Can anyone explain me the 14:15 EUR/USD sudden spike?

[Lord Flasheart]

That wasn't anger, man. It was sarcasm, the lowest form of humor.

As to what points were hit, an ex-post analysis like yours is completely specious. I could have picked random points on the graph and claimed that my marvelous technical system predicted every single one of them. If I did that it wouldn't validate anything, apart from the fact that I am a genius at data-mining, as well as at drawing squiggly lines on a chart. I used to know a guy who would come over to a trader's desk, look at a chart of whatever the trader was looking at, pick some extreme high and lows and would say "Well, it's obvious, isn't it? You should have bought here (pointing to the lows), sold here (pointing to the highs), bought here, etc. It's obvious!" That's exactly what you're doing, innit?

obvious in hindsight yes,but happens to often to be random

 

[JahDave]

obvious in hindsight yes,but happens to often to be random

I can say I agree with Flash. I have studied fundamental and technical, and have been trading currency for about three years now. What moves the markets is mass social mood, but it is not random and it is not controlled by news announcements either. There are countless times I have seen the the markets move different directions on the same type of announcement. Just in the past month the U.S. stock market has been shaking off bad news and still advancing. The Euro Greece deal was all done quite a while before the Euro started it's current rebound. The One I like best is that the WTC collapse started the stock market crash. The markets went up for several months after that. Anyway, the list is endless if you wanted to research it. I only know that I made pips down last night, back up today and I have settled into a fairly longterm short Euro position. And one final thought from my perspective is that once I just started using technical analysis then I became a better trader. If fundamentals work for you then great, but I do get quite tired of all the TA bashing around this forum.

Good trading to all,
Dave

 

[Martinghoul]

obvious in hindsight yes,but happens to often to be random

What happens too often to be random? Chart patterns fitting theories that were constructed to fit those patterns in the first place? That's called data-mining. Yes, it does happen often, and yes, it's not random, I completely agree.

 

[arabianights]

but I do get quite tired of all the TA bashing around this forum.

It's entirely justified. However, believing in TA is very much like any other irrational belief or religion... adherents get very offended when sensible people take the mick out of it, and confabulate, defend to the end, doublethink etc etc... They also see such things as an attack upon themselves... they don't want to accept the random nature of reality and their powerlessness over it...

Good laugh though. It's just sad that so many people throw their money away on this nonsense...

 

[JahDave]

It's entirely justified. However, believing in TA is very much like any other irrational belief or religion... adherents get very offended when sensible people take the mick out of it, and confabulate, defend to the end, doublethink etc etc... They also see such things as an attack upon themselves... they don't want to accept the random nature of reality and their powerlessness over it...

Good laugh though. It's just sad that so many people throw their money away on this nonsense...

That is where you are wrong Arabian. I take no offense when someone believes different than i do. I am a consistently profitable trader and i am not offended. Personally I don't resort to name calling and publicly bashing other people's trading methods because they are different than mine, and I wish you and everyone who reads this great success in trading.

Regards,
Dave

 

[Martinghoul]

I can say I agree with Flash. I have studied fundamental and technical, and have been trading currency for about three years now. What moves the markets is mass social mood, but it is not random and it is not controlled by news announcements either. There are countless times I have seen the the markets move different directions on the same type of announcement. Just in the past month the U.S. stock market has been shaking off bad news and still advancing. The Euro Greece deal was all done quite a while before the Euro started it's current rebound. The One I like best is that the WTC collapse started the stock market crash. The markets went up for several months after that. Anyway, the list is endless if you wanted to research it. I only know that I made pips down last night, back up today and I have settled into a fairly longterm short Euro position. And one final thought from my perspective is that once I just started using technical analysis then I became a better trader. If fundamentals work for you then great, but I do get quite tired of all the TA bashing around this forum.

Good trading to all,
Dave

There's all sorts of problems with what you have stated here, Dave...

The fact that mkts move in different directions on the same type of announcement doesn't mean that technical analysis works or doesn't work. Neither does the fact that you made or lost money last night. Whether technical analysis makes you (or anyone else, for that matter) a better trader is, likewise, neither here nor there.

The only TA bashing I am doing here is suggesting that TA has very little predictive power, at best. Macroeconomic forecasting (which you refer to as "fundamentals"), on the other hand, is effective and that can be demonstrated in a mathematically rigorous fashion.

If you want to disagree with me, please go ahead. However, I would very much like to see non-anecdotal evidence of the power of TA. Furthermore, we can even have our very own, independently arbitrated (by the honest folks of T2W) mini-challenge to see how TA performs arnd relevant events. Whether it proves or disproves anything, everyone can decide for themselves.

 

[JahDave]

There's all sorts of problems with what you have stated here, Dave...

The fact that mkts move in different directions on the same type of announcement doesn't mean that technical analysis works or doesn't work. Neither does the fact that you made or lost money last night. Whether technical analysis makes you (or anyone else, for that matter) a better trader is, likewise, neither here nor there.

The only TA bashing I am doing here is suggesting that TA has very little predictive power, at best. Macroeconomic forecasting (which you refer to as "fundamentals"), on the other hand, is effective and that can be demonstrated in a mathematically rigorous fashion.

If you want to disagree with me, please go ahead. However, I would very much like to see non-anecdotal evidence of the power of TA. Furthermore, we can even have our very own, independently arbitrated (by the honest folks of T2W) mini-challenge to see how TA performs arnd relevant events. Whether it proves or disproves anything, everyone can decide for themselves.

Thanks for the nice response Martin,

I am not here to debate or try to change anyone's opinion of what works or doesn't work. I am just saying that especially new traders and traders that are struggling should read and research both sides of the coin and build a trading system that works for them. I was only making the point that there are a lot of technical traders that are successful and there are a lot of fundamental traders that are also successful. Everyone should put in the hard work to make themselves successful because there is no easy way to make money consistently. It takes hard work and experience as do all worthwhile endeavors.

Regards,
Dave

 

[bedsit]

EUR/USD from 1.31005 to 1.31108

+103 pips instantly at 14:15. A vertical spike. I don't understand why.

I checked various news sites, but there is nothing special. Just the wait for FED's decisions.

Anyone knows why? :-0

“The normal behaviour of the crowd is to mill around, make noise and go nowhere. Once in a while a crowd becomes excited and explodes in a rally or a panic, but usually it just wastes time. Bits of news and rumours send ripples through the crowd, whose shifts leave footprints on our screens. Prices and indicators reflect changes in crowd psychology.” Dr A Elder

 

[Ingot54]

The fact that mkts move in different directions on the same type of announcement doesn't mean that technical analysis works or doesn't work.

... I am ... suggesting that TA has very little predictive power, at best. Macroeconomic forecasting (which you refer to as "fundamentals"), on the other hand, is effective and that can be demonstrated in a mathematically rigorous fashion.

I think there is a thread with this stand-off on T2W somewhere ... can someone please point me to it?

If you want to disagree with me, please go ahead. However, I would very much like to see non-anecdotal evidence of the power of TA.

Yes, and I would love to see non-anecdotal evidence of the power of PURE macro-economic forecasting. It is likely one could wait months for the effect of macro-economic events to actually show up in the market, despite a spike in activity at the moment of that news release.

Furthermore, we can even have our very own, independently arbitrated (by the honest folks of T2W) mini-challenge to see how TA performs arnd relevant events. Whether it proves or disproves anything, everyone can decide for themselves.

Now that would be an interesting challenge for some gun-traders to take up.

Now to make it even more interesting, let's ask the TA-deniers to NOT use any form of charting ... just give them the starting price and a radio for the news should about pull it up. And let's ban TA traders from access to the News, to even things up ... after all, I know many TA traders who shun trading at High Impact news times (... and a few - like Felix Homogratus - who made money trading News events exclusively).

On the other hand, I nominate Larry Williams for the TA Team - http://en.wikipedia.org/wiki/Larry_R._Williams

Williams won the 1987 World Cup Championship of Futures Trading from the Robbins Trading Company were he turned $10,000 to over $1,100,000 (11,376%) in a 12 month competition with real money. Ten Years later his daughter Michelle won the same contest.

... and if Larry is busy with Internal Revenue on the day, I would like Dan Zanger to deputise for him - http://www.investopedia.com/articles/trading/04/082504.asp

When asked how he likes to trade, Dan Zanger responds using a race car analogy.

"I like to go 180 mph just inches from the wall. That means being margined 2 to 1 and either long or short a stock that is highly volatile and getting ready to make a big move," he says.

Zanger puts his money where his mouth is. He holds the unofficial record in trading stocks by turning $11,000 into more than $18 million in 18 months in 1999-2000. He grew that to an incredible $42 million in less than two years and has the tax receipts to prove it.

Hope nobody tells Williams or Zanger that TA doesn't work ... would spoil the campfire stories for sure.

Oh dear, I didn't mean to say all that ... just slipped out. Now I'm involved, and I have such a thin hide!

But this is a discussion that will go on for quite a while without resolution imho ... because it is likely that the FA traders will be looking at charts from time-to-time, and there will be TA traders who will be listening to the news as well. Several authors of well-known trading books allude to the fact that good traders utilise everything at their disposal ... both TA and FA ... as I do from time-to-time myself to greater or lesser degrees.

Some of the FA folks might like to chat to George Soros and Warren Buffett to see if they are available on the day too.

You see, there is nothing improper about using the probability of "good" TA setups to plonk your wad down and hope for the best. And there is everything to admire about the ability of FA news-of-the world to float the boats of good FA analysts and traders.

I can't trade pure FA to save myself.

But my left brain can spot a good TA probability set-up ... it's just that at this point in my evolution I don't have the right or left brains to take best advantage of those.

In other words ... I do not trade effectively (ie I am not getting wealthy from my market activity), and that's why I look for and enjoy using mechanical/technical systems. The FA folks would point and say: "That's the problem, dude!"

At least wile I am losing I can point to the trading vehicle and say it had a flat tyre!

Best wishes to both teams ... and may the TA team kick @$$ big time!

Ivan

 

[Black Swan]

Well bless my cotton socks (scally Pringles ) another TA v FA *debate* on T2W...

Martin, you are not a lower than whale **** retail punter like us..you play a totally different game, to different rules.

Now I havn't got a fookin clue (from a fundamental perspective) why my alerts triggered for me to go long on USD/CHF last night at approx. 20:45, similarly I havn't got the foggiest why they triggered to go short on EUR/USD at approx 00:24...but they did..and when that series of w@nky TA indicators line up and trigger then 90% of the time the trade will go into profit at some stage...(90% of the trades are not profitable obviously..approx 50/50 atm)

Now I'm sure if I dug deep enough I could find a reason why the alerts triggered, but tbh I havn't got the time and I don't have the luxury of a six figure (basic) salary to try and figure it out... All's I know is that, in terms of probability, my edge as a retail forex punter works and I have to take that edge and try and make it work in order to put bread on the table.

Biggest fundy event for me in the past few days was nfp, techs worked fine on that (once the first candle was allowed to spaz off). Fundys always 'bleed' onto the charts and as retail punters I honestly reckon that's as good as it is ever gonna get for the vast majority of us...("us" not including you obviously )

But you would have to be a total retard to think TA drives the market, no one in their right mind could believe that surely? Other than a lot of the big guys possibly selling/buying/getting bored/wanting to play with us 'ickle folk when the 200ma is reached etc. I wouldn't have thought they give a rat's re. stochs, the rsi, ADX etc...

 

[Dommo]

I used to know a guy who would come over to a trader's desk, look at a chart of whatever the trader was looking at, pick some extreme high and lows and would say "Well, it's obvious, isn't it? You should have bought here (pointing to the lows), sold here (pointing to the highs), bought here, etc. It's obvious!"

That's a funny story, and it's pretty much the impression I gained from almost any TA book/analysis I have ever read.

I can't bring myself to believe in any foundations for TA, although I acknowledge that some people seem to make it work, which I think is no mean feat.

Technical analysis strikes me as a misnomer. The sole technical or scientific aspect appears to be the calculation of statistics - so much of the rest seems interpretive and something of an art, and it's that art that just admits too many possibilities for me.

 

[barjon]

Dr John Watson F.A. looked up from his Times and spoke "I say, Sherlock (for it is he), that McGaskill chappie has issued a severe weather warning. That will bring that Mad Maxmarket fellow to a halt and about time too, he's been driving much to fast for the weather conditions as it is"

"Not so, my dear Watson," mused Sherlock Holmes T.A., "I have been following his route with interest and he has been driving most directly with scarcely a pause or detour. We must visit the scene - come Watson, the Game's afoot."

Holmes replaced his magnifying glass into its resting place and continued to crouch looking at the tyre tracks on the highway. "You, see," cried Watson, "here is the skid mark. I told you he must stop."

"Oh, Watson, Watson, haven't I taught you anything over all these years. Look at the rubber, pray. The first line of rubber was laid down by his sharp braking, but that lasted little time before the rubber is from his acceleration as he got back up to speed. There is no doubt, Watson, it was a feint to shake his pursuers!!"

"But, the weather, Holmes, the weather. He must stop and retrace his route. I know these conditions and they are dire."

"You may well be right, my dear Watson, but he will leave his clues and we will know what he is about. For he is a wily fellow and a worthy opponent."

 

[Martinghoul]

Well bless my cotton socks (scally Pringles ) another TA v FA *debate* on T2W...

Martin, you are not a lower than whale **** retail punter like us..you play a totally different game, to different rules.

Sure, fine, but I tell you that I use the same exact logic when I do my pa punting (on IG Index, no less), where I play the same game as everyone else, to the same rules.

My point is that I personally can't use a tool like TA, where I don't understand the logic behind the method (if there's any). Moreover, I have yet to see an objective, somewhat rigorous demonstration that TA works. Everything I have seen is always either too objective, too full of survivorship bias issues or too confounded with other factors.

 

[Ingot54]

That's a funny story, and it's pretty much the impression I gained from almost any TA book/analysis I have ever read.

I can't bring myself to believe in any foundations for TA, although I acknowledge that some people seem to make it work, which I think is no mean feat.

Technical analysis strikes me as a misnomer. The sole technical or scientific aspect appears to be the calculation of statistics - so much of the rest seems interpretive and something of an art, and it's that art that just admits too many possibilities for me.

Hi Dommo

On the basis of your understanding of TA, I cannot enter a discussion with you.

First we both need to be on the same page, and because my background was first FA in equities, I easily understand the basis of your views.

But having made the gradual slide across to the light where TA rules, I can tell you that both are important in understanding the markets, but only one of them is necessary to be a successful trader.

For the Position trader, only FA is necessary to succeed. That could be vastly improved by finding a chart and not buying at tops or selling at bottoms, but again there will be someone who will argue "What if it goes higher/lower?"

For the ST trader, only TA is necessary, but again, it does help to understand what is driving the long term trend.

Basic TA gets a lot of traction from simple points of previous support and resistance, but I freely acknowledge that these points get smashed as many times as they hold too. However, as a way to trade short term, a bit of TA will start your engine, and is well worth doing a basic course on it, to get the idea.

I can't really believe you or Martin read any TA book and only came away with the impression that "It's obvious that you should have bought here (pointing to the lows) and sold here (pointing to the highs)."

My 5 yo old grandson would have picked up the basics better than that - sorry - I seriously doubt you are being honest here about reading any TA book, and only coming away with that impression.

I give you more credit than that ... but the story does serve to stir the thread, doesn't it!

What is it about a moving average crossover that FA traders have a problem with?

I saw a mate in Australia recently (2008) refuse to sell his shares in one particular bank, because "it is so solid". I told him, to sell now and buy back at the bottom, when the kerfuffle is over.

But he held right to the 60% loss mark, and got the shakes.

He finally held and reaped the benefits of the recovery. But I was able to show him that by looking at the simplest of charts, AND taking on board what was happening globally/fundamentally, he could have easily doubled his holdings in that bank.

The two work very well together - we can be friends!!!

The "too many possibilities for me" bit could easily be overcome by keeping it simple.
Personally I have had to come to terms with the adage that "less is more" when it comes to TA.

That would be a good start ... Basic is best.

 

[Black Swan]

What are you talking about? When stochs cross into the overbought area it's definitely time to sell. It means that price HAS to drop surely? If I could just find out what setting the big boys use for RSI... .

Regards,

Psmith

Just to make one thing clear, well 2 actually. I'm only talking forex (please insert your own jokes at my expense) I havn't got a clue what drives equities and the big players I'm referring to are right at the top of the tree, but I'm sure there's plenty of big intermediate players that do use TA to make big bucks.. speaking of BSDs he normally swoops after a bat signal is sent out on one of these threads...stand buy for links...

 

[Mr. Charts]

An age-old debate.
Futile, imho.
Events move sentiment and action drives price. TA - which is understood to be some sort of scientific analysis but has an art element to it, is of minor significance in an event driven scenario.
If price reaches a key support/resistance level, for instance, there might be some counter action to the prevailing move.

In an environment without motive events, then TA has a larger significance with trading off key levels. It is, however, trumped by events should they occur.

Why on earth can't you have multi-factoral markets ? The fact is, they are.
Richard

 

[tonegawa]

Sure, fine, but I tell you that I use the same exact logic when I do my pa punting (on IG Index, no less), where I play the same game as everyone else, to the same rules.

My point is that I personally can't use a tool like TA, where I don't understand the logic behind the method (if there's any). Moreover, I have yet to see an objective, somewhat rigorous demonstration that TA works. Everything I have seen is always either too objective, too full of survivorship bias issues or too confounded with other factors.

what is pa punting?

 

[arabianights]

No, it isn't price action, it's personal account.

 

[Dommo]

I can't really believe you or Martin read any TA book and only came away with the impression that "It's obvious that you should have bought here (pointing to the lows) and sold here (pointing to the highs)."

Hi Ivan - I'm not criticising anyone who uses TA. I am in fact impressed that other people make it work. I'm also not looking to be converted! As an example of a difficult book, I'm quoting below from something I wrote in another thread.

eg Kirkpatrick & Dahlquist Ch 20, first page: "EWT is based on the notion that the market behaves in an irregular cyclic manner. Proponents of EWT believe that this cylic structure is classifiable and predictable."

If it is "classifiable and predictable" it surely cannot be "irregular cyclic" and even less could it be merely "irregular"?

In the next paragraph:

"Because Elliot's theory defies any strict, mathematical description, except through anecdotal evidence, its existence is difficult to prove conclusively."

My background is in maths and law. Maybe for that reason I have certain cognitive limitations but sentences like those above just do not really compute for me.

I can of course, understand what the indicators are - I just can't find justification for them, and (much more importantly) I can't formulate them into something useful. For anyone who can, I say good luck to you.
Cheers
Dom

 

[MrGecko]

Blurb of this thread:

The fundamental camp that cannot understand why technical analysis could work all convince each other that news and fundamentals are the only things you can possibly use to generate any consistent profits from the markets, and that anybody who uses technical analysis must also read their horoscopes and have "dreamcatchers" over their beds.

The Technical analysis camp all convince each other that all you need to know about an asset price is if it is going up, down or sideways, and that you really don't need to understand the fundamentals or follow the news because it's all in the chart anyway.

These two groups will continue to reinforce their respective views with themselves, and will start to treat members of the opposite camp with an element of disdain before it all falls apart.

I have my own particular views on this but am bored of repeating them; sufficed to say that extremist views are pretty much always dumb.