BBmac's Gbpusd thread

[bbmac]

This is what I am see-ing atm near-term on 4hr in respect of potential supp/res factors;

I have rejected the 5min hidden-divergence based set-up (re-entry back into 30min downtrend) Reasons are that, i. No 1min trigger Reversal set-up and ii. No pre-identified potential sbr.

You have to trade your triggers/set-ups only at the highest probability areas and only in the highest probability circumstances...

G/L

 

[bbmac]

current atr stats

G/L

 

[bbmac]

76.4% fib fan of the 7044-5707 drop and the base of the prev sw hi=prev res=potential res zone on the daily t/f provding the asian/overnight session resistance. 76.4% fib retrace level of same move is deeper in the zone.

G/L

 

[bbmac]

.... This is the first potential rbs zone on 4hr at which I would look for 1hr hidden divergence based set-up and a 1hr price action trigger to get back with 4hr uptrend after a pullback (if indeed I was playing a 1hr trigger which I am not) In so doing and at entry I would look to ensure that the 4hr macd signal line is still above it's zero axis, and that at least the Daily is still pointing up..In this prev swing hi=prev res=potential rbs zone, the 38.2% of current 6240-6628 move with 50% of 6525-6628 a couple of pips below that 38.2%.

G/L

That set-up formed as pointed out yesterday and despite the reservations re the 2 X Lh on 1hr it resulted in a 'with 4hr uptrend' follow thru to new highs...crucially the set-up formed @ an immediate HL in the 4hr uptrend..The set-up is shown below..

G/L

 

[bbmac]

1st 1min Re-entry (to next t/f trend after a pullback) of the day

5min begins an uptrend off the prev 1hr sw hi zone (RBS) leading to a pullback off 6685 level when a hidden divergence based 1min Re-entry to 5min uptrend develops @ the prev 5min sw hi=prev res=potential support zone shown below.

The 1min Re-entry set-up is here (A quick +20pips booked

Price is now deeper in the potential res zone on the daily t/f, discussed in a previous post today.

G/L

 

[bbmac]

Uk GDP number ...0830am gmt release

Upcoming Uk Gdp data has the potential to dissapoint. Conventional wisdom suggest that any print of 0.2% or over will see £ strength on the market reaction, but any flat print @ 0.0% or below will likely see £ weakness reaction ? 0.1%-well who knows, lol.

G/L

NB: Figure on the right is the previous, left is the forecast.

 

[bbmac]

Upcoming Uk Gdp data has the potential to dissapoint. Conventional wisdom suggest that any print of 0.2% or over will see £ strength on the market reaction, but any flat print @ 0.0% or below will likely see £ weakness reaction ? 0.1%-well who knows, lol.

G/L

NB: Figure on the right is the previous, left is the forecast.

QoQ -0.4%, YoY -5.2% were the actial #'s...how often do we see this,? ...a # is bigged up before the release only to dissappoint..big sell off ensues on reaaction to the data

G/L

 

[bbmac]

100 sma on the 1hr breeched in the data reaction as were the ascending support trend lines on 1hr and 4hr....and 23.6% of total recent 5707-6692 move up.

 

[bbmac]

This contraction in the Gdp (-5.9% peak-tvalley now) makes for an interesting discussion at the next Mpc re QE? ...which is why the sell-off in £, market fearing an extension to the current £175bln.

G/L

 

[kaisen]

100 sma on the 1hr breeched in the data reaction as were the ascending support trend lines on 1hr and 4hr....and 23.6% of total recent 5707-6692 move up.

Hi BBMAC, did you get any of the initial monster move?

I was putting two stop orders either side the PA before the news announcement (away from the action) with a view to one of the orders being filled in the right direction.
Sadly, as i have not done this before i cancelled the orders and didnt enjoy the surge!

I have made over 30 pips scalping cable this morning and should have scapled from mid 680´s but i thought i would sit out until after the news.

Couple of things if you would?

First, what is your view on the two stop strategy? (i dont want to try it next time only for it not to work based on my concern over indecision to an announcement and a choppy move)

Second, you mention the 100sma alot. Coming from stocks and indices i use 20,50 and 200ma on my charts. Would you mind telling me about the 100ma and whether you looking at any others?

Thank you greatly in advance.

 

[bbmac]

....Currently some demand visible around the 2 fibs: 61.8% 6240-6692 / 76.4% 6325-6692 but tone remains bearish now intraday with price at 160% of it's 20day average pip range now, 280pips off the 6692 Hi.

G/L

 

[bbmac]

Hi BBMAC, did you get any of the initial monster move?

I was putting two stop orders either side the PA before the news announcement (away from the action) with a view to one of the orders being filled in the right direction.
Sadly, as i have not done this before i cancelled the orders and didnt enjoy the surge!

I have made over 30 pips scalping cable this morning and should have scapled from mid 680´s but i thought i would sit out until after the news.

Couple of things if you would?

First, what is your view on the two stop strategy? (i dont want to try it next time only for it not to work based on my concern over indecision to an announcement and a choppy move)

Second, you mention the 100sma alot. Coming from stocks and indices i use 20,50 and 200ma on my charts. Would you mind telling me about the 100ma and whether you looking at any others?

Thank you greatly in advance.

Answering your questions in order you ask them;

1. I sold on the 0940am 1min candle in an imperfectly formed 1min Re-entry set-up (imperfect as macd showed no hidden div but osma/cci ok) so picked up pips on the downmove. I also bought on the set-up below @ the 2 fibs detailed in post above, but have exited for a small gain only, as it's going nowhere fast.

2. Straddling orders pre-data release used to be fair strategy but as always slippage etc can hamper such a strategy...I am rarely in a position ahead of market-moving data and if I am, my stop is @ b/e...I certainly don't straddle now, but will play the post data react.

3. I have 100 and 200sma on 1hr + charts, the 200 is considered by many to be the ' fair value ' ma as you know...and the 100 is widely used. they do not form part of any trigger for entry but they may form part of any support/resistance confluence and as a guide to the general tone of the market.

G/L

 

[kaisen]

Answering your questions in order you ask them;

1. I sold on the 0940am 1min candle in an imperfectly formed 1min Re-entry set-up (imperfect as macd showed no hidden div but osma/cci ok) so picked up pips on the downmove. I also bought on the set-up below @ the 2 fibs detailed in post above, but have exited for a small gain only, as it's going nowhere fast.

2. Straddling orders pre-data release used to be fair strategy but as always slippage etc can hamper such a strategy...I am rarely in a position ahead of market-moving data and if I am, my stop is @ b/e...I certainly don't straddle now, but will play the post data react.

3. I have 100 and 200sma on 1hr + charts, the 200 is considered by many to be the ' fair value ' ma as you know...and the 100 is widely used. they do not form part of any trigger for entry but they may form part of any support/resistance confluence and as a guide to the general tone of the market.

G/L

Sincere thanks for your reply kind sir.

You mention osma and i have tried googling this but not with great success. Could you tell me what osma is and, as i trouble you for the last time, what is rbs and sbr stand for?

I have found. i believe, MNI is Market News International.

This will help me keep on track with your posts

ATB!

 

[bbmac]

A bullish divergence based Reversal set-up and price action trigger on 1min (Reversal Aii seq) supported by a 5min Reversal B set-up..shown below @ the prev 1hr sw lo=prev supp=potential supp zone previously posted and shown again below: A +24pip gain booked;

The supporting 5min regular bullish divergence set-up is here:

G/L

 

[bbmac]

...You mention osma and i have tried googling this but not with great success. Could you tell me what osma is and, as i trouble you for the last time, what is rbs and sbr stand for?...I have found. i believe, MNI is Market News International....This will help me keep on track with your posts ...ATB!

Hi,

Answering your questions below, in the order you raised them in your post;

1. Osma is the moving average of oscillator indicator and is standard in the MT4 charting package, it is effectively the difference between the macd signal line and ma line plotted as a histogram ie the histogram on the ' standard macd ' The macd I use is a histogram of the signal line.
2. SBR/RBS = Support Becomes resistance and Resistance Becomes Support and refers to the tech phenomenon of broken support may act as resistance in a downtrend on any pullback re-test from the underside / broken resistance may act as support in an uptrend on any pullback re-test from the topside.
3. Mni is indeed as you suggest and their market updates.

G/L

 

[bbmac]

W/e fri 23rd Oct 09

Friday's fall from 6692 Hi hastened by the worst than forecast -0.4% fall in 3rd Qtr Uk Gdp has altered the technical outlook somewhat following the rapid rise off 5707 recent swing low. The move down has resulted in a Daily bearish thrust candle close on Friday engulfing the previous 3 day's candles, and a pinbar candle on the Weekly T/f....The Daily and Weekly charts below show the area of potential resistance @ that 6692 hi from where the selling started and included the 76.4% fib fan of the 7044-5707 move down, as well as the Weekly descending potential resistance trend line, in the previous Daily swing hi=previous resistance=potential resistance zone..

Effectively the top of the right shoulder on the Weekly H&S formation was the area of the 6692 Hi before the 393pip fall on Friday, which sliced through both the 23.6% and just through the 38.2% fibs of the 5707-6692 rise as well as any ascending potential support trend lines on 1hr and 4hr t/f's. Price has also gone below the last 2 x HL's of the 1hr/4hr uptrends. The drop also breeched the 100sma's on the 1hr and daily t/f's, with price settling just below the 200sma on the 1hr also, back inside the descending price channel on the Daily t/f, following it's upside breech to that 6692 Hi.

Below current price, the zone marked as a on the 4hr chart below is a previous swing lo=previous support=potential support zone that is co-existant on the 1hr t/f also. Below here the previous swing hi=prev res=potential rbs zone marked as b is also co-existant on the Daily t/f. The fibs shown on this t/f are the unbreeched retraces of the 5707-6692 move up.

(100sma = yellow line, 200sma = red line)

Potential sbr/res to the upside of current price can be more readily seen on the 1hr t/f with a fib drawn from the 6692hi to the current lo.

Xe.com are already quoting 6409 (??) against a Friday close (dependant on broker) of around 6305-10

Certainly there are extreme oscillator readings on 1hr with the sub 1hr beginning to exhibit regular divergence readings, and the 4hr hidden-divergence building:

G/L to all for the forthcoming week's trading.

PS: What price an upward revision in this 3rd Qtr Gdp and a 4th Qtr positive growth print on next release?? (or is that just the conspiracy theorist in me.)

 

[bbmac]

Great post over a FF.com

Replicated below is a great post over @ FF.com on a thread discussing whether it is possible to make a living from trading. The author makes some very valid points.

The link is here; http://www.forexfactory.com/showthread.php?t=34249&page=8

----------------

I can only speak for myself, but I actually do make a living at trading. It was hard won. It took intensive study and a level of due diligence and discipline that most jobs don't require.

It is a certain breed that rises to the challenge and thrives in this environment.

So cutting the wheat from the chaff starts at the bottom. If anyone finds themselves in any one of the categories of the "people who shouldn't trade" below, then save yourself a lot of money and give up now. What I'm going to share may sound harsh, but it's not mean spirited in the least. The market is brutal and honesty is critical. Anyone giving people false hope or encouragement is doing a great disservice.

The Unspoken Rules of Trading

1. Stupid people shouldn't trade.

It takes a level of mental acuity that pushing the button for the fries doesn't. Trading is professional work and requires an aptitude for strategic thinking as well as a high level of problem solving skills. Here's a link for industry IQ averages. http://iqcomparisonsite.com/Occupations.aspx The chart includes administrative functions as well as professionals, so you need to look at the 50% mark and above. In Finance the cutoff is 110 IQ for professional work, for general employment the cutoff for professional work is 100. There is another statistical table here http://www.geocities.com/rnseitz/Definition_of_IQ.html. Remember these are minimum cutoffs, not levels of excellence. These polls are based on actual employment figures, so it isn't an opinion whether someone has what it takes, it's just reality. Do yourself a favor and take a simple IQ test online. There are plenty.

You are going up against the top minds in the world in this market, so you need to ask yourself, "Do I really have the necessary fire power?" The market isn't an equal opportunity employer, it's a predator.

2. Lazy people shouldn't trade.

It's hard work. Anyone who thinks they can cut corners are deluding themselves. The problem is most lazy people don't realize they're lazy. I don't mean the people who can't be bothered to get out of bed kind of lazy. I mean the one's who went to college, got a degree and spent their time until now being handed work to do rather then ever taking an initiative to improve upon a process, to strive for a level of excellence above the bare minimum of what was expected of them, and always sought the line of least resistance kind of lazy. Trading takes a high level of commitment, a willingness to make sacrifices, and an ability to innovate. If you've never risen to the challenge or developed these skill sets, putting large sums of money on the line is a tough way to find out you don't have them.

3. Emotionally weak or unstable people shouldn't trade.

You need to have a high degree of emotional intelligence, stability, and self awareness to make it. If you don't have the constitution for it, or haven't dealt with your emotional weaknesses they will interfere with your decision making process and you will lose. Fear, greed, ego, hope, and anger are obvious things that need to be overcome. More serious maladies will have an even greater impact so it's up to the individual to introspect if they have the emotional stamina for this profession. Trading will push every button, bring out every demon, and then some you never knew existed. If you haven't seen the "coffee's for closers" speech on youtube, it's worth watching, and if you think that's abuse, then you have no idea what you're up against.

4. Substance abusers, alcoholics shouldn't trade.

For obvious reasons besides drunk courage and nodding off for 12 hours while a trade's going with no stop loss at 500:1 leverage.

5. Unlucky people shouldn't trade.

If you've never won at anything in your life why would trading be any different? There is an underlying cause for unluckiness. I don't buy into the notion that some people are naturally lucky and others aren't. We create our own luck and lot in life. If you are a glass is half empty person, or constantly of the view that the deck is stacked against you, it will be. State of mind defines our path. Losers love to be proven right. The "see I told you, no one's a winner" types.
With that vantage point someone has already cast their own misfortune. They usually try to find like minded beings to substantiate their view so they can blame it on the system and not take personal responsibility for their own failings or correct them. Misery loves company.

Naive people don't really belong on this list, but should always trade demo first. We all have to start somewhere. So being new to something doesn't mean you are not going to make it. But heading into this with a notion that it's easy or listening to people brag about their winnings on a forum and thinking "I can do that too" is a completely false impression. I watch the Interactive threads and from half the stuff I read you'd think people are making a fortune.

This is just not true. There are a handful of good traders, but you need to understand enough about the market dynamics to know who is good at this and who is full of it or just demo trading.

Then there are the scammers. The people who shake down newbies by throwing fairy dust in their eyes. So be cautious of trading systems and signal services that sound too good to be true. They are.

No trading system will replace real knowledge. People who put their faith in a trading system will lose. You need to study from the bottom up. Candlestick patterns, chart patterns, price action, all the components that create market dynamics. If you can't understand what's happening on a naked chart, no indicator is going to help. There is no holy grail, no magic bullet.
There is only thousands of hours of chart time and studying everything you can get your hands on for technical analysis, trading psychology, and learning how the global financial market operates.

Then there's money management, risk reward, and overcoming negative expectancy. Trading is a business, not a game. It needs to be approached with a high level of professionalism. The bottom line is critical. You are the President, the Trader, the Analyst, Systems Technician, and Accountant. You have to wear each hat equally well and your business is only as strong as it's weakest link. If you have no prior experience running a business, then you need to learn. Trading is more than just placing trades.

After you've put all this together, then there's the market, which is a fickle beast. It eats the best and brightest as a snack before lunch. It's unforgiving, uncompassionate, and unrelenting. If you get cocky, or complacent, it will rip you to shreds. Even if you do everything right, sometimes you get broadsided, which is why money management is so important.

The last one's standing are the one's you're up against. And they are 10 moves ahead, have years of collective experience and inside market knowledge that retail traders don't.

No mean feat. But if you think you've got what it takes, great.

Trading is not a glamorous job. It's a boring, rote, solitary activity. You need lots of patience and to remain passionate about it at the same time. Personally, I love it. It's like playing financial chess against a thousand Kasparov's. When you get the moves right there's an indescribable satisfaction to it. Making money is the end game, but the side effects are personal improvement and self autonomy, and an in depth understanding of how the global financial system actually works. All good stuff.

Anyway, that's my take on it.

I hope some of this is useful to someone just setting out on the path.

Best of luck.

 

[bbmac]

Extension to QE tomorrow ??

Just wondering out aloud: Tomorrow's Boe/Mpc rate decision is likely to be n/c @ 0.5% with the market consumed by the decision on whether to extend the QE from the present £175Bln in light of the poor Q3 gdp # of -0.4%. This said this figure is more likely than not to be revised upwards with the market expecting growth, however modest in Q4, as the other major economies returned to growth in Q3.

Consensus seems to be that the Mpc will decide to extend QE to £200-225Bln from the present £175Bln but with other confidence and output surveys showing some strength I wonder whether the decisoon to extend will be bold enough to £225Bln? The Boe have aleady intimated that they are not in favour of negative rates so QE seems the only possible measure open and having been stung in the past by criticism of being slow to react/over-concerned about inflation risks -vs- other indications of a contracting money supply and economy it seems probable that some QE extension may be on the cards...but they will trun their eye back to inflation at some point and with the likely return to growth soon I wonder whether they will be wanting to stoke those potential inflation fires too much with the exension to QE?

Probable £ weakness on any extension of QE to £225Bln is the conventional wisdom? but any less than that and it is harder to guess the market reaction...will no QE extension be viewed as a sign of confidence in the economy/worries about stoking inflation in the future and therefore a positive for £ ? or as the wrong decsion, thus too see-ing a knee-jerk £ sell-off?

Of course there is a chance of a double whammy if U.s NFP reaction the day after (Friday) see's $ strength or weakness thus comounding any overall market reaction re the Uk Boe/Mpc's decision re QE, and ahead of that the Fomc later today.

We will know tomorrow.

G/L

 

[bbmac]

re above post

Uk Pmi services comes in above forecast @ 56.9?? .....any effect on the QE decision??
(Above 50 is seen as expansive?)

G/L

 

[bbmac]

QE again

Ahead of that Boe/Mpc decision tomorrow is the Uk manuf and ind production data due for release tomorrow at 0930am gmt. Last month's numbers came in well below forecast, showing contraction not expansion, although this month's forecasts are again for expansion m/m. Is this the last piece in the jigsaw during this 2 day Mpc meeting before the QE expansion (or not) decsion is made?

The previous month's figures are highlighted to the left of the forecasts

G/L