Hope you all have a great Christmas and a relaxing time to recharge before the daily routine kicks in again.
More charts to come over the next few days and excuse any typo's, I have the feeling some posts may be sponsored by B&W (Brandy and Whiskey).
Doc
Thursday 25 December 2014
Sunday 21 December 2014
Pro money actions
This is a tough post to put words to. Pro money activity is not a single candle or formation that happens, it is a combination of time, price, reaction to their efforts and how easy or difficult it is for them to slow and finally turn a trend or range in progress. It is expensive for pro money to do this work and it has to be done in places where it will the best opportunity to work and not have to do it again at a later time. Too much effort with little result means a range is likely to form and then its a game of who has the deepest pockets. Ranges are very expensive to break and he who has the most cash wins. This is why I tell you to wait for a break and test of the break to see will it hold. Let the pro's do their thing and be happy in that you can see what has happened and can react accordingly.
Here are a few charts of the Eur/Usd and a break down of one approach used by pro money. There is little point in learning the pattern or naming anything other than the most basic parts there are in this, because all it will achieve is you filling your brain with useless words and terms and not concentrating on how price looks. Once you have at least one good eye, all you need to do is watch price form and close. I say form, because you want to see where the action took place as a candle formed, this can be useful intel especially around price areas of interest to pro money.
There will be plenty emotional tugs in your mind as to why you must trade in the direction of the candles because they just look so good and strong and are moving with great progress. This is nothing more than a sucker punch and you are falling into their trap. It is very hard to show anyone why not consider going opposite to the main move when it is so obvious to them that thats not where price is going. Breaking these emotional ties will be difficult and takes a long time. If something looks too good to be true, and even if you are in this money making move, you will have so much confidence that nobody can talk you out of taking profit or closing the position completely in readiness for the turn.
If I had a penny for each time someone wanted just 10 more points, or I know it will turn around now, or it looks weak/strong etc, I could give up work and retire. Be ruthless with your entry, stop and target because without knowing all three before you enter the market, you are on the poor man's slide to becoming broke and throwing money away. All three functions must be plotted either on the chart or in your mind before you enter and DO NOT change them. You must know what is the most money I am prepared to loose before I take a new trade. This is basic money management and it must be a realistic figure. Wealth is not created in a few trades, but over a longer period of time where smaller bites are taken out of the market and not look for big moves. Take small profits all the time and take small losses a lesser amount of time. Then your account grows and given enough experience and confidence you can then slowly places slightly higher value trades in the market, this gets extra profits for the same point risk and target as you will have always done. But dont jump into increasing trade size until such time as your account can take it.
I could write volumes on taking care of your capital, but let the most basic things be your guide, protect your capital and it allows you come back to trade again tomorrow. But loose it and you can no longer trade.
Moving on to some charts.
4hr chart of the Euro and I have drawn in a box on top showing historic supply. We know sellers were active here in the past and that the area has been untouch for a long time relative to this time frame. We know any new entry into this price area is likely to see some sellers come back in and we watch for signs of the bullish move showing signs of weakness.
The big sign in this chart is the single long bullish candle with a spike on top. This is printed as a bullish candle, but is in reality bearish. We this from the reaction to it in the next closed candle. If such a powerful bullish candle resulted in the next candle being strongly bearish, then how can the up move continue. Could it be the orders up in the box be some over whelming that the buying was really an attempt by pro money to show the retail trader that the price is really heading for the moon and its been like this for the past half days trading session and you are missing out unless you go long right now!
Sure, its the ulitmate sucker punch that happens on all financial instruments and on all time frames. But they happen much nicer on the 4hr and daily. Which is why I take most of my trade leads from the 4hr and daily time frames.
1hr chart.
A little closer in on price action here, count 4 candles back, but start from the candle with the spike. This is how the 4 hr candle looked as it was forming. Can you now see how the strength of the buying started to slow down towards the end of its life?
This folks is the basis of price action, it is often reported as closed candles only, but its also important to look for how it behaved as it was forming. Become fully informed and get as much intel as you can in these important areas.
15min chart.
Here is the first real clear sign of the bullish move in trouble. Again look at the candles from the spike back left to where the large bearish candle held price down for one time period. That puch back up to the spike was nothing other than the tugs on the retail traders emtions to get in now before you miss the rocket take off. The candles rarely form the same pattern time after time inside these boxes. You must look at them in context with the other candles around it and not try and fit them into a pattern, but allow the newly formed pattern make sense to your logical brain. Ask yourself some fundamental questions, who would be buying up here, who would be selling up here. If I bought up here, who am I buying from?....if I am selling here, who I am selling to?
Your customer must always be, the retail trader. And I guess there are folks here who have been my customers. But unlike the faceless institutions who just take your money, I tell you how this works. There is a lot of work for you to do in learning to be patient and getting an entry after you have seen the evidence of pro money at work. There tends to be a second shot where the more careful traders step in and place their orders. It wont happen all the time and its important you not be hard on yourself for missing what was a perfect trade. Unless I see the right entry after a good setup, I let it go and wait for another. In time this will save you money and help you grow an account rather than pull the trigger on any entry after a good setup. Quality rather than quantity is the message.
Down to the 5min and this time frame and sometimes the 1min is where I take my entry lead from after all the higher time frames are shown good intel. I have zoomed in closer to price action so that I can explain this clearer than the regular chart view.
The brown box is of course the bow from the 4hr chart and I have to make this clear because there are emails asking me at times why some of my chart have two background colours.
We still start with the highest candle that looked not too unlike this on the 4hr chart. There is still a large wick and a bearish reaction. The bearish reaction is not as impressive as the 4hr, but it does still tell us a story. There are tails on the tow candles after the climatic bullish candle and there were some buyers remaining who were most likely have been the retail trader cannon fodder types. The large bearish candle is an important placement because it showed up in a place where only buying within a pull back would have otherwise taken place.
A small bullish move up over the next three candles happened with signs of selling coming in as price rose higher. Again, any bullish continuation would not have shown this. There are also two tests on bullish candles which are checking for remaining buyers. Each test resulted in lower prices and helps solidify pro moneys investment in more down side. They wont jump in right away and slowly unwind one position and sell into remaining buying. This is will different each time which is why looking for patterns wont be as productive as you analytical and logical brain can be.
Note the bottom of the brown box, it has setup into a resistance area. This wont always happen but in this instance it shows up the willingness for pro money to effectively put a cap on price and do not want to see higher prices.
A second 5min chart. I have drawn in a yellow line to show what was and what will further be shown as another area where price has reacted in the past.
Here is another 4hr chart zoomed out and showing the same yellow line as the above 5min chart.
In this chart we can see way back left where this area was important and if you look for long enough on high time frames you will see there are a few of these on other price areas. Make yourself aware of them.
Towards the upper right of the box you will see another spike into the box drawn in all of the charts. Take note of the similar approach used by pro money, highly emotive push for price to reach the moon and if you are not in, you will miss a big move.
Also note the reaction was different to the last, even though the push is the same. This is why I say to not learn patterns just for the sake of knowing patterns.
I hope this helps some of you and that something does go click in your head. Lots more can be written on this, but for the moment there should be plenty in that to feed your brain. Take some time now and apply this to other pairs from high time frames all the way down to the 5min.
Here are a few charts of the Eur/Usd and a break down of one approach used by pro money. There is little point in learning the pattern or naming anything other than the most basic parts there are in this, because all it will achieve is you filling your brain with useless words and terms and not concentrating on how price looks. Once you have at least one good eye, all you need to do is watch price form and close. I say form, because you want to see where the action took place as a candle formed, this can be useful intel especially around price areas of interest to pro money.
There will be plenty emotional tugs in your mind as to why you must trade in the direction of the candles because they just look so good and strong and are moving with great progress. This is nothing more than a sucker punch and you are falling into their trap. It is very hard to show anyone why not consider going opposite to the main move when it is so obvious to them that thats not where price is going. Breaking these emotional ties will be difficult and takes a long time. If something looks too good to be true, and even if you are in this money making move, you will have so much confidence that nobody can talk you out of taking profit or closing the position completely in readiness for the turn.
If I had a penny for each time someone wanted just 10 more points, or I know it will turn around now, or it looks weak/strong etc, I could give up work and retire. Be ruthless with your entry, stop and target because without knowing all three before you enter the market, you are on the poor man's slide to becoming broke and throwing money away. All three functions must be plotted either on the chart or in your mind before you enter and DO NOT change them. You must know what is the most money I am prepared to loose before I take a new trade. This is basic money management and it must be a realistic figure. Wealth is not created in a few trades, but over a longer period of time where smaller bites are taken out of the market and not look for big moves. Take small profits all the time and take small losses a lesser amount of time. Then your account grows and given enough experience and confidence you can then slowly places slightly higher value trades in the market, this gets extra profits for the same point risk and target as you will have always done. But dont jump into increasing trade size until such time as your account can take it.
I could write volumes on taking care of your capital, but let the most basic things be your guide, protect your capital and it allows you come back to trade again tomorrow. But loose it and you can no longer trade.
Moving on to some charts.
4hr chart of the Euro and I have drawn in a box on top showing historic supply. We know sellers were active here in the past and that the area has been untouch for a long time relative to this time frame. We know any new entry into this price area is likely to see some sellers come back in and we watch for signs of the bullish move showing signs of weakness.
The big sign in this chart is the single long bullish candle with a spike on top. This is printed as a bullish candle, but is in reality bearish. We this from the reaction to it in the next closed candle. If such a powerful bullish candle resulted in the next candle being strongly bearish, then how can the up move continue. Could it be the orders up in the box be some over whelming that the buying was really an attempt by pro money to show the retail trader that the price is really heading for the moon and its been like this for the past half days trading session and you are missing out unless you go long right now!
Sure, its the ulitmate sucker punch that happens on all financial instruments and on all time frames. But they happen much nicer on the 4hr and daily. Which is why I take most of my trade leads from the 4hr and daily time frames.
1hr chart.
A little closer in on price action here, count 4 candles back, but start from the candle with the spike. This is how the 4 hr candle looked as it was forming. Can you now see how the strength of the buying started to slow down towards the end of its life?
This folks is the basis of price action, it is often reported as closed candles only, but its also important to look for how it behaved as it was forming. Become fully informed and get as much intel as you can in these important areas.
15min chart.
Here is the first real clear sign of the bullish move in trouble. Again look at the candles from the spike back left to where the large bearish candle held price down for one time period. That puch back up to the spike was nothing other than the tugs on the retail traders emtions to get in now before you miss the rocket take off. The candles rarely form the same pattern time after time inside these boxes. You must look at them in context with the other candles around it and not try and fit them into a pattern, but allow the newly formed pattern make sense to your logical brain. Ask yourself some fundamental questions, who would be buying up here, who would be selling up here. If I bought up here, who am I buying from?....if I am selling here, who I am selling to?
Your customer must always be, the retail trader. And I guess there are folks here who have been my customers. But unlike the faceless institutions who just take your money, I tell you how this works. There is a lot of work for you to do in learning to be patient and getting an entry after you have seen the evidence of pro money at work. There tends to be a second shot where the more careful traders step in and place their orders. It wont happen all the time and its important you not be hard on yourself for missing what was a perfect trade. Unless I see the right entry after a good setup, I let it go and wait for another. In time this will save you money and help you grow an account rather than pull the trigger on any entry after a good setup. Quality rather than quantity is the message.
Down to the 5min and this time frame and sometimes the 1min is where I take my entry lead from after all the higher time frames are shown good intel. I have zoomed in closer to price action so that I can explain this clearer than the regular chart view.
The brown box is of course the bow from the 4hr chart and I have to make this clear because there are emails asking me at times why some of my chart have two background colours.
We still start with the highest candle that looked not too unlike this on the 4hr chart. There is still a large wick and a bearish reaction. The bearish reaction is not as impressive as the 4hr, but it does still tell us a story. There are tails on the tow candles after the climatic bullish candle and there were some buyers remaining who were most likely have been the retail trader cannon fodder types. The large bearish candle is an important placement because it showed up in a place where only buying within a pull back would have otherwise taken place.
A small bullish move up over the next three candles happened with signs of selling coming in as price rose higher. Again, any bullish continuation would not have shown this. There are also two tests on bullish candles which are checking for remaining buyers. Each test resulted in lower prices and helps solidify pro moneys investment in more down side. They wont jump in right away and slowly unwind one position and sell into remaining buying. This is will different each time which is why looking for patterns wont be as productive as you analytical and logical brain can be.
Note the bottom of the brown box, it has setup into a resistance area. This wont always happen but in this instance it shows up the willingness for pro money to effectively put a cap on price and do not want to see higher prices.
A second 5min chart. I have drawn in a yellow line to show what was and what will further be shown as another area where price has reacted in the past.
Here is another 4hr chart zoomed out and showing the same yellow line as the above 5min chart.
In this chart we can see way back left where this area was important and if you look for long enough on high time frames you will see there are a few of these on other price areas. Make yourself aware of them.
Towards the upper right of the box you will see another spike into the box drawn in all of the charts. Take note of the similar approach used by pro money, highly emotive push for price to reach the moon and if you are not in, you will miss a big move.
Also note the reaction was different to the last, even though the push is the same. This is why I say to not learn patterns just for the sake of knowing patterns.
I hope this helps some of you and that something does go click in your head. Lots more can be written on this, but for the moment there should be plenty in that to feed your brain. Take some time now and apply this to other pairs from high time frames all the way down to the 5min.
Saturday 20 December 2014
Eur/Usd
A quick look at the Euro/Usd before the Christmas week crazy trading kicks in, this is the time of year when price action wont be as useful as it would otherwise and the end of year is also a time when many positions for those in the pro money world who trade longer time frames.
This is my ten mile high view. Look for the obvious and proven price history, ignore the current candle because it is not yet closed and of no value to us. We see where price has been and how it reacted. The short story is, price has come from a higher price to a lower price and with good pace and little to hinder it. This tells us the bears are in full control and there are no signs of this changing on this time frame yet. If there is no sign change, or no sign of change, then we continue with a bearish view until price proves otherwise.
Another monthly chart with one important addition. A yellow line to show support and resistance. This is an approximate area and not a single line/pixel or 1 thou tolerance line. It is an area.
We need to know ahead of time where price can potentially react, we need this for entries, exits and stops. All are of equal importance in trading. On the next chart we will look a little closer and get more intel.
Weekly chart.
Not much different you say, close but look again. The yellow line now has a corrected value to 1.20000. This is a price area that many will look for a bounce, if enough traders share the same view, then there will be a bounce because it becomes self full filling. Plus there are strong technical reasons for a bounce there, we see historic buying to the left of price in May 2012. When old and clean price areas like that are untouched for a long period of time, then can show violent reactions and price takes off quickly. If this happens, you may not see a pull back until price has gone some distance. But if price stays in the area for a longer period of time, it means there are less interested buyers. That would not be good for the Euro, because any drop through 1.20000 will be hard to contain. If it did happen, I would expect the ECB to announce some major purchase of bonds etc to happen quickly. This is nothing more than a money game to see who can do the least and spend the least to make the most amount of money, that is from a Gov perspective. Any Gov react to the markets rather than stop them falling, they are always last to the party.
Daily chart.
I marked what looks like messy price action to show the bears are still in control. The retraces are chaotic, yet still comply with standard supply and demand groups. Note how price is slowing down as it gets closer to the major area of buying back in 2012. Pro money has to unload as price falls and buy in before it hits what eventually becomes the bottom. Otherwise a single close and open of new positions would create such spikes that it would be near impossible for anyone to gain a good entry and hold onto it. The last few days show a strong push down and given the time of year it is, this may be nothing more than positions being liquidated and willing sellers taking the orders for a quick trip down for equally quick profit into a safe area.
Price has closed lower and shows a strong close with no buyers or signs of a pull back on this time frame.
Lastly the 4hr chart.
I have placed some white lines showing the retraces and the boxes where the bears took over again. It does look more and more messy the lower you get in time, but its still perfect supply and demand trading. Wider stops than normal were needed inside all this mess in order to pull out a few winning trades.
On the last two candles there is some buying, not much and still closed below the previous bottom. The closer we get to 1.20000 the more risk you take on when shorting.
There are other pairs who are also coming close to major potential turning points and it is no fluke that this happens in or around the same time. For the past 100 years the markets have behaved like this and will still be behave the same in the next 100. You or I wont change them one single bit with our tiny influence.
I did get an email requesting to show on a chart where pro money comes in. Looking at the chart below I will give you a hint, look for the box and then look for the reaction. The reaction is the result of pro money, but they hide most of their tracks inside the box. On lower time frames there is more intel on what it looks like and will look very much the same, you are safer to trade the retest of the pro money result than the initial break. Any strong break will have a test and continuation, most of the time. But trading a break is a lower pay out and higher stop hit count.
Oil
It wont come as any surprise that Oil has been on the slippery slope to lower prices and it may be beneficial now to take a look at where this began and where it could go.
My chart history wont go back far enough to show you the big picture, so I have borrowed a chart from the Nasdaq website to aid this post. If anyone from the Nasdaq are unhappy over the use of your public chart and request I remove it, I shall do so.
Here is the Nasdaq 10 year chart on Crude Oil.
The media has been full of experts saying they will see 40 dollar prices. It does not take an expert to pull that figure out of the air when you look at historic prices.The business TV news and various financial web sites who pimp this news provide me with hours of entertainment, the best comedy shows I have ever seen.
Clearly there was a 2009 major buying in Oil at the 40 dollar price area. It is inevitable we see some reaction there again. Low Oil prices have two wanted effects, one is from Opec and the other is from Governments who wish to punish a large energy exporting country.
Here is the weekly chart, all you see is Oil falling of a cliff and one tiny blue candle formed in the perfect place to test the resolve of buyers. Clearly other plans were afoot and down it goes.
The tiny candle is now a support and resistance area and is likely to be a strong one too when price eventually comes back to it.
Daily chart. The newly formed support and resistance area is now marked with a line to help guide your eye. Note the strong break of this and the very painful retest which look like buyers. Indeed there were buyers and I will let you think who was behind that. A hint could be a non english speaking nation.
Clearly damage limitation was in full swing, but when the worlds finance houses are against, nothing will save your behind. On the futures charts I saw a huge volume spike on that candle, and was sustained for the day. Thats not the typical pull back I would expect to see.
On the bottom right of the chart there is new price action showing a slow down. A battle took place between the bulls and the bears and is not yet resolved. We will delve in deeper in the next time frame lower.
4hr chart.
The support and resistance area is now more clearly defined and once broken, price did not look back until a long fall in price took place. What looked like buying in the above chart is also more clearly defined in this time frame. What we see is buying over 3 x 4hr periods and into near term supply, which clearly held. None of this comes as a surprise given the news driven frenzy at this point.
At the origin of this supply test I have a white line showing the next area price has to test for remaining buyers. Price pushed through the line hard on the way down and when it retracted we see a number of candles with wicks on top. This shows us sellers came back in and around those higher prices where the near term selling originated.
The initial fall from the S/R line was too fast to keep going and some slow down and pull back for a good percentage of the move was inevitable. On the right of the chart we see the start of this happening. There is no major floor for buying with a view to turning the market bullish again. Above price there are a few places where the continuation could happen. Of course you also have to keep in mind the tricks of pro money. If everyone is expecting 40 dollars a barrel for Oil, if the price keeps retracting some will think the buyers have come in early. This can happen for weeks, or a wide range setup. Looking at price action at each of the potential continuation areas above is key to you getting a feel for how pro money are positioning.
1hr chart.
I mentioned a price range in the above text and now I will show you one potential range. This 1hr time frame has set into a range already and look at the reaction of price at the top of the range vs the bottom of the range.
It is obvious there are still more interested sellers than there are buyers. In the past I have said that when price forms a range, it only makes sense to sell of the top of the range and buy off the bottom. But keeping in mind of the overall trend you are in and ideally, buy or sell in line with the overall trend to help reduce risk.
My chart history wont go back far enough to show you the big picture, so I have borrowed a chart from the Nasdaq website to aid this post. If anyone from the Nasdaq are unhappy over the use of your public chart and request I remove it, I shall do so.
Here is the Nasdaq 10 year chart on Crude Oil.
The media has been full of experts saying they will see 40 dollar prices. It does not take an expert to pull that figure out of the air when you look at historic prices.The business TV news and various financial web sites who pimp this news provide me with hours of entertainment, the best comedy shows I have ever seen.
Clearly there was a 2009 major buying in Oil at the 40 dollar price area. It is inevitable we see some reaction there again. Low Oil prices have two wanted effects, one is from Opec and the other is from Governments who wish to punish a large energy exporting country.
Here is the weekly chart, all you see is Oil falling of a cliff and one tiny blue candle formed in the perfect place to test the resolve of buyers. Clearly other plans were afoot and down it goes.
The tiny candle is now a support and resistance area and is likely to be a strong one too when price eventually comes back to it.
Daily chart. The newly formed support and resistance area is now marked with a line to help guide your eye. Note the strong break of this and the very painful retest which look like buyers. Indeed there were buyers and I will let you think who was behind that. A hint could be a non english speaking nation.
Clearly damage limitation was in full swing, but when the worlds finance houses are against, nothing will save your behind. On the futures charts I saw a huge volume spike on that candle, and was sustained for the day. Thats not the typical pull back I would expect to see.
On the bottom right of the chart there is new price action showing a slow down. A battle took place between the bulls and the bears and is not yet resolved. We will delve in deeper in the next time frame lower.
4hr chart.
The support and resistance area is now more clearly defined and once broken, price did not look back until a long fall in price took place. What looked like buying in the above chart is also more clearly defined in this time frame. What we see is buying over 3 x 4hr periods and into near term supply, which clearly held. None of this comes as a surprise given the news driven frenzy at this point.
At the origin of this supply test I have a white line showing the next area price has to test for remaining buyers. Price pushed through the line hard on the way down and when it retracted we see a number of candles with wicks on top. This shows us sellers came back in and around those higher prices where the near term selling originated.
The initial fall from the S/R line was too fast to keep going and some slow down and pull back for a good percentage of the move was inevitable. On the right of the chart we see the start of this happening. There is no major floor for buying with a view to turning the market bullish again. Above price there are a few places where the continuation could happen. Of course you also have to keep in mind the tricks of pro money. If everyone is expecting 40 dollars a barrel for Oil, if the price keeps retracting some will think the buyers have come in early. This can happen for weeks, or a wide range setup. Looking at price action at each of the potential continuation areas above is key to you getting a feel for how pro money are positioning.
1hr chart.
I mentioned a price range in the above text and now I will show you one potential range. This 1hr time frame has set into a range already and look at the reaction of price at the top of the range vs the bottom of the range.
It is obvious there are still more interested sellers than there are buyers. In the past I have said that when price forms a range, it only makes sense to sell of the top of the range and buy off the bottom. But keeping in mind of the overall trend you are in and ideally, buy or sell in line with the overall trend to help reduce risk.
Saturday 8 November 2014
Entries over view
A number of recent emails requested I show what I look for on the lead up to taking a trade. So without further delay here is what I do from my ten mile high view on the high time frames down to day trading time frames.
The pair has no relevance and it just a means of demonstrating the approach. Some pairs act in ways where they wont provide the same degree of comfort to the trader in how to look and feel. It may sound odd at first, but each pair has a personality in how they behave. A casual glance will show pairs outside of the majors to have a spiky nature or when their price moves, it moves in large swings.
Monthly chart where I start my analysis each month with a look at last months candle close. And you should only ever trade on a candle close and not when it is forming. Otherwise you risk price looking much different to what you think it will be. So trade what you see as fact i.e a closed candle and not trade what you think.
This is the blank chart and from here you can apply what you feel is necessary to help you paint a picture of what has happened over time. My way is not the right way or only way, just one approach that works for me. Add, remove and modify as you see fit because we all think differently, unless you listen to the media and become one of the herd.
I have drawn in a tick mark on top which shows the climatic price action of the market top. On the bottom of the chart is the lowest price within the charts time. The middle line is a support and resistance line, but in reality it is an area as all price can be. Dont look for price to react to the pixel, it is akin chasing rainbows.
So far we know price in the near term has fallen from the high, bounced off the low, hit resistance and bounced back down from the resistance line/area. We therefore deduce that price is still bearish and we want to be on the side of the market favored by the majority.
If we shorted we need to know where is a good place to take profit. We also need to know where is a good place for a stop and of course, where to enter.
Weekly chart.
A little closer into the price action and we now see more detail. It is still too high a time frame for most to trade and we pull what information we can from the chart. We can see price hitting the resistance area and the strong move away. This clearly shows a lot of sellers and as price moves down the pull backs are relatively mild which shows how strong the selling is and the desire to reach a target. A target is a figure of speech and there is no one target, but a price area.
The white line is near term support and resistance and price slowed as it approached this. The warning sign was the large bullish print a little above the white line. The price was reacting to an area of consolidation on the left of the line.
Ignore the approx 100 points label. It should read 1000 points. If you were pro money, would taking price up to where it has just been make more sense and be easier profit than it would to take it lower where price has not been for a long time and where historic orders are likely lower in value?
The daily bread and butter chart. This is the most viewed time frame for most instruments traded. I zoomed out a little to show more of the price move.
The white S/R line is still here for reference so that we know where we are in the bigger picture. Note price falling from the high and there is one place where price accelerated rapidly. Shortly after this price spiked into that area. This was a means of getting a better price for pro money to continue the move down and was aided by the fact that most traders would have been stopped out, others gone long and subsequently stopped out, which all feed pro money easy profit. If you wanted to hold through that spike you would need deep pockets.
Lastly we see price poke below the S/R line and will have been seen as continuation. But taking that as the market was about to close and close into the end of the week would have been unwise. You are better to enter into an active market.
Now we are down to the 4hr time frame. The white S/R line is here again for reference and also is a large box placed into an area where supply (sellers) are active. You can see the large effort to pull more and more short orders in order to get price down. The previously mentioned consolidation was the most likely reason for this price action.
Towards the end of the market you see the false move down and price closing above S/R. This means the time is not yet here for further bearish moves and a retracement is necessary. I highlighted with two white line places where pull backs into look good. There are sellers waiting in there.
The 1hr time frame wont be of much use at the moment because we do not have activity and I only put it on here to show how lower time frames begin to expand what looks cleaner on higher time frames. Note there are now three white lines showing places where sellers are waiting. Anyone one of those could be the point at which the market turns again, but you now know the turns happen in an area rather than a finite price.
The London close showed the most activity for the session and volume on a futures chart showed that play out. The slow drift up in the NY session was a non event and it never gained enough momentum to trade.
When you finally place a trade and we will assume for the moment that you only trade with a standard lot of one point per 10 dollars. Rather than risk the 10 dollars consider scaling in. Break your trade into .2 of a lot. Now your risk is 2 dollars per entry per point. Less to loose is the market turns of spikes etc.
If you got a good entry and price moves as you had watched it unfold, you can now get in again on a low time frame pull back and doing this a few times will get your full single lot trade in the market with a lot lower risk.
You can scale out on the same basis. Set a target on successive further away prices and move your stops accordingly. I will put up another post of realistic places for a day trader to use on the 1, 5 and 15min time frames.
The pair has no relevance and it just a means of demonstrating the approach. Some pairs act in ways where they wont provide the same degree of comfort to the trader in how to look and feel. It may sound odd at first, but each pair has a personality in how they behave. A casual glance will show pairs outside of the majors to have a spiky nature or when their price moves, it moves in large swings.
Monthly chart where I start my analysis each month with a look at last months candle close. And you should only ever trade on a candle close and not when it is forming. Otherwise you risk price looking much different to what you think it will be. So trade what you see as fact i.e a closed candle and not trade what you think.
This is the blank chart and from here you can apply what you feel is necessary to help you paint a picture of what has happened over time. My way is not the right way or only way, just one approach that works for me. Add, remove and modify as you see fit because we all think differently, unless you listen to the media and become one of the herd.
I have drawn in a tick mark on top which shows the climatic price action of the market top. On the bottom of the chart is the lowest price within the charts time. The middle line is a support and resistance line, but in reality it is an area as all price can be. Dont look for price to react to the pixel, it is akin chasing rainbows.
So far we know price in the near term has fallen from the high, bounced off the low, hit resistance and bounced back down from the resistance line/area. We therefore deduce that price is still bearish and we want to be on the side of the market favored by the majority.
If we shorted we need to know where is a good place to take profit. We also need to know where is a good place for a stop and of course, where to enter.
Weekly chart.
A little closer into the price action and we now see more detail. It is still too high a time frame for most to trade and we pull what information we can from the chart. We can see price hitting the resistance area and the strong move away. This clearly shows a lot of sellers and as price moves down the pull backs are relatively mild which shows how strong the selling is and the desire to reach a target. A target is a figure of speech and there is no one target, but a price area.
The white line is near term support and resistance and price slowed as it approached this. The warning sign was the large bullish print a little above the white line. The price was reacting to an area of consolidation on the left of the line.
Ignore the approx 100 points label. It should read 1000 points. If you were pro money, would taking price up to where it has just been make more sense and be easier profit than it would to take it lower where price has not been for a long time and where historic orders are likely lower in value?
The daily bread and butter chart. This is the most viewed time frame for most instruments traded. I zoomed out a little to show more of the price move.
The white S/R line is still here for reference so that we know where we are in the bigger picture. Note price falling from the high and there is one place where price accelerated rapidly. Shortly after this price spiked into that area. This was a means of getting a better price for pro money to continue the move down and was aided by the fact that most traders would have been stopped out, others gone long and subsequently stopped out, which all feed pro money easy profit. If you wanted to hold through that spike you would need deep pockets.
Lastly we see price poke below the S/R line and will have been seen as continuation. But taking that as the market was about to close and close into the end of the week would have been unwise. You are better to enter into an active market.
Now we are down to the 4hr time frame. The white S/R line is here again for reference and also is a large box placed into an area where supply (sellers) are active. You can see the large effort to pull more and more short orders in order to get price down. The previously mentioned consolidation was the most likely reason for this price action.
Towards the end of the market you see the false move down and price closing above S/R. This means the time is not yet here for further bearish moves and a retracement is necessary. I highlighted with two white line places where pull backs into look good. There are sellers waiting in there.
The 1hr time frame wont be of much use at the moment because we do not have activity and I only put it on here to show how lower time frames begin to expand what looks cleaner on higher time frames. Note there are now three white lines showing places where sellers are waiting. Anyone one of those could be the point at which the market turns again, but you now know the turns happen in an area rather than a finite price.
The London close showed the most activity for the session and volume on a futures chart showed that play out. The slow drift up in the NY session was a non event and it never gained enough momentum to trade.
When you finally place a trade and we will assume for the moment that you only trade with a standard lot of one point per 10 dollars. Rather than risk the 10 dollars consider scaling in. Break your trade into .2 of a lot. Now your risk is 2 dollars per entry per point. Less to loose is the market turns of spikes etc.
If you got a good entry and price moves as you had watched it unfold, you can now get in again on a low time frame pull back and doing this a few times will get your full single lot trade in the market with a lot lower risk.
You can scale out on the same basis. Set a target on successive further away prices and move your stops accordingly. I will put up another post of realistic places for a day trader to use on the 1, 5 and 15min time frames.
Sunday 5 October 2014
Entries and scaling
I will in some way answer some emails and questions about this which has been a hot topic over the past few weeks.
What I will cover is generic in nature and is applicable to everything that is traded and all time frames.
Lets look at a bare chart free from indicators and other distractions.
Given that this is a long term perspective there is much we can draw from this. But the main reason is to see where is price with respect to historic major turning points and what is price action like in the very recent past.
Now it is time to mark the chart gradually until we see something useful appear.
Tow blue lines show price entering into supply and on each attempt to push higher we saw sellers coming in and the bulls putting up practically no fight. This is proof enough for shorting and the market sentiment is now bearish.
Now that we have the big picture established it is time to go down to time frames more useful to gaining information on entries and targets.
Taking our lead from the weekly time frame I have marked where supply has been coming into the market and where the clear signs of bearish sentiment firmly now in control.
The two white boxes are places where pro money was positioning for the down move. In retrospect it is easy to say this, but simple analysis will allow you see this on any time frame and any market. A big part of getting it right is patience and the willingness to wait and be on the same side as pro money.
As the price continued its march to the right of the chart I have drawn blue lines to show where you would have gained new or additional entries if you had not already been short from a few weeks back. This scaling in and same idea for scaling out is visible on all charts, pro money wont hold for an entire more because they are the market makers and need to act long before you will, and in the opposite direction. This means trading against the main trend while their positions are filled, or close to, and then comes their major push.
These small pull backs are signs of profit taking and new orders coming in. On smaller time frames they will look like a long trend coming from retail day traders. As you can see, it is nothing but cannon fodder in the greater scheme of things.
Next we drop down to the 4hr chart and I have zoomed out a little just to show you the move from the top down i.e where it originated on this time frame and where the new entries, profiting taking and and results from pure supply and demand traders getting it wrong. Taking touch trades this close to the unwind of a major time frame is a dumb move. Price action will play out in the hands of pro money and they clearly have chosen a direction long before now.
Next we put more notes on the 4hr chart and see what pops out at you. In time you wont have to draw any of these because they will become so obvious that it only takes seconds to tell what is happening on any time frame. Its a good skill to learn from drawing and taken as a top down approach.
We know we are in bearish mode and just for this time frame we will consider that the move down from the top of the chart is the main move and not at a later time. It makes no difference but it is useful for me to get a single chart to get the message across to you.
The white box is the break where the decision was taken to turn bearish and it was a clean strong break and only a brief look back where I have the first tick mark. If you were not short prior to the tick, this was a clear sign the bulls have been beaten. If in doubt, let one more candle close and if the reaction is not in the same direction as the previous candle, then clearly you have more information about the intention of the bears.
The blue lines are pointing to candles where new short entries came in and on their close was your opportunity. Price action of all the blue candles which are mainly bullish shows lack of interest and again, this is profit taking, scaling in and smaller time frame longs that are nothing more than pull backs into supply over head.
On lower time frames is where you will have gotten in but I wont show them here because the method is no different to here. A 1, 5 or 15min will get you good entries timing during a day session and where you wont miss as much of the move. Keep flicking between time frames as each successive time frame candle closes, multiple monitors are invaluable for this.
Here is a 1hr chart that shows the above charts white box in more detail. Can you now see how the break can be seen tested here very quickly and what the reaction to this test was?
A superb place to enter which is where the majority of smart traders will have to waiting to see tested. All the chop you see on the left of the chart can be very common when the market is turning. You can avoid all that mess if you use a very basic method to show you when there is a clear direction.
Note the other tick marks, all show nice price action for impending shorts.
This is the same 1hr chart of the same area, but this time I have drawn two red lines. If you guessed these are support and resistance you would be correct. What we want to see is a break and test of these lines with a clear commitment to a direction. Given we knew for some time the higher time frames were showing historic supply, we have been biased to looking for shorts when the time came. Look how long we had to wait?...but that's okay because patience is ingrained on all we do.
There is a tick mark here above a bullish candle. But the candle is far from bullish and all it done was trap day traders who entered long and later on took out their stops which hands cheap short entries to pro money. This happens every day and on every time frame. You will see these by the dozen every day. Higher time frame info is your lead, always.
With regards to targets, the major two are on the first chart. As a day trader you want to know where these are before you short in case you are trying to short into an area where profit taking on a big scale will come in and can lead to a minor long market.
Unless something is obvious, don't trade it. This applies equally to entries, stops and exits. With stops put them beyond the obvious. A recent high or low needs to be passed by some amount of points within your risk appetite in order to stay in the trade and not get stopped out by pro money gunning for the usual places where stops will be hiding.
What I will cover is generic in nature and is applicable to everything that is traded and all time frames.
Lets look at a bare chart free from indicators and other distractions.
Given that this is a long term perspective there is much we can draw from this. But the main reason is to see where is price with respect to historic major turning points and what is price action like in the very recent past.
Now it is time to mark the chart gradually until we see something useful appear.
Tow blue lines show price entering into supply and on each attempt to push higher we saw sellers coming in and the bulls putting up practically no fight. This is proof enough for shorting and the market sentiment is now bearish.
Now that we have the big picture established it is time to go down to time frames more useful to gaining information on entries and targets.
Taking our lead from the weekly time frame I have marked where supply has been coming into the market and where the clear signs of bearish sentiment firmly now in control.
The two white boxes are places where pro money was positioning for the down move. In retrospect it is easy to say this, but simple analysis will allow you see this on any time frame and any market. A big part of getting it right is patience and the willingness to wait and be on the same side as pro money.
As the price continued its march to the right of the chart I have drawn blue lines to show where you would have gained new or additional entries if you had not already been short from a few weeks back. This scaling in and same idea for scaling out is visible on all charts, pro money wont hold for an entire more because they are the market makers and need to act long before you will, and in the opposite direction. This means trading against the main trend while their positions are filled, or close to, and then comes their major push.
These small pull backs are signs of profit taking and new orders coming in. On smaller time frames they will look like a long trend coming from retail day traders. As you can see, it is nothing but cannon fodder in the greater scheme of things.
Next we drop down to the 4hr chart and I have zoomed out a little just to show you the move from the top down i.e where it originated on this time frame and where the new entries, profiting taking and and results from pure supply and demand traders getting it wrong. Taking touch trades this close to the unwind of a major time frame is a dumb move. Price action will play out in the hands of pro money and they clearly have chosen a direction long before now.
Next we put more notes on the 4hr chart and see what pops out at you. In time you wont have to draw any of these because they will become so obvious that it only takes seconds to tell what is happening on any time frame. Its a good skill to learn from drawing and taken as a top down approach.
We know we are in bearish mode and just for this time frame we will consider that the move down from the top of the chart is the main move and not at a later time. It makes no difference but it is useful for me to get a single chart to get the message across to you.
The white box is the break where the decision was taken to turn bearish and it was a clean strong break and only a brief look back where I have the first tick mark. If you were not short prior to the tick, this was a clear sign the bulls have been beaten. If in doubt, let one more candle close and if the reaction is not in the same direction as the previous candle, then clearly you have more information about the intention of the bears.
The blue lines are pointing to candles where new short entries came in and on their close was your opportunity. Price action of all the blue candles which are mainly bullish shows lack of interest and again, this is profit taking, scaling in and smaller time frame longs that are nothing more than pull backs into supply over head.
On lower time frames is where you will have gotten in but I wont show them here because the method is no different to here. A 1, 5 or 15min will get you good entries timing during a day session and where you wont miss as much of the move. Keep flicking between time frames as each successive time frame candle closes, multiple monitors are invaluable for this.
Here is a 1hr chart that shows the above charts white box in more detail. Can you now see how the break can be seen tested here very quickly and what the reaction to this test was?
A superb place to enter which is where the majority of smart traders will have to waiting to see tested. All the chop you see on the left of the chart can be very common when the market is turning. You can avoid all that mess if you use a very basic method to show you when there is a clear direction.
Note the other tick marks, all show nice price action for impending shorts.
This is the same 1hr chart of the same area, but this time I have drawn two red lines. If you guessed these are support and resistance you would be correct. What we want to see is a break and test of these lines with a clear commitment to a direction. Given we knew for some time the higher time frames were showing historic supply, we have been biased to looking for shorts when the time came. Look how long we had to wait?...but that's okay because patience is ingrained on all we do.
There is a tick mark here above a bullish candle. But the candle is far from bullish and all it done was trap day traders who entered long and later on took out their stops which hands cheap short entries to pro money. This happens every day and on every time frame. You will see these by the dozen every day. Higher time frame info is your lead, always.
With regards to targets, the major two are on the first chart. As a day trader you want to know where these are before you short in case you are trying to short into an area where profit taking on a big scale will come in and can lead to a minor long market.
Unless something is obvious, don't trade it. This applies equally to entries, stops and exits. With stops put them beyond the obvious. A recent high or low needs to be passed by some amount of points within your risk appetite in order to stay in the trade and not get stopped out by pro money gunning for the usual places where stops will be hiding.
Hard reality check to retail traders
Some time ago I posted how Gold and Silver were being sold by the media as the safe haven and a commodity that was touted for a major rise in value. My own analysis was this was nothing more than a male cow manure.
The truth came to the charts last week and see how both metals broke major numbers and in grand style. The retail traders who were loading up on both the ETF and physical holdings got burned bad.
I plotted a line at 1200 dollars which again the media said was strong support. Way over on the left of the chart you can barely see where historic buying came in, but the run is over and the real sentiment has finally dawned on the retailer.
Here is silver.
I commented where the red line is some time ago, about the guy on TV saying silver is at bargain prices and its a great time to buy. Hmm, more like a great time for him to sell into your long orders.
A reality check is the media are not your friends, wont ever be your friend and their cleverly worded shows further program the retail trader into making poor decisions. We know the chart doesnt lie and neither does history.
And just to make the point of major moves. Look at the Euro against GBP and USD.
Here the Euro fell hard over the past few weeks and the retail traders will be shorting like crazy. Look at the red line and what can you see?...look left. This is an S/R area and any break is best left go and wait for its return. Many pairs are now into high time frame areas of interest. I did say on my last post that we would soon see significant trading opportunities and here they come.
Here is the Euro and the Dollar.
It looks a lot like the above chart and is no fluke that a currency will hit high time potential turns at the same time against many other majors. Same red line with the same meaning. For the Euro to go against the long drop down, the ECB will have to come out with some major news.
I have some entry and scaling information to post up and I will try and get it done soon after this is posted.
The truth came to the charts last week and see how both metals broke major numbers and in grand style. The retail traders who were loading up on both the ETF and physical holdings got burned bad.
I plotted a line at 1200 dollars which again the media said was strong support. Way over on the left of the chart you can barely see where historic buying came in, but the run is over and the real sentiment has finally dawned on the retailer.
Here is silver.
I commented where the red line is some time ago, about the guy on TV saying silver is at bargain prices and its a great time to buy. Hmm, more like a great time for him to sell into your long orders.
A reality check is the media are not your friends, wont ever be your friend and their cleverly worded shows further program the retail trader into making poor decisions. We know the chart doesnt lie and neither does history.
And just to make the point of major moves. Look at the Euro against GBP and USD.
Here the Euro fell hard over the past few weeks and the retail traders will be shorting like crazy. Look at the red line and what can you see?...look left. This is an S/R area and any break is best left go and wait for its return. Many pairs are now into high time frame areas of interest. I did say on my last post that we would soon see significant trading opportunities and here they come.
Here is the Euro and the Dollar.
It looks a lot like the above chart and is no fluke that a currency will hit high time potential turns at the same time against many other majors. Same red line with the same meaning. For the Euro to go against the long drop down, the ECB will have to come out with some major news.
I have some entry and scaling information to post up and I will try and get it done soon after this is posted.
Saturday 6 September 2014
EUR/CAD
A view on EUR/CAD from the higher time frames down to the 4hr.
Monthly chart.
This is my ten mile high view and we can clearly see price has reached into high time frame significant supply and the shorts clearly visible. The reaction was clean and swift on this time frame and no hesitation. A nice spike formed at the top where the previous bullish move trapped many longs. If you look at enough higher time frames you will see this is very common place, yet people get taken in by their greed.
Below I have a demand box where we expect buyers to step in. No rocket science in any of this and simple observation of price history. One question I have for is, do you have the patience to wait for this and can you see the turn happening in real time. Or maybe your brain is wired to tell you, the turn I see is not real but a fake move because has been in such a strong up move.
Take a glance at my other posts, pro money sells into higher prices and buys into lower prices. The higher the time frame the more money will be involved, thus the move will be greater.
Weekly chart.
Here the short selling is very obvious after the fact, but how long does it take for you to accept price is in bearish mode?...how many pull backs will you wait for an entry?
Can you see how the price candles close with longer real bodies and the bullish pull backs are small candles?
Price is currently at the spot where old supply was broken, and broken supply becomes resistance in the classic sense. But we are uninterested in classic book teachings and more in actual fact shown on a price chart. It helps to think as pro money thinks, look at the last few candles, there is a lot of selling in there and a lot of opportunity to pull the price back until it gets closer to the point where it fell. Why leave easy money laying around when the herd who will happily follow any bullish activity for a few days?
The blue lines are to guide your eye to where tests came in to see will the move up hold and get better long prices if it does hold. On the way back down price can often seek to weed out remaining orders and those areas are only broken quickly is supply outweighs demand.
Daily chart.
Top line shows supply and bottom line shows where nearer term supply was broken. If you look carefully you will see price has touched the level where the broken supply was last tested and given it was end of day/week and ideal place to close out.
The left most tick mark was a test of broken supply, and the lack of sellers tell the story for taking this long soon after. Given we know on the higher time frames there is significant supply over head we have to be careful with long orders held. In fact if you look at the blue lines you can see how deep price had to retrace in order to keep the bullish move going. The middle blue line and above is where pro money was changing course and the periods of consolidation was getting longer. On the top most blue line we hit over head supply and price fell off sharply and when it retracted the change in sentiment is very clear.
There is one future unknown which will cause some frustration when trading the Euro. The ECB have taken to buying more debt and will also print money. How deep they will allow the Euro to fall is anyone's guess and where they will step in. I am sure it will happen totally by accident at some major level!
4hr chart.
I zoomed out just to show some well defined trading. Given we know we are in a down trend now and price fell sharply and more money can be made by getting back closer to the origin of a move, we can see a nice drop off from new supply and price is then bought into to force a move back up. It reached the new supply with highly emotional strong bullish candles that will have the herd throwing buy orders in the market. All this done was allow pro money sell into those and let price fall back into bearish mode which is where it was all along. After that supply area was hit you can see how price had no trouble in breaking support because the support is not valid when the bigger picture comes into play, as it has to.
Another 4hr chart.
This is a small addition to the above chart to show you what happened. The bullish push on the left was the false move to help get price back to near term new supply. Price hits supply over head and the move away was clean and unobstructed. As price hits the bottom of our fake support, there was a small bullish move which was nothing more than supply/demand traders getting in and ultimately getting taken out. These reactions are common place all over the charts and on all time frames. If you dont keep the high time frame picture in mind, this will also happen to you.
As price broke the fake support there was not as much as a glance back to test, a clear sign of over whelming selling and it took some time for the pros to slow the sell off. This is seen in candles with tails indication buying, but the buying is only designed to slow and not reverse. Once price is slowed enough and lower time frame day traders now see a bullish opportunity at least into the nearest supply area over head, and this is perfectly fine as long as you are aware that when the bears return they will come back with great force and you will not get much if any warning.
Some profits will have been taken in that area too and additional short orders placed.
In all the euro gave a great weeks trading which multiplied accounts far and wide. To those who emailed me and asked about help on getting taken out, only to see price go where they expected it to. There is only one thing I can add.
You have to understand that the pull backs can go deep, the Euro used have a 66 point pull back which was close on a good days move. If you want to soak all that up you have to trade much smaller lot size. A standard lot with a 66 point pull back is a loss of 660 plus the spread.You dont need to trade a full lot to make money, even .2 of a lot gives a good income once you learn to apply it correctly and let the lower time frames roll over and get in as a pull back ends. You wont get the entire move, but all you need is a good piece of it and set a stop to where you can afford it.
The pull backs on lower time frames will either show there is support for the move you see, or they will break it. If they break it this doesnt help pro money either and so you have better chances when an area holds. It should also be crystal clear that price is moving again. When a 5 or 15min chart is showing a move, it wont trouble me to wait for half a day or longer to get in on the next pull back once the larger time frame supply or demand is far enough away.
Monthly chart.
This is my ten mile high view and we can clearly see price has reached into high time frame significant supply and the shorts clearly visible. The reaction was clean and swift on this time frame and no hesitation. A nice spike formed at the top where the previous bullish move trapped many longs. If you look at enough higher time frames you will see this is very common place, yet people get taken in by their greed.
Below I have a demand box where we expect buyers to step in. No rocket science in any of this and simple observation of price history. One question I have for is, do you have the patience to wait for this and can you see the turn happening in real time. Or maybe your brain is wired to tell you, the turn I see is not real but a fake move because has been in such a strong up move.
Take a glance at my other posts, pro money sells into higher prices and buys into lower prices. The higher the time frame the more money will be involved, thus the move will be greater.
Weekly chart.
Here the short selling is very obvious after the fact, but how long does it take for you to accept price is in bearish mode?...how many pull backs will you wait for an entry?
Can you see how the price candles close with longer real bodies and the bullish pull backs are small candles?
Price is currently at the spot where old supply was broken, and broken supply becomes resistance in the classic sense. But we are uninterested in classic book teachings and more in actual fact shown on a price chart. It helps to think as pro money thinks, look at the last few candles, there is a lot of selling in there and a lot of opportunity to pull the price back until it gets closer to the point where it fell. Why leave easy money laying around when the herd who will happily follow any bullish activity for a few days?
The blue lines are to guide your eye to where tests came in to see will the move up hold and get better long prices if it does hold. On the way back down price can often seek to weed out remaining orders and those areas are only broken quickly is supply outweighs demand.
Daily chart.
Top line shows supply and bottom line shows where nearer term supply was broken. If you look carefully you will see price has touched the level where the broken supply was last tested and given it was end of day/week and ideal place to close out.
The left most tick mark was a test of broken supply, and the lack of sellers tell the story for taking this long soon after. Given we know on the higher time frames there is significant supply over head we have to be careful with long orders held. In fact if you look at the blue lines you can see how deep price had to retrace in order to keep the bullish move going. The middle blue line and above is where pro money was changing course and the periods of consolidation was getting longer. On the top most blue line we hit over head supply and price fell off sharply and when it retracted the change in sentiment is very clear.
There is one future unknown which will cause some frustration when trading the Euro. The ECB have taken to buying more debt and will also print money. How deep they will allow the Euro to fall is anyone's guess and where they will step in. I am sure it will happen totally by accident at some major level!
4hr chart.
I zoomed out just to show some well defined trading. Given we know we are in a down trend now and price fell sharply and more money can be made by getting back closer to the origin of a move, we can see a nice drop off from new supply and price is then bought into to force a move back up. It reached the new supply with highly emotional strong bullish candles that will have the herd throwing buy orders in the market. All this done was allow pro money sell into those and let price fall back into bearish mode which is where it was all along. After that supply area was hit you can see how price had no trouble in breaking support because the support is not valid when the bigger picture comes into play, as it has to.
Another 4hr chart.
This is a small addition to the above chart to show you what happened. The bullish push on the left was the false move to help get price back to near term new supply. Price hits supply over head and the move away was clean and unobstructed. As price hits the bottom of our fake support, there was a small bullish move which was nothing more than supply/demand traders getting in and ultimately getting taken out. These reactions are common place all over the charts and on all time frames. If you dont keep the high time frame picture in mind, this will also happen to you.
As price broke the fake support there was not as much as a glance back to test, a clear sign of over whelming selling and it took some time for the pros to slow the sell off. This is seen in candles with tails indication buying, but the buying is only designed to slow and not reverse. Once price is slowed enough and lower time frame day traders now see a bullish opportunity at least into the nearest supply area over head, and this is perfectly fine as long as you are aware that when the bears return they will come back with great force and you will not get much if any warning.
Some profits will have been taken in that area too and additional short orders placed.
In all the euro gave a great weeks trading which multiplied accounts far and wide. To those who emailed me and asked about help on getting taken out, only to see price go where they expected it to. There is only one thing I can add.
You have to understand that the pull backs can go deep, the Euro used have a 66 point pull back which was close on a good days move. If you want to soak all that up you have to trade much smaller lot size. A standard lot with a 66 point pull back is a loss of 660 plus the spread.You dont need to trade a full lot to make money, even .2 of a lot gives a good income once you learn to apply it correctly and let the lower time frames roll over and get in as a pull back ends. You wont get the entire move, but all you need is a good piece of it and set a stop to where you can afford it.
The pull backs on lower time frames will either show there is support for the move you see, or they will break it. If they break it this doesnt help pro money either and so you have better chances when an area holds. It should also be crystal clear that price is moving again. When a 5 or 15min chart is showing a move, it wont trouble me to wait for half a day or longer to get in on the next pull back once the larger time frame supply or demand is far enough away.
Saturday 30 August 2014
eur/gbp
An overview of eur/gbp and a sign of things to come.
First up we look at the monthly chart.
I placed three red horizontal lines to show support and resistance areas. All look good to my eye and as seen with the upper line, there has been one touch on this as price fell. The reaction was a lower time frame bullish move and the message to keep in mind is that it was a reaction to unfilled orders and not a change in trend or sentiment.
I have a blue line showing the strong bullish intent taken off the base of the lowest S/R line and the cheapest price for pro money to push this. The box is where the retest came in and was early and unclear until the tiny red doji candle closed. To most traders that showed more upside and potential for breaking through the mid red line, and after a short retracement price pushed strongly up through and it was only a matter of waiting patiently while the pro's shot for the moon and the herd as you can clearly see responded. The pro's had all their work dont and the target was hit hard and the profit taking and closed positions came in rather violently.
Weekly chart.
I have drawn a red line to show near term price reaction and a place where further shorts may be possible. The lowest line is from our above chart and given the mess price made when it left that area, there was no intention to push higher and the long game is over.
The blue line again shows the rush of emotion fed to retail traders to get more longs for the pro's to sell against. Any time you see price in this parabolic move, get ready to bail!
Daily chart.
A few more red lines to help concentrate your brain. Of note is how price blew right through the candle where I have placed a tick. With so many short orders flooding in, and at the end of the day/week and month, we can get strong moves happening and positioning for the next week/month/quarter.
The blue line would be a good place to get traders into short lived longs, it has been untested and it is not unknown for price to get pushed to where it gives best effect to sell into. There are no signs of any additional bullish activity coming in and the unwind and new positions take time to get itno the market when major market turns are happening. We wont know for sure if this is so until we can see clearly breaks of major support and no buyers stepping in where any up move is sold into either by absorbing the buyers quickly, or over time. It is a matter of how much short orders remain to be filled before the big push.
4hr chart.
First thing to note here is how deep price had to go back down into old buy orders before it had enough push to reach the target. The candle with the tick is now even more obvious in what its function was, it got retail buyers involved for a short period of time and gave pro money four good days to close out.
The candle lower left is where we may see something happen, but given it is so close to short term target below there is the possibility of it being of no interest. The lowest red line is where the real action will likely take place.
1hr chart
Depending on how the market moves next week, any pull back in the near term has a small box above current price for adding more orders. Nobody knows how this will play out until it happens and for the moment we make ourselves aware of where are places to look for in the event of a pull back or short term reversal and knowing the higher time frames are showing bearish strength.
First up we look at the monthly chart.
I placed three red horizontal lines to show support and resistance areas. All look good to my eye and as seen with the upper line, there has been one touch on this as price fell. The reaction was a lower time frame bullish move and the message to keep in mind is that it was a reaction to unfilled orders and not a change in trend or sentiment.
I have a blue line showing the strong bullish intent taken off the base of the lowest S/R line and the cheapest price for pro money to push this. The box is where the retest came in and was early and unclear until the tiny red doji candle closed. To most traders that showed more upside and potential for breaking through the mid red line, and after a short retracement price pushed strongly up through and it was only a matter of waiting patiently while the pro's shot for the moon and the herd as you can clearly see responded. The pro's had all their work dont and the target was hit hard and the profit taking and closed positions came in rather violently.
Weekly chart.
I have drawn a red line to show near term price reaction and a place where further shorts may be possible. The lowest line is from our above chart and given the mess price made when it left that area, there was no intention to push higher and the long game is over.
The blue line again shows the rush of emotion fed to retail traders to get more longs for the pro's to sell against. Any time you see price in this parabolic move, get ready to bail!
Daily chart.
A few more red lines to help concentrate your brain. Of note is how price blew right through the candle where I have placed a tick. With so many short orders flooding in, and at the end of the day/week and month, we can get strong moves happening and positioning for the next week/month/quarter.
The blue line would be a good place to get traders into short lived longs, it has been untested and it is not unknown for price to get pushed to where it gives best effect to sell into. There are no signs of any additional bullish activity coming in and the unwind and new positions take time to get itno the market when major market turns are happening. We wont know for sure if this is so until we can see clearly breaks of major support and no buyers stepping in where any up move is sold into either by absorbing the buyers quickly, or over time. It is a matter of how much short orders remain to be filled before the big push.
4hr chart.
First thing to note here is how deep price had to go back down into old buy orders before it had enough push to reach the target. The candle with the tick is now even more obvious in what its function was, it got retail buyers involved for a short period of time and gave pro money four good days to close out.
The candle lower left is where we may see something happen, but given it is so close to short term target below there is the possibility of it being of no interest. The lowest red line is where the real action will likely take place.
1hr chart
Depending on how the market moves next week, any pull back in the near term has a small box above current price for adding more orders. Nobody knows how this will play out until it happens and for the moment we make ourselves aware of where are places to look for in the event of a pull back or short term reversal and knowing the higher time frames are showing bearish strength.
Saturday 9 August 2014
euro/usd with chart
I have an MT4 client setup and now I can post some charts again.
These are my thoughts on the Euro and how it has played out last week.
Daily time frame showing the significant demand at the bottom of the chart. We have punched into the area to over 50% of its historic orders and there is room for a further push if the bulls wish to take this higher. Such a move would be touted as bearish and nothing more than a continuation, but do keep in mind the view of the herd who blindly follow price when it moves in jumps. We know this is a place where pro money will want to take it long and have to keep an open mind for this.
The lower red line is the lowest price made and there is still more more left if they wish to try again and a second dip into or beyond the blue box is possible.
4hr chart.
Starting from the bottom right and working up I can see there was a second attempt to push lower and this resulted in a higher close on what looks to be long bearish candle. This was a test to see were more sellers willing to take it, clearly there were none. Given that the sellers have been removed it now made an easy unobstructed path for price to rise with great ease. The last 4 candles show just how easy price has risen and nailed near term supply to the top of the small range formation. The last candle shows no major sell off.
The two horizontal lines are the two areas most likely to hold price up on its journey. Breaking the lower will be good to see being later tested to see will it hold. The upper line is where we have to wait and see what strength is left in the bulls. The targets I marked up are candles, it is the range of these candles is where the bulk of the profit will be. The lower one has a small bullish candle with a long tail, clearly lots of buyers came in and there are trapped and will only be wishing and hoping for price to come back to them in order to get out at break even or for a small profit, expect a reaction there.
1hr chart.
A few things to point out here. At the bottom of the chart on the left is a long bearish candle which is in reality bullish, we know this based on the tail, reaction and close of the subsequent candles and the same candle range being tested later on. To further seal the deal the test candle was tested, a clear sign pro money want to know if all sellers are worn out or taken out before they go about their real task.
The last few hours really tell the story, a strong move up and beyond near term supply and price being held and all shorts being bought into. Timing is everything and given Asia and Europe will open first next week, dont expect the near term make up of the market to be maintained, it often drifts off until London opens and this is where the major worlds trading is conducted.
And for a last look at where we are, here is the weekly chart. Normally you would look at this time frame first and I have it here so that you can see where the major swings have happened in the past. There are more pockets of demand further down in price, but if we go down, we first must rise and vice versa.
These are my thoughts on the Euro and how it has played out last week.
Daily time frame showing the significant demand at the bottom of the chart. We have punched into the area to over 50% of its historic orders and there is room for a further push if the bulls wish to take this higher. Such a move would be touted as bearish and nothing more than a continuation, but do keep in mind the view of the herd who blindly follow price when it moves in jumps. We know this is a place where pro money will want to take it long and have to keep an open mind for this.
The lower red line is the lowest price made and there is still more more left if they wish to try again and a second dip into or beyond the blue box is possible.
4hr chart.
Starting from the bottom right and working up I can see there was a second attempt to push lower and this resulted in a higher close on what looks to be long bearish candle. This was a test to see were more sellers willing to take it, clearly there were none. Given that the sellers have been removed it now made an easy unobstructed path for price to rise with great ease. The last 4 candles show just how easy price has risen and nailed near term supply to the top of the small range formation. The last candle shows no major sell off.
The two horizontal lines are the two areas most likely to hold price up on its journey. Breaking the lower will be good to see being later tested to see will it hold. The upper line is where we have to wait and see what strength is left in the bulls. The targets I marked up are candles, it is the range of these candles is where the bulk of the profit will be. The lower one has a small bullish candle with a long tail, clearly lots of buyers came in and there are trapped and will only be wishing and hoping for price to come back to them in order to get out at break even or for a small profit, expect a reaction there.
1hr chart.
A few things to point out here. At the bottom of the chart on the left is a long bearish candle which is in reality bullish, we know this based on the tail, reaction and close of the subsequent candles and the same candle range being tested later on. To further seal the deal the test candle was tested, a clear sign pro money want to know if all sellers are worn out or taken out before they go about their real task.
The last few hours really tell the story, a strong move up and beyond near term supply and price being held and all shorts being bought into. Timing is everything and given Asia and Europe will open first next week, dont expect the near term make up of the market to be maintained, it often drifts off until London opens and this is where the major worlds trading is conducted.
And for a last look at where we are, here is the weekly chart. Normally you would look at this time frame first and I have it here so that you can see where the major swings have happened in the past. There are more pockets of demand further down in price, but if we go down, we first must rise and vice versa.
eur/usd
My experimenting with a web trading platform is coming to an end. This is yet another weekend where I cannot pull up any charts and do some useful work. Needless to say for my sanity I will not continue with it and unfortunately return to a Windows based client.
I cannot post a chart to show you what I want to make you aware of, and instead this brief post is to make you aware of the euro price is now down into November 2013 lows. We can expect a bounce here and there may be some good points in the move. As always, watch for pro money activity and any further leg down will result in a rapid move and may be no more than taking out stops and getting a cheap price on a bullish move.
Draw some lines on the 2013 lows and watch price action around them, if you have a futures account, keep an eye on volume as well.
Keep in mind that pro money buys in strong down moves and sells in strong up moves. The larger time frames are full of this and when approaching those levels pro money will push the price hard to give the illusion of a good run.
I cannot post a chart to show you what I want to make you aware of, and instead this brief post is to make you aware of the euro price is now down into November 2013 lows. We can expect a bounce here and there may be some good points in the move. As always, watch for pro money activity and any further leg down will result in a rapid move and may be no more than taking out stops and getting a cheap price on a bullish move.
Draw some lines on the 2013 lows and watch price action around them, if you have a futures account, keep an eye on volume as well.
Keep in mind that pro money buys in strong down moves and sells in strong up moves. The larger time frames are full of this and when approaching those levels pro money will push the price hard to give the illusion of a good run.
Monday 4 August 2014
web platform testing
Greetings all and my long absence has been one of enjoying the summer outdoors while we have it, and also to test out something I have been wishing to try for a long time. I have ended my Windows based trading and moved to a web platform instead. I will say the charts you see here are not my live charts and I have instead selected a popular company brand to show you what the platform is like.
First thing to note is this is a resource hog and it takes considerable CPU processing time, that came as a surprise. I have filtered my charts down to 2 and sometimes one large monitor. Of late all my trading has been long term and I have had no need for using more monitors to get more time frames in front of me. It is a bonus when you can eliminate lower time frames, providing you have the discipline to set some kind of alarm when price reaches an area you are interested in.
Fair warning, the charts I am about to show are full width of my monitors and this could well cause some scroll bars to come into this blog, I will just have to see how it looks and if it need fixing I will depend on some of the web guru's who are here.
A look now at the S&P500. Ah, scroll bar has come. If you all dont like the scroll bar I can reduce the chart size. In fact, let me add the same chart below this one with the reduced size and you can say which you prefer.
The details are all lost on the second file, but for the moment I will continue and find some sense in all this. The two black horizontal lines are near term support and resistance and between them is where a large range setup and held the majority of the trading for a long time. We now have broken out of the range and last week I passed a comment to a friend that this thing is long over due for a deep pull back. Our conversation went further and talk of the real crash being long over due came to the fore. In case some of you dont get that part, the S&P is made up of the top 500 US companies and shows an over all view of that market.
Any company shows a strong share price if the company is doing well, has good sales, hiring new people and expanding etc. But, and here is the real fly in all this. There is no positive economic news from the US and the company share price in my view is being bought into by institutions who are using FED money to get short term gain and the share price is in no way reflected in real economic numbers. Same can be said for Europe.
Keep in the front of your mind all the time, when price is set to collapse, it must first be run up. When price is due to become bullish it must first be marked down. What I see now is price rising with no good reason why it is going up, other than being marked up. Needless to say I would not be long the S&P nor short either, yet.
A closer look on the weekly and see what else we can see. Scroll city again, but at least you can see it.
First thing to pop out is we pretty much hit 2000 and fell back sharply. The last leg looks very weak and taking a long time to get anywhere. Since the break out of the trading range it has taken a lot of effort by the bulls to get prices moving higher. Sensible traders will wait and see where support comes in, if it comes in.
Lastly for the S&P is a daily chart.
Your first glance at a closed candle tends to be your best analysis. What can we see here?
How about the obvious sharp fall followed by break of near term support. Next support is 1900 and the media at that stage will whip up a storm. Our unanswered question is, where will the buyers come back in, or will they come back in at all?
Lets take a look at Oil on the weekly.
With all the mess in the middle east happening the reaction in the price of Oil is.....range bound. There is no panic or interest in Oil trading for higher prices. One reason is Russia, they need a 100 dollar per barrel price and the west is determined to hurt their pocket. But even prior to the mess kicking off, look at the historic price. It has not been rising much and if anything there appears to be potential for more downside coming in. The last two attempts to push price higher failed.
Onto Oil on the daily chart.
We see price gained a little but the reaction by the bears was strong, there is no upside on this chart. At present we are at support and price will dance around here for a while and likely fall further. Look at where the last real buying came in and there is a target pro money will aim for. Getting an entry might be entertaining.
Oil on the 8hr chart. Yes I did say 8hr. One thing I do like about the platform is it has many time frames not seen on MT4 and it is useful to have.
More good information here, note the last attempt by the bulls. It was very strong, sudden and did not have the legs to get anywhere. The bears are clearly in control still and we now see price at near term support, look at current price and then scroll left to see historic demand. I doubt this will hold, but doubts wont make you money and for the moment take note of the price range setup by the buyers and wait.
Last Oil chart on the 15min.
All big moves down and not a bull to be seen. Most commodities need lots of time to get moving and when the move getting in is not easy if you trade near term. The only thing I can add to this chart is price now likely wait for NY open.
Final chart, usd/jpy on the monthly.
Look carefully and you will see current price is at a major support and resistance level. Anything can happen here. In is Japanese policy to reduce the value of their currency against the US Dollar. So far this is working for them and this level is where we may see some big action happen by their central bank. If they dont see price move higher, they may help it on its way. Currencies are manipulated by very deep pockets and dont be under any illusions of countries not acting in their own interests.
There was strong buying off the 80 level here, a possible sign of more upside.
Closing note on the platform, so far I have only used it for live orders, hard stops and manual close. I do not see a take profit setting and it may be that a limit order is used for that purpose instead. The information about the platform and all other web platforms is very sketchy and none I found gave a crystal clear brief breakdown on their use.
The platform is very poor for marking up charts, note all I have posted here do not have anything drawn or written on them. The tools for annotating are poor and do not have enough adjustment. I will have to take a chart pic and use some other program for drawing on them.
I have found the data feed for the web platform is more reliable than MT4. There are also less times when getting and order filled stalls.
First thing to note is this is a resource hog and it takes considerable CPU processing time, that came as a surprise. I have filtered my charts down to 2 and sometimes one large monitor. Of late all my trading has been long term and I have had no need for using more monitors to get more time frames in front of me. It is a bonus when you can eliminate lower time frames, providing you have the discipline to set some kind of alarm when price reaches an area you are interested in.
Fair warning, the charts I am about to show are full width of my monitors and this could well cause some scroll bars to come into this blog, I will just have to see how it looks and if it need fixing I will depend on some of the web guru's who are here.
A look now at the S&P500. Ah, scroll bar has come. If you all dont like the scroll bar I can reduce the chart size. In fact, let me add the same chart below this one with the reduced size and you can say which you prefer.
The details are all lost on the second file, but for the moment I will continue and find some sense in all this. The two black horizontal lines are near term support and resistance and between them is where a large range setup and held the majority of the trading for a long time. We now have broken out of the range and last week I passed a comment to a friend that this thing is long over due for a deep pull back. Our conversation went further and talk of the real crash being long over due came to the fore. In case some of you dont get that part, the S&P is made up of the top 500 US companies and shows an over all view of that market.
Any company shows a strong share price if the company is doing well, has good sales, hiring new people and expanding etc. But, and here is the real fly in all this. There is no positive economic news from the US and the company share price in my view is being bought into by institutions who are using FED money to get short term gain and the share price is in no way reflected in real economic numbers. Same can be said for Europe.
Keep in the front of your mind all the time, when price is set to collapse, it must first be run up. When price is due to become bullish it must first be marked down. What I see now is price rising with no good reason why it is going up, other than being marked up. Needless to say I would not be long the S&P nor short either, yet.
A closer look on the weekly and see what else we can see. Scroll city again, but at least you can see it.
First thing to pop out is we pretty much hit 2000 and fell back sharply. The last leg looks very weak and taking a long time to get anywhere. Since the break out of the trading range it has taken a lot of effort by the bulls to get prices moving higher. Sensible traders will wait and see where support comes in, if it comes in.
Lastly for the S&P is a daily chart.
Your first glance at a closed candle tends to be your best analysis. What can we see here?
How about the obvious sharp fall followed by break of near term support. Next support is 1900 and the media at that stage will whip up a storm. Our unanswered question is, where will the buyers come back in, or will they come back in at all?
Lets take a look at Oil on the weekly.
With all the mess in the middle east happening the reaction in the price of Oil is.....range bound. There is no panic or interest in Oil trading for higher prices. One reason is Russia, they need a 100 dollar per barrel price and the west is determined to hurt their pocket. But even prior to the mess kicking off, look at the historic price. It has not been rising much and if anything there appears to be potential for more downside coming in. The last two attempts to push price higher failed.
Onto Oil on the daily chart.
We see price gained a little but the reaction by the bears was strong, there is no upside on this chart. At present we are at support and price will dance around here for a while and likely fall further. Look at where the last real buying came in and there is a target pro money will aim for. Getting an entry might be entertaining.
Oil on the 8hr chart. Yes I did say 8hr. One thing I do like about the platform is it has many time frames not seen on MT4 and it is useful to have.
More good information here, note the last attempt by the bulls. It was very strong, sudden and did not have the legs to get anywhere. The bears are clearly in control still and we now see price at near term support, look at current price and then scroll left to see historic demand. I doubt this will hold, but doubts wont make you money and for the moment take note of the price range setup by the buyers and wait.
Last Oil chart on the 15min.
All big moves down and not a bull to be seen. Most commodities need lots of time to get moving and when the move getting in is not easy if you trade near term. The only thing I can add to this chart is price now likely wait for NY open.
Final chart, usd/jpy on the monthly.
Look carefully and you will see current price is at a major support and resistance level. Anything can happen here. In is Japanese policy to reduce the value of their currency against the US Dollar. So far this is working for them and this level is where we may see some big action happen by their central bank. If they dont see price move higher, they may help it on its way. Currencies are manipulated by very deep pockets and dont be under any illusions of countries not acting in their own interests.
There was strong buying off the 80 level here, a possible sign of more upside.
Closing note on the platform, so far I have only used it for live orders, hard stops and manual close. I do not see a take profit setting and it may be that a limit order is used for that purpose instead. The information about the platform and all other web platforms is very sketchy and none I found gave a crystal clear brief breakdown on their use.
The platform is very poor for marking up charts, note all I have posted here do not have anything drawn or written on them. The tools for annotating are poor and do not have enough adjustment. I will have to take a chart pic and use some other program for drawing on them.
I have found the data feed for the web platform is more reliable than MT4. There are also less times when getting and order filled stalls.
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