Monday, April 20, 2015

Price & Time: High Volume Liquidation in USD/CAD


Talking Points
  • USD/JPY flirting with important downside pivots
  • GBP/USD near key Fib zone
  • USD/CAD breaks multi-week range
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Foreign Exchange Price & Time at a Glance:
Price & Time Analysis: USD/JPY
Price & Time: High Volume Liquidation in USD/CAD
Charts Created using Marketscope – Prepared by Kristian Kerr
  • USD/JPY has come under steady pressure since failing near the 61.8% retracement of the March range at the start of the week
  • Our near-term trend bias is lower while below 120.90
  • Gann levels at 118.70 and 118.40 look critical and a move below them is needed to spark a more serious decline
  • A minor turn window is eyed today/tomorrow
  • Only a move through 120.90 would turn us positive on the exchange rate
USD/JPY Strategy: Like the short side while under 120.90.
Instrument
Support 2
Support 1
Spot
Resistance 1
Resistance 2
USD/JPY
*118.40
118.70
119.10
119.50
*120.90
Price & Time Analysis: GBP/USD
Price & Time: High Volume Liquidation in USD/CAD
Charts Created using Marketscope – Prepared by Kristian Kerr
  • GBP/USD has traded steadily higher since finding support earlier this week at the 261.8% extension of the January/February advance
  • Our near-term trend bias is now higher in Cable
  • The 38% retracement of the February/April decline at 1.4940 looks to be a key pivot with traction above needed to spark a more important leg higher
  • A very minor turn window is eyed tomorrow
  • A daily close under 1.4680 would turn us negative on the pound
GBP/USD Strategy: Looking to buy on weakness.
Instrument
Support 2
Support 1
Spot
Resistance 1
Resistance 2
GBP/USD
*1.4680
1.4800
1.4915
*1.4940
1.5050
Focus Chart of the Day: USD/CAD
Price & Time: High Volume Liquidation in USD/CAD
We have been suspicious of the action in USD/CAD since the dramatic reversal on the FOMC decision last month. It was one of the widest daily ranges in years on some of the highest volume in years. A textbook sign of exhaustion – especially after just eeking out a new high. Our fears were realized yesterday as the February lows were breached leading to another high volume liquidation. We can only assume that this decline has more to run given the clear potential overhang of “stale longs” after several weeks of range trade. Another interpretation of the price action is that a head & shoulders pattern has been triggered on the move through 1.2450. If this is the case, it could open the way for a move to 1.2000. We shall see. It is USD/CAD after all and a curve ball or two is the rule not the exception. Immediate resistance is seen at 1.2350 and 1.2450, but only a move over 1.2665 would turn the technical outlook positive.

The Weekly Volume Report: Dollar Trying To Turn?

Talking Points
  • EUR/USD moves up on high volume
  • USD/CAD sees dramatic increase in turnover
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Daily Volume Chart: EUR/USD
The Weekly Volume Report: Dollar Trying To Turn?
Charts Created using Marketscope – Prepared by Kristian Kerr
  • EUR/USD has traded steadily higher over the past few days
  • Volume has been well above average during this rise and raises concerns that a more material correction higher is developing
  • The sharp rise in daily OBV is also a concern
  • A close over 1.1040 on above average volume is needed to turn the outlook more positive on the euro
Daily Volume Chart: USD/JPY
The Weekly Volume Report: Dollar Trying To Turn?
Charts Created using Marketscope – Prepared by Kristian Kerr
  • USD/JPY has fallen steadily after failing near 121.00 earlier in the week
  • Below average volume during the decline is supportive
  • Persistent weakness in daily OBV does remains a cause for concern
  • A close under 118.00 on above average volume would turn us negative on the exchange rate
Daily Volume Chart: USD/CAD
The Weekly Volume Report: Dollar Trying To Turn?
Charts Created using Marketscope – Prepared by Kristian Kerr
  • USD/CAD fell sharply this past week to trade at its lowest level in almost three months
  • The move lower was accompanied by strong volume and warns a broader liquidation phase is underway
  • Daily OBV has also begun to pick up downside momentum
  • A daily close above 1.2450 on above average volume is needed to turn the outlook more positive for Funds

Price & Time: "Flaky Pattern" in USD/JPY

Talking Points
  • USD/JPY flirting with important downside pivot
  • GBP/USD stalls at Fib level
  • EUR/USD test key moving average
Get real time volume on your charts for free. Click HERE
Foreign Exchange Price & Time at a Glance:
Price & Time Analysis: EUR/USD
Price & Time: "Flaky Pattern" in USD/JPY
Charts Created using Marketscope – Prepared by Kristian Kerr
  • EUR/USD has recovered steadily after finding support last week near the 1.0585 78.6% retracement of the late March range
  • Our near-term trend bias is lower while below 1.0830
  • A breach of 1.0585 looks needed to set off a more important move to the downside in the euro
  • A very minor turn window is eyed tomorrow
  • A close over 1.0830 would turn us positive on the exchange rate
EUR/USD Strategy: Like the short side while under 1.0830.
Instrument
Support 2
Support 1
Spot
Resistance 1
Resistance 2
EUR/USD
*1.0585
1.0700
1.0750
1.0805
*1.0830
Price & Time Analysis: GBP/USD
Price & Time: "Flaky Pattern" in USD/JPY
Charts Created using Marketscope – Prepared by Kristian Kerr
  • GBP/USD stalled on Friday at the 1.5050 50% retracement of the late February/April decline
  • Our near-term trend bias is higher in Cable while above 1.4800
  • A close above 1.5050 is needed to trigger a more meaningful push higher in the pound
  • A very minor turn window is eyed tomorrow
  • A daily close under 1.4800 would turn us negative on the pound
GBP/USD Strategy: Looking to buy on weakness against 1.4800.
Instrument
Support 2
Support 1
Spot
Resistance 1
Resistance 2
GBP/USD
*1.4800
1.4885
1.4940
1.5000
*1.5050
Focus Chart of the Day: USD/JPY
Price & Time: "Flaky Pattern" in USD/JPY
“Mainstream” analysts don’t seem to like chart patterns. This is a mistake in my view as chart patterns can give tremendous behavioral/psychological insight into an exchange rate. I am not the only who thinks this way apparently as even researchers at the Fed found them useful (albeit begrudgingly) in their rather infamous 1995 research piece “Head & Shoulders: Not Just A Flaky Pattern”. It can be read HERE. Personally I think where people run into trouble with pattern analysis is by trying to apply strict and rigid rules to them (which is ironically what the Fed researchers did). A pattern really is just showing a behavioral tendency after a set of technical occurrences. A “head & shoulders” pattern, for instance, is really just a development in a market where it has failed to record new highs. The “neckline” is just the point where a lot of short-term participants will bail out of long positions (or be forced to bail out if one acknowledges the self-fulfilling aspect of widely watched patterns). So why do I bring all this up today? USD/JPY - the price action since early February has set up a pretty clear potential head & shoulders pattern on the daily. Under 118.40 triggers.

9 Tricks Of The Successful Forex Trader

For all of its numbers, charts and ratios, trading is more art than science. Just as in artistic endeavors, there is talent involved, but talent will only take you so far. The best traders hone their skills through practice and discipline. They perform self analysis to see what drives their trades and learn how to keep fear and greed out of the equation. In this article we'll look at nine steps a novice trader can use to perfect his or her craft; for the experts out there, you might just find some tips that will help you make smarter, more profitable trades, too.

TUTORIAL: Beginner's Guide To MetaTrader 4

Step 1. Define your goals and then choose a style of trading that is compatible with those goals. Be sure your personality is a match for the style of trading you choose.

Before you set out on any journey, it is imperative that you have some idea of where your destination is and how you will get there. Consequently, it is imperative that you have clear goals in mind as to what you would like to achieve; you then have to be sure that your trading method is capable of achieving these goals. Each type of trading style requires a different approach and each style has a different risk profile, which requires a different attitude and approach to trade successfully. For example, if you cannot stomach going to sleep with an open position in the market then you might consider day trading. On the other hand, if you have funds that you think will benefit from the appreciation of a trade over a period of some months, then a position trader is what you want to consider becoming. But no matter what style of trading you choose, be sure that your personality fits the style of trading you undertake. A personality mismatch will lead to stress and certain losses. (For more, see Invest With A Thesis.)

Step 2. Choose a broker with whom you feel comfortable but also one who offers a trading platform that is appropriate for your style of trading.

It is important to choose a broker who offers a trading platform that will allow you to do the analysis you require. Choosing a reputable broker is of paramount importance and spending time researching the differences between brokers will be very helpful. You must know each broker's policies and how he or she goes about making a market. For example, trading in the over-the-counter market or spot market is different from trading the exchange-driven markets. In choosing a broker, it is important to read the broker documentation. Know your broker's policies. Also make sure that your broker's trading platform is suitable for the analysis you want to do. For example, if you like to trade off of Fibonacci numbers, be sure the broker's platform can draw Fibonacci lines. A good broker with a poor platform, or a good platform with a poor broker, can be a problem. Make sure you get the best of both. (For related reading, see How To Pay Your Forex Broker.)

Step 3. Choose a methodology and then be consistent in its application.

Before you enter any market as a trader, you need to have some idea of how you will make decisions to execute your trades. You must know what information you will need in order to make the appropriate decision about whether to enter or exit a trade. Some people choose to look at the underlying fundamentals of the company or economy, and then use a chart to determine the best time to execute the trade. Others use technical analysis; as a result they will only use charts to time a trade. Remember that fundamentals drive the trend in the long term, whereas chart patterns may offer trading opportunities in the short term. Whichever methodology you choose, remember to be consistent. And be sure your methodology is adaptive. Your system should keep up with the changing dynamics of a market. (For related reading, see What is the difference between fundamental and technical analysis and Blending Technical And Fundamental Analysis.)

Step 4. Choose a longer time frame for direction analysis and a shorter time frame to time entry or exit.


Many traders get confused because of conflicting information that occurs when looking at charts in different time frames. What shows up as a buying opportunity on a weekly chart could, in fact, show up as a sell signal on an intraday chart. Therefore, if you are taking your basic trading direction from a weekly chart and using a daily chart to time entry, be sure to synchronize the two. In other words, if the weekly chart is giving you a buy signal, wait until the daily chart also confirms a buy signal. Keep your timing in sync.

Step 5. Calculate your expectancy.

Expectancy is the formula you use to determine how reliable your system is. You should go back in time and measure all your trades that were winners versus all your trades that were losers. Then determine how profitable your winning trades were versus how much your losing trades lost.

Take a look at your last 10 trades. If you haven't made actual trades yet, go back on your chart to where your system would have indicated that you should enter and exit a trade. Determine if you would have made a profit or a loss. Write these results down. Total all your winning trades and divide the answer by the number of winning trades you made. Here is the formula:

E= [1+ (W/L)] x P – 1
where:

W = Average Winning Trade
L = Average Losing Trade
P = Percentage Win Ratio
Example:
If you made 10 trades and six of them were winning trades and four were losing trades, your percentage win ratio would be 6/10 or 60%. If your six trades made $2,400, then your average win would be $2,400/6 = $400. If your losses were $1,200, then your average loss would be $1,200/4 = $300. Apply these results to the formula and you get; E= [1+ (400/300)] x 0.6 - 1 = 0.40 or 40%. A positive 40% expectancy means that your system will return you 40 cents per dollar over the long term.
Step 6. Focus on your trades and learn to love small losses.

Once you have funded your account, the most important thing to remember is that your money is at risk. Therefore, your money should not be needed for living or to pay bills etc. Consider your trading money as if it were vacation money. Once the vacation is over your money is spent. Have the same attitude toward trading. This will psychologically prepare you to accept small losses, which is key to managing your risk. By focusing on your trades and accepting small losses rather than constantly counting your equity, you will be much more successful.

Secondly, only leverage your trades to a maximum risk of 2% of your total funds. In other words, if you have $10,000 in your trading account, never let any trade lose more than 2% of the account value, or $200. If your stops are farther away than 2% of your account, trade shorter time frames or decrease the leverage. (For further reading, see Leverage's Double-Edged Sword Need Not Cut Deep.)

Step 7. Build positive feedback loops.

A positive feedback loop is created as a result of a well-executed trade in accordance with your plan. When you plan a trade and then execute it well, you form a positive feedback pattern. Success breeds success, which in turn breeds confidence - especially if the trade is profitable. Even if you take a small loss but do so in accordance with a planned trade, then you will be building a positive feedback loop.

Step 8. Perform weekend analysis.

It is always good to prepare in advance. On the weekend, when the markets are closed, study weekly charts to look for patterns or news that could affect your trade. Perhaps a pattern is making a double top and the pundits and the news are suggesting a market reversal. This is a kind of reflexivity where the pattern could be prompting the pundits while the pundits are reinforcing the pattern. Or the pundits may be telling you that the market is about to explode. Perhaps these are pundits hoping to lure you into the market so that they can sell their positions on increased liquidity. These are the kinds of actions to look for to help you formulate your upcoming trading week. In the cool light of objectivity, you will make your best plans. Wait for your setups and learn to be patient. (For information on determining what the market's telling you, read Listen To The Market, Not Its Pundits.)

If the market does not reach your point of entry, learn to sit on your hands. You might have to wait for the opportunity longer than you anticipated. If you miss a trade, remember that there will always be another. If you have patience and discipline you can become a good trader. (To learn more, see Patience Is A Trader's Virtue.)

Step 9. Keep a printed record.

Keeping a printed record is one of the best learning tools a trader can have. Print out a chart and list all the reasons for the trade, including the fundamentals that sway your decisions. Mark the chart with your entry and your exit points. Make any relevant comments on the chart. File this record so you can refer to it over and over again. Note the emotional reasons for taking action. Did you panic? Were you too greedy? Were you full of anxiety? Note all these feelings on your record. It is only when you can objectify your trades that you will develop the mental control and discipline to execute according to your system instead of your habits.

Bottom Line
The steps above will lead you to a structured approach to trading and in return should help you become a more refined trader. Trading is an art and the only way to become increasingly proficient is through consistent and disciplined practice. Remember the expression: the harder you practice the luckier you'll get.



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$USDJPY Forecast and Trade setup for 30th March to 3rd April 2015

$USDJPY Forecast and Trade setup for 30th March to 3rd April 2015


Weekly Chart


  • Negative Divergence on RSI
  • Failed rally is what i can see because from the 61.8 fib

Daily Chart

  • Daily you could see a big drop in RSI momentum
  • Ichimoku is still on up trend, however could be easily broken as the cloud is weak
Hourly Chart

  • 4hr Ichimoku already have broken the up trend
  • Looks likely to test the 117.00 -116's

Outlook Trade opportunity

Personally I have a short trade from the ichimoku break and trendline break from the H4, and on top of that a weekly 61.8 fib

Risk Level __


Tips -

Always take note of any economical news event on our provided calender below

EUR/USD Struggles to Keep Going Upward

EUR/USD continued to rise today but halted its rally and is now struggling to keep its gains. Economic data from the United States and the eurozone was mixed, giving no edge to the currency pair.
US CPI increased 0.2% in March on a seasonally adjusted basis, at the same rate as in February and in line with expectations.
According to the preliminary estimate, Michigan Sentiment Index rose from 93.0 in March to 95.9 in April, far above the value of 93.8 predicted by analysts.
Leading indicators increased 0.2% in March, slightly less than the forecast reading of 0.3% but more than the revised February’s increase of 0.1%.
EUR/USD for 2015-04-17

If you have any comments on the recent EUR/USD action, please reply using the form below.

2014 Ends - The Dollar is Strong, But For How Long?

I thought I would post a year-end wrap-up in this "long in the tooth" blog to let those who still check it once in a while can see that I'm still alive and trading.  Most of my attention has been focused on my personal trading and supporting some up-and-coming niche hedge funds.  In both avenues my efforts have been successful.

It was a good year in most aspects.  No thanks to current politicians and anti-market types.  Socialism and other "high control" governments are trying to make it as difficult as possible for free markets to operate as they should.

Notwithstanding, we've got some real market trends in place.  The dollar is strong vs. almost any currency out there: AUD, NZD, JPY, EUR, CHF, GBP, CAD, MXN (Mexican Peso) and precious metals.

Trading OneNightStand and trailing a portion of the positions on strong follow-through trades after the beginning of July resulted in very reasonable gains.  At one point in mid-October, the account was at $1,289.21.  With a lot of back and forth towards year-end some reduction in  return was inevitable.  Currently, the forex side of the Challenge account is $1,156.60.

Not so good on the silver side of the Challenge account.  

The 1330 ounces of silver carried over from last year currently have a liquidation value of $20,841.10 (based on the 12/31/14 spot price of $15.67).  

Commodity prices, of which oil is a huge percentage, have all dropped significantly this year relative to the dollar.  Since May, Crude Oil prices have dropped in half.  Which didn't help silver and gold values at all.  It is really amazing that silver didn't fall more with the fallout in commodities.  Maybe it will.  Either way, I have no interest in liquidating any of the silver the Challenge account has accumulated.

Large shifts in value between asset classes and capital inflows into others (like the US stock market as of late) cause new trends to begin and existing trends to continue.  So keep selling that Euro for awhile yet.

Quick summary:

Silver value:         $20,841.10
Forex account:      $1,156.60
----------------------------------
Total:                     $21,997.70

This year I may trade some additional breakout setups to increase returns on some of these trends we're seeing.  I'll post something if/when I start.

ONS is still working of course.  A number of hardy ONS and FirstStrike followers have been in steady contact with me and have also had a decent year.  It is pretty obvious that there are trends going when a currency is falling vs the dollar for 8 weeks like we saw in the Euro.  Still, many traders had a hard time believing the moves were just more than simple corrections.  

A person needs a method that has limited risk and open ended outlier potential to profit from markets primarily dictated by chaos theory.  Which forex and commodity markets most definitely are.

Best wishes on 2015.

I will be thinking of you.

Joel