening star. Steve Nison in his book, Japanese Candlestick Charting Techniques (2001), wrote that the evening star consists of three candles. First, there’s a long white candle; then there’s a star (or doji); finally there’s a black real body that cuts deeply into the first white candle’s body. The third candle here doesn’t just cut deeply. It overwhelms the first candle so I’m not sure Nison would endorse this interpretation. Regardless, it was the right entry point. Here’s the hourly chart:
© Dianne Fecteau, 2009. No part of this material may be reproduced in any form, or referred to in any other publication, without the express written permission of the author.
Let’s take a closer look at the doji on the hour chart below. It’s a honey. Not only does it form after an uptrend (as it must), but there aren’t a lot of them on the chart. The market is overbought so why is there such hesitation which is what the doji represents? It’s at an area I’ve identified as resistance. It’s also at 50% retracement. Finally, one could make an argument that it goes on to become part of a larger candlestick pattern, the evening star. Steve Nison in his book, Japanese Candlestick Charting Techniques (2001), wrote that the evening star consists of three candles. First, there’s a long white candle; then there’s a star (or doji); finally there’s a black real body that cuts deeply into the first white candle’s body. The third candle here doesn’t just cut deeply. It overwhelms the first candle so I’m not sure Nison would endorse this interpretation. Regardless, it was the right entry point. Here’s the hourly chart:
© Dianne Fecteau, 2009. No part of this material may be reproduced in any form, or referred to in any other publication, without the express written permission of the author.
Uncertainty
AUDUSD—standing aside for now
I’ve been a bit buffeted by the Ozzie during the last several days. I’ve been out at breakeven or tiny little profits in its sideways movements. I stopped out overnight at .8770 with a loss of 48 pips. This morning I took a closer look.
From the longer term charts—monthly, weekly, and daily—we’re still in an uptrend although the movement has been strongly sideways the last couple of weeks. Lately it’s been waffling with ranges, false or premature breakouts from ranges, negative divergences, etc. Now it looks as though it may be pushing up which is what I thought it would do in the first place.
Why, I ask myself, would a pair behave this way? I mean besides the obvious reason that nobody can make up their mind about what to do—is the sky falling or is it not? Maybe that is the reason but what else comes to mind? I think about what Frost and Prechter wrote in their book, Elliott Wave Principle (New Classics Library, 10th ed. 2005), about B waves on page 81:
B waves are phonies…sucker plays, bull traps, speculators’ paradise….[They’re] rarely technically strong, and are virtually always doomed to complete retracement by wave C. If the analyst can easily say to himself, “There’s something wrong with this market,” chances are it’s a B wave.
That’s what I’ve been thinking to myself—there’s something wrong with this market. Of course there may be something wrong with me and my analysis but I’m not going there right now.
OK. What do I have? A belief we’re in an uptrend although Dow Theory tells me it could be an intermediate correction. A market that seems unclear. What choice do I have? I can only stand aside. As Gann wrote, if you “don’t know what to do, there is but one thing to do. Get out and wait until you know there is a definite trend.” When I see something more clearly and have a good entry point, I’ll trade it.
USD/CHF
I’m out of this pair I bought at 1.0288 and have a short on from near the top of the channel at 1.0386. Remember that yesterday I wrote it could bump its head and scoot back to its lower trend line? Well it did. Look at the candles as it approached the top of the channel on the hourly chart:
Now it’s falling out of its channel. Is this a fake move prior to all the news today? (ADP, GDP, Corporate Profits, and CPI). Look at how RSI is dipping. Note the negative divergence. All this is not good. I am, after all, in an overall downtrend as I pointed out yesterday. I’m uncertain here, too, but will stay in the trade until I’m stopped out at profit. Hmm. There seems to be a theme of uncertainty this morning.
EURUSD
I stopped out overnight with 100 pips profit. Not bad, but what’s up with the Euro? I’m analyzing it now and will post later. Hopefully I won’t have to say I’m uncertain, LOL.
GBPUSD
Thank goodness I don’t have to say I’m uncertain! Alas, there’s no trade at the moment. I consider the market to be contracting and I’m waiting to sell, hopefully at or above 1.6150. I’ll post more, later.
None of the above is a trade recommendation. These are just my early morning thoughts. Remember that trading involves substantial risk.
© Dianne Fecteau, 2009. No part of this material may be reproduced in any form, or referred to in any other publication, without the express written permission of the author.
I’ve been a bit buffeted by the Ozzie during the last several days. I’ve been out at breakeven or tiny little profits in its sideways movements. I stopped out overnight at .8770 with a loss of 48 pips. This morning I took a closer look.
From the longer term charts—monthly, weekly, and daily—we’re still in an uptrend although the movement has been strongly sideways the last couple of weeks. Lately it’s been waffling with ranges, false or premature breakouts from ranges, negative divergences, etc. Now it looks as though it may be pushing up which is what I thought it would do in the first place.
Why, I ask myself, would a pair behave this way? I mean besides the obvious reason that nobody can make up their mind about what to do—is the sky falling or is it not? Maybe that is the reason but what else comes to mind? I think about what Frost and Prechter wrote in their book, Elliott Wave Principle (New Classics Library, 10th ed. 2005), about B waves on page 81:
B waves are phonies…sucker plays, bull traps, speculators’ paradise….[They’re] rarely technically strong, and are virtually always doomed to complete retracement by wave C. If the analyst can easily say to himself, “There’s something wrong with this market,” chances are it’s a B wave.
That’s what I’ve been thinking to myself—there’s something wrong with this market. Of course there may be something wrong with me and my analysis but I’m not going there right now.
OK. What do I have? A belief we’re in an uptrend although Dow Theory tells me it could be an intermediate correction. A market that seems unclear. What choice do I have? I can only stand aside. As Gann wrote, if you “don’t know what to do, there is but one thing to do. Get out and wait until you know there is a definite trend.” When I see something more clearly and have a good entry point, I’ll trade it.
USD/CHF
I’m out of this pair I bought at 1.0288 and have a short on from near the top of the channel at 1.0386. Remember that yesterday I wrote it could bump its head and scoot back to its lower trend line? Well it did. Look at the candles as it approached the top of the channel on the hourly chart:
Now it’s falling out of its channel. Is this a fake move prior to all the news today? (ADP, GDP, Corporate Profits, and CPI). Look at how RSI is dipping. Note the negative divergence. All this is not good. I am, after all, in an overall downtrend as I pointed out yesterday. I’m uncertain here, too, but will stay in the trade until I’m stopped out at profit. Hmm. There seems to be a theme of uncertainty this morning.EURUSD
I stopped out overnight with 100 pips profit. Not bad, but what’s up with the Euro? I’m analyzing it now and will post later. Hopefully I won’t have to say I’m uncertain, LOL.
GBPUSD
Thank goodness I don’t have to say I’m uncertain! Alas, there’s no trade at the moment. I consider the market to be contracting and I’m waiting to sell, hopefully at or above 1.6150. I’ll post more, later.
None of the above is a trade recommendation. These are just my early morning thoughts. Remember that trading involves substantial risk.
© Dianne Fecteau, 2009. No part of this material may be reproduced in any form, or referred to in any other publication, without the express written permission of the author.
Tuesday, September 29, 2009
Could the report of its demise...? (USD/CHF 9/29)
Anyone following my dance with the USD/CHF knows it stopped out Monday morning with the measly 20 pips profit. This can be frustrating. It may be a sign of what I’m really doing here which is trading against the trend. The pips just aren’t there; it’s a correction. It can also be the mark of a trend petering out—remember that bottoming (and topping) is a process and not a one day event (usually).
I say it could be contra-trend because although shorter time frames are showing an uptrend, the overall daily and weekly chart show a downtrend. However I was true to my word that I would buy if it touched its hourly uptrend line. That happened yesterday at 1.0288.
This pair is in an upward channel right now. The Elliott Wave theorists can refrain from bombarding me with how this is a correction. The cycle hunters can back off as well. I will disregard the skepticism about the USD; I will disregard the remarks of everyone from World Bank president Zoellick to Chinese central bank governor, Zhou Xiaochuan, to Uncle Tad (I mean the United Nations Conference on Trade and Development aka UNCTAD. I will also disregard optimism. I will not, to paraphrase Mark Twain, ask if the reports of the USD demise are greatly exaggerated. Well, I can ask it. But I'm not going to trade on it.
As a trader, I read the market. I ask, “Can I make a case for a trade here?” If I can, there’s greater probability the trade will make money. There’s still probability for loss. Once I calculate the loss (that’s before I calculate profit) I know if I can place my trade in such a way that the risk won’t give rise to a throbbing pain in my stomach and anxiety that will have me hovering above the key board.
In the short term, I believe I can trade this pair. Here’s the hourly chart I’m working from: The pair is now up 98 pips as of 6:48 AM EST and my profit stop is guaranteeing me 20 of them. I’m getting ready to move my stop to take a bit more because it’s possible that the pair will hit its head on the upward line of its channel, say “Ouch!” and scoot back to its trend line. At which point I would buy again with my super tight stop. On and on the story goes. At least until it doesn’t.
Now look at the daily chart. Here you see a pronounced downtrend. You also see how laughably small this little uptick is in the overall scheme of things. Selling rallies in a downtrend is always the “safer” way to trade. I may do so at some point in this rally (although I'm hard-pressed to call this a rally. It's more evocative of a sputter). But for now, I’m going to wait to see.
I say it could be contra-trend because although shorter time frames are showing an uptrend, the overall daily and weekly chart show a downtrend. However I was true to my word that I would buy if it touched its hourly uptrend line. That happened yesterday at 1.0288.
This pair is in an upward channel right now. The Elliott Wave theorists can refrain from bombarding me with how this is a correction. The cycle hunters can back off as well. I will disregard the skepticism about the USD; I will disregard the remarks of everyone from World Bank president Zoellick to Chinese central bank governor, Zhou Xiaochuan, to Uncle Tad (I mean the United Nations Conference on Trade and Development aka UNCTAD. I will also disregard optimism. I will not, to paraphrase Mark Twain, ask if the reports of the USD demise are greatly exaggerated. Well, I can ask it. But I'm not going to trade on it.
As a trader, I read the market. I ask, “Can I make a case for a trade here?” If I can, there’s greater probability the trade will make money. There’s still probability for loss. Once I calculate the loss (that’s before I calculate profit) I know if I can place my trade in such a way that the risk won’t give rise to a throbbing pain in my stomach and anxiety that will have me hovering above the key board.
In the short term, I believe I can trade this pair. Here’s the hourly chart I’m working from: The pair is now up 98 pips as of 6:48 AM EST and my profit stop is guaranteeing me 20 of them. I’m getting ready to move my stop to take a bit more because it’s possible that the pair will hit its head on the upward line of its channel, say “Ouch!” and scoot back to its trend line. At which point I would buy again with my super tight stop. On and on the story goes. At least until it doesn’t.
Now look at the daily chart. Here you see a pronounced downtrend. You also see how laughably small this little uptick is in the overall scheme of things. Selling rallies in a downtrend is always the “safer” way to trade. I may do so at some point in this rally (although I'm hard-pressed to call this a rally. It's more evocative of a sputter). But for now, I’m going to wait to see.
None of the above is a trade recommendation. Remember that trading involves substantial risk.
© Dianne Fecteau, 2009. No part of this material may be reproduced in any form, or referred to in any other publication, without the express written permission of the author.
© Dianne Fecteau, 2009. No part of this material may be reproduced in any form, or referred to in any other publication, without the express written permission of the author.
Friday, September 25, 2009
Is it really Friday?
First, a word cloud based on the text of the FOMC minutes from Wednesday. I hope you had a chance to read the lighthearted take on the minutes I posted a couple of posts ago. This word cloud tells me that their most frequently used words are federal, committee, economic, and markets. Why am I not surprised?
I’m still in the AUD/USD (currently at 78 pips) and USD/CHF (currently at 38 pips) trades from yesterday. The USD/JPY trade stopped out at 20 pips profit. GBP/JPY stopped out at a 40 pip loss and I’m currently short in this pair with my stop at breakeven. Since the AUD/USD and USD/CHF both have stops at a profit point and the GBP/JPY is at breakeven they are “free” trades. Traders love those things because once the stop is at or above breakeven you can't lose money or are profitable. But I’m in these trades thinking bigger things could happen. Whether they will or not is the question.
Today began looking like one of those days when the USD could continue to strengthen. Why? Equity futures are bidding down. Plus there’s lots of buzz and chatter out there about how the equity markets have seen their highs and a turning point is here. Of course some of those buzzing have been saying this for at least six weeks or so, some longer. Much in the area of market prediction is downright silly. That said, I do believe the market provides clues and markers for those alert to them. Seeing them requires awareness, something I’ll write about this weekend.
Ten days ago I did an Elliott wave count on the EUR/USD. I’ve updated it in the daily chart below. The trouble with Elliott Wave is that when you’re in a correction it’s difficult to reach agreement on what it is until after the fact. This makes it less than tradable in most cases. But I do believe it reflects a market psychology. I still believe we’re in wave C of a correction on the daily chart. Once the Euro reached past 1.4720 I put a sell order in at 1.4849. My thinking was that it would reach towards its September ’08 high of 1.4868. It climbed only to 1.4845 so it didn’t quite reach the order. Frankly, I’m a bit surprised. A sell order I put in place this morning at 1.4712 was just triggered. I’ll move my stop to breakeven (if possible—it can reverse quickly but it’s a tight stop so I won’t pay too stiff a price) as soon as it looks as though it’s going to continue down. I won’t be troubled if I’m taken out since there may be one last push up. In any case, the pair is looking a bit top heavy.
Today began looking like one of those days when the USD could continue to strengthen. Why? Equity futures are bidding down. Plus there’s lots of buzz and chatter out there about how the equity markets have seen their highs and a turning point is here. Of course some of those buzzing have been saying this for at least six weeks or so, some longer. Much in the area of market prediction is downright silly. That said, I do believe the market provides clues and markers for those alert to them. Seeing them requires awareness, something I’ll write about this weekend.
Ten days ago I did an Elliott wave count on the EUR/USD. I’ve updated it in the daily chart below. The trouble with Elliott Wave is that when you’re in a correction it’s difficult to reach agreement on what it is until after the fact. This makes it less than tradable in most cases. But I do believe it reflects a market psychology. I still believe we’re in wave C of a correction on the daily chart. Once the Euro reached past 1.4720 I put a sell order in at 1.4849. My thinking was that it would reach towards its September ’08 high of 1.4868. It climbed only to 1.4845 so it didn’t quite reach the order. Frankly, I’m a bit surprised. A sell order I put in place this morning at 1.4712 was just triggered. I’ll move my stop to breakeven (if possible—it can reverse quickly but it’s a tight stop so I won’t pay too stiff a price) as soon as it looks as though it’s going to continue down. I won’t be troubled if I’m taken out since there may be one last push up. In any case, the pair is looking a bit top heavy.
Besides that I went long the pound this morning at 1.5987. I don’t have time to include the chart right now but I have a tight stop on it.
None of the above are trade recommendations. Remember that trading involves substantial risk. My hope is that by posting this analysis on some of the trades I take, people can start to learn an approach for themselves. The biggest part of trading is handling emotions and this is something I'll be dealing with in future posts.
© Dianne Fecteau, 2009. No part of this material may be reproduced in any form, or referred to in any other publication, without the express written permission of the author.
Thursday, September 24, 2009
Thursday (9/24) trades
AUD/USD
I was stopped out of my Ozzie long yesterday. This morning, after studying the charts, I decided to short it. I know; I know. It sounds as though I’m waffling on this pair—mostly long but now short? What’s up with that?
Well here’s the thing. While the pair is in an overall uptrend, it’s waffling too. It had that lovely consolidation range (.8543 - .8676) from early September until last week when it broke out, pulled back, and broke out again. One premature or false breakout I’ll accept. Two and I begin to get suspicious. It’s back inside its range (a peek a moment ago showed .8627).
I decided to short because:
1) Two upper candle shadows reached .8788 and then fell back (This later became a double top because it broke below the lowest low between the two tops (in this case .8703) but I didn’t know that when I placed my short trade at .8738.) I was more concerned with the upper shadows that meant higher prices were being rejected.
2) The strong black candle that happened before the last little uptrend. This showed me selling pressure was coming in at that level so when price returned to that level I thought it might happen again.
3) The pair was stumbling at the same price it had stumbled at on the first breakout
4) There’s still negative divergence on the chart between price and RSI
Since then of course, there has been confirmation of the double top. A calculation of what the price objective could be based on that would be .8616. It reached that point so I lightened my short by a third to take some profit and moved my stop to a small profit stop. When it reached 100 pips profit I took another third off the table. If it definitively breaks the trend line from mid-September (it’s already broken the one from the beginning of the month), I suspect it will at least return to the bottom of its range. Maybe more. Last week I wrote that I believe the .8500 levels are significant and that the pair could have big moves in either direction it took itself to. I still believe that. Here’s the 3-hour chart (the little downward triangle is my short entry):
Well here’s the thing. While the pair is in an overall uptrend, it’s waffling too. It had that lovely consolidation range (.8543 - .8676) from early September until last week when it broke out, pulled back, and broke out again. One premature or false breakout I’ll accept. Two and I begin to get suspicious. It’s back inside its range (a peek a moment ago showed .8627).
I decided to short because:
1) Two upper candle shadows reached .8788 and then fell back (This later became a double top because it broke below the lowest low between the two tops (in this case .8703) but I didn’t know that when I placed my short trade at .8738.) I was more concerned with the upper shadows that meant higher prices were being rejected.
2) The strong black candle that happened before the last little uptrend. This showed me selling pressure was coming in at that level so when price returned to that level I thought it might happen again.
3) The pair was stumbling at the same price it had stumbled at on the first breakout
4) There’s still negative divergence on the chart between price and RSI
Since then of course, there has been confirmation of the double top. A calculation of what the price objective could be based on that would be .8616. It reached that point so I lightened my short by a third to take some profit and moved my stop to a small profit stop. When it reached 100 pips profit I took another third off the table. If it definitively breaks the trend line from mid-September (it’s already broken the one from the beginning of the month), I suspect it will at least return to the bottom of its range. Maybe more. Last week I wrote that I believe the .8500 levels are significant and that the pair could have big moves in either direction it took itself to. I still believe that. Here’s the 3-hour chart (the little downward triangle is my short entry):
USD/CHF
When people pile on against the USD they really pile on. It’s been in a whale of a downtrend. I wrote last week that there had to be a dead cat bounce in there somewhere. This morning I took a long position which is currently up 75 pips but I’m not picking out any Prada’s with my profits just yet. The equity market needs to start dropping for me to feel comfortable this is going to run. Will it? Some people think so. Reasons I took the trade were:
1) The lower shadows showed the market was rejecting those lower prices
2) Positive divergence between price and RSI on the 3-hour chart
3) It took four candles to get to the low of the prior long white candle on the 3-hour chart
4) I was at a support point so I could go long with little risk
In addition, some other calculations I do suggest it might be bottoming. Bottoming is usually a process, though, and not an event. So this pair could stammer and stagger a while. Here’s the three hour chart:
1) The lower shadows showed the market was rejecting those lower prices
2) Positive divergence between price and RSI on the 3-hour chart
3) It took four candles to get to the low of the prior long white candle on the 3-hour chart
4) I was at a support point so I could go long with little risk
In addition, some other calculations I do suggest it might be bottoming. Bottoming is usually a process, though, and not an event. So this pair could stammer and stagger a while. Here’s the three hour chart:
OTHER TRADES
I went long USD/JPY this morning. I’m not going to go into all the reasons right now except that it’s obvious it was at support and I could enter with a small stop. I’ve moved my stop to a small profit. I also went long the GBP/JPY because it was at an obvious support. That trade has been slightly up or slightly down all day. I’m watching it. Remember it’s in an overall downtrend and it’s always safer to sell rallies. But we’ll see. As I’ve written before, one mustn’t get married to a point of view. That means I can reverse if I find evidence to do so.
None of the above is a trade recommendation of course. Remember that trading involves substantial risk.
© Dianne Fecteau, 2009. No part of this material may be reproduced in any form, or referred to in any other publication, without the express written permission of the author.
None of the above is a trade recommendation of course. Remember that trading involves substantial risk.
© Dianne Fecteau, 2009. No part of this material may be reproduced in any form, or referred to in any other publication, without the express written permission of the author.
Friday, September 18, 2009
Other trades this week
To be honest, I usually am exhausted by the end of the week. TGIF and all that. I frequently lighten up or go flat. Often I don’t trade at all on Fridays.
But I wanted to touch on the other trades I was in this week.
On Tuesday I went out at 90 pips profit on the Ozzie. That was a mistake since I'd forgotten to move my profit target up as I moved my stop up. That was .8660 and I was looking for a place to go long again. It's high was .8775 for the week so I definitely, stupidly, missed out on more profit but since I would have kept moving my stop and target up, I wouldn't have gotten all of it. So it's not too big a disappointment. I put in two buy orders, one at the top of the range and one at an uptrend line. I also shorted the Ozzie at minor support of .8720 yesterday (gosh, was that only yesterday? It feels like such a long week with the sideways movements on the charts). Since that point it dropped back to the top of its range (As in home on the range? Mama? It’s me, your pogo sticking but not too high, wayward child) and triggered my buy order at .8678. It's ranging around this point so one position is slightly in profit and one is slightly underwater. Back to the charts for that one.
I also shorted the drearily dwindling USD/CHF at 1.0309 on its tiny rally yesterday. One would think there’d be at least a dead cat bounce soon, wouldn’t one? By gosh, the 1-, 5-, 15-, 30-minute and even one hour chart is showing an uptrend. It’s nasty little low yesterday at 1.0275 must have brought out the bottom fishers as well as those that love to buy lows whether or not there is any near term support under them. A quick look at the three-hour chart isn’t all that encouraging. The three white candles could be interpreted as something Steve Nison calls the Three White Soldiers (aka Three Advancing Soldiers). These can indicate more strength is coming if they appear after a period of stable prices or a low price area. (Japanese Candlestick Charting Techniques). Well the prices have been low but they haven’t been lingering there long. The three white candles could also be interpreted as what he calls the Three Methods. This is a long black candle followed by three small, often white real body candles that “hold within the first session’s high-low range.” (Ibid. p. 276) It’s bearish. Thank you, candlesticks, for those two equally interesting interpretations. But I don’t mean to sound sarcastic. I do use candles but as Steve himself would be the first to say, they can’t be used in isolation. Also, to be fair, the third candlestick shows some weakening with its upper shadow. And then there’s that bearish shooting star. This uptick doesn’t look sustainable right now but as I said earlier, there’s a dead cat bounce in here somewhere. My suspicion is it will retest those yesterday lows at least. Here's the three hour chart:
But I wanted to touch on the other trades I was in this week.
On Tuesday I went out at 90 pips profit on the Ozzie. That was a mistake since I'd forgotten to move my profit target up as I moved my stop up. That was .8660 and I was looking for a place to go long again. It's high was .8775 for the week so I definitely, stupidly, missed out on more profit but since I would have kept moving my stop and target up, I wouldn't have gotten all of it. So it's not too big a disappointment. I put in two buy orders, one at the top of the range and one at an uptrend line. I also shorted the Ozzie at minor support of .8720 yesterday (gosh, was that only yesterday? It feels like such a long week with the sideways movements on the charts). Since that point it dropped back to the top of its range (As in home on the range? Mama? It’s me, your pogo sticking but not too high, wayward child) and triggered my buy order at .8678. It's ranging around this point so one position is slightly in profit and one is slightly underwater. Back to the charts for that one.
I also shorted the drearily dwindling USD/CHF at 1.0309 on its tiny rally yesterday. One would think there’d be at least a dead cat bounce soon, wouldn’t one? By gosh, the 1-, 5-, 15-, 30-minute and even one hour chart is showing an uptrend. It’s nasty little low yesterday at 1.0275 must have brought out the bottom fishers as well as those that love to buy lows whether or not there is any near term support under them. A quick look at the three-hour chart isn’t all that encouraging. The three white candles could be interpreted as something Steve Nison calls the Three White Soldiers (aka Three Advancing Soldiers). These can indicate more strength is coming if they appear after a period of stable prices or a low price area. (Japanese Candlestick Charting Techniques). Well the prices have been low but they haven’t been lingering there long. The three white candles could also be interpreted as what he calls the Three Methods. This is a long black candle followed by three small, often white real body candles that “hold within the first session’s high-low range.” (Ibid. p. 276) It’s bearish. Thank you, candlesticks, for those two equally interesting interpretations. But I don’t mean to sound sarcastic. I do use candles but as Steve himself would be the first to say, they can’t be used in isolation. Also, to be fair, the third candlestick shows some weakening with its upper shadow. And then there’s that bearish shooting star. This uptick doesn’t look sustainable right now but as I said earlier, there’s a dead cat bounce in here somewhere. My suspicion is it will retest those yesterday lows at least. Here's the three hour chart:
Finally, ta-da, the Euro. It’s currently up 110 pips from last week. Wow! For this we waited? The resistance it’s encountering is real so we’ll just have to wait and see for that one. I’m out of it for now.
None of these are trade recommendations. All trading involves substantial risk.
© Dianne Fecteau, 2009. No part of this material may be reproduced in any form, or referred to in any other publication, without the express written permission of the author.
None of these are trade recommendations. All trading involves substantial risk.
© Dianne Fecteau, 2009. No part of this material may be reproduced in any form, or referred to in any other publication, without the express written permission of the author.
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