A remarkably good salesman I knew told me that despite having massive success most of his sales were nothing out of the ordinary, but 1 out of 20 or so was something special. He actually looked forward to the run of the mill sales, knowing his numbers he 'knew' a big sale was around the corner.
Now whilst we really hope to have a better 'home run' record than 1 out of 20, this week we had a few trades but nothing really special. That's OK it happens. So no trade of the week charts today.
Saturday, May 31, 2014
4hr charts W pivots
As usual the 4hr charts show the importance of the W pivots (please note this pivot indi does not show the historical pivots just this last weeks), support and resistance levels and the number of trades that can be expected in a week (2-5).
Sunday, May 25, 2014
Not all wicks are created equal - UJ and EU comparison
In the last week both EU and UJ had significant lower wicks on their D charts at identified support levels, typically you'd expect them to go up? In this case EU fell and UJ went up.
Apart from saying the US$ was strong, after the fact, most indicators (other than divergence) would not have alerted to a possible direction change on a D chart and even if they did which trade do you take? Buy one of them perhaps picking the wrong one, buy both and getting a winner and loser? Lots of potential risk for little reward.
I believe price action itself would have alerted the way (we had a 42 pip successful trade buying UJ and did not trade EU down, see the useful link my trades at forex factory).
On the D charts, on 21 May both pairs have shown their 2nd significant lower wick in and around proven support/resistance areas. Giving good reason to expect moves up on 22nd May. If we take our general trade analysis viewpoint neither pair has validated a change of D trend, no 3 - 7 day reversal pattern with a close above the 8lwma, RSI either not crossed above signal line or unconvincing, RSI below 50 level, no engulfing 3 bar reversals closes (close above the previous 2 candle closes).
So for us any buys would need our counter trend rules to apply. This revolves around reversal candle patterns at proven support/resistance areas and W pivots.
So the D charts on 21 May suggest a move up. We need to focus on the 1hr price action on 22nd May for buy signals.
EU 22 May, at London open it makes a higher low, following the D candle a strong signal indeed that there is a buy. However 2 doji's then a 3 bar reversal (close below the 2 previous candle closes) follow at the Asian session high 1.3685, see the left arrow down. If we had been buyers this would give us serious concern. Firstly according to our D trend rules we have not got a confirmed change in trend to buys, we remain below our 1hr blue moving average that is angled down and now the 1hr flow up has failed. The higher low did not follow through and gave a lower high/double top. From there the lower high lower low flow continues giving another sell signal on 23 May.
In contrast the move up in UJ to 101.60 on 21 May breaks the lower high lower low flow on 1hr. There is a higher low in the Asian session and from there the higher high higher low flow continues easily seen with price action above the blue moving average which is angled up.
In summary then the 1hr price action that follows the D candle gives good clues on how to trade after the D lower wicks.
Apart from saying the US$ was strong, after the fact, most indicators (other than divergence) would not have alerted to a possible direction change on a D chart and even if they did which trade do you take? Buy one of them perhaps picking the wrong one, buy both and getting a winner and loser? Lots of potential risk for little reward.
I believe price action itself would have alerted the way (we had a 42 pip successful trade buying UJ and did not trade EU down, see the useful link my trades at forex factory).
So for us any buys would need our counter trend rules to apply. This revolves around reversal candle patterns at proven support/resistance areas and W pivots.
So the D charts on 21 May suggest a move up. We need to focus on the 1hr price action on 22nd May for buy signals.
EU 22 May, at London open it makes a higher low, following the D candle a strong signal indeed that there is a buy. However 2 doji's then a 3 bar reversal (close below the 2 previous candle closes) follow at the Asian session high 1.3685, see the left arrow down. If we had been buyers this would give us serious concern. Firstly according to our D trend rules we have not got a confirmed change in trend to buys, we remain below our 1hr blue moving average that is angled down and now the 1hr flow up has failed. The higher low did not follow through and gave a lower high/double top. From there the lower high lower low flow continues giving another sell signal on 23 May.
In contrast the move up in UJ to 101.60 on 21 May breaks the lower high lower low flow on 1hr. There is a higher low in the Asian session and from there the higher high higher low flow continues easily seen with price action above the blue moving average which is angled up.
In summary then the 1hr price action that follows the D candle gives good clues on how to trade after the D lower wicks.
Saturday, May 24, 2014
Our trade of the week
Our trade of the week was held over the weekend. On 14 May a strong negative close would be expected to continue (even if after some retrace).
Our counter trend rules:
If we are considering counter trend we want over whelming additional information to consider, such as:
- Proven support/resistance levels.
- W pivots.
- Divergence on higher time frames.
- Price action proving it does not want to progress for hours, double tops/bottoms , higher lows/lower highs, evening/morning star patterns, engulfing closes.
- Psych levels eg round numbers
In addition to the right kind of price action on 1hr or 15 min, double tops/bottoms , higher lows/lower highs, evening/morning star patterns, engulfing closes.
Our counter trend rules were met. Price was in a proven support/resistance area from Feb-Mar '14 and a W pivot 1.6728 (click on the charts to see in greater detail). On 15th we had divergence on 4hr and 1hr, price moving for hours that it did not want to go lower and a classic higher low on 15 min and 1hr.
Entry 1.6775, we exited at the W pivot R1/round number 1.6900 for 121 pips.
Our counter trend rules:
If we are considering counter trend we want over whelming additional information to consider, such as:
- Proven support/resistance levels.
- W pivots.
- Divergence on higher time frames.
- Price action proving it does not want to progress for hours, double tops/bottoms , higher lows/lower highs, evening/morning star patterns, engulfing closes.
- Psych levels eg round numbers
In addition to the right kind of price action on 1hr or 15 min, double tops/bottoms , higher lows/lower highs, evening/morning star patterns, engulfing closes.
Our counter trend rules were met. Price was in a proven support/resistance area from Feb-Mar '14 and a W pivot 1.6728 (click on the charts to see in greater detail). On 15th we had divergence on 4hr and 1hr, price moving for hours that it did not want to go lower and a classic higher low on 15 min and 1hr.
Entry 1.6775, we exited at the W pivot R1/round number 1.6900 for 121 pips.
4hr charts W pivots
As usual the 4hr charts show the importance of the W pivots (please note this historical pivot indi does not show the mid pivots), support and resistance levels and the number of trades that can be expected in a week (2-5).
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