A head and shoulders pattern needs to be confirmed by a break through the neckline (w/volume for markets lucky enough to have true volume figures). An aggressive trader would short EUR/USD when the neckline is pierced and a more cautious trader would wait for a failed test trying to go back through the neckline. Either way, the head and shoulders formation points down. On a longer term basis, it’s hard to ignore the fundamentals (twin US deficits) that point to a much weaker USD. Personally, the picture looks confused enough to me that I am only doing intraday trades in the Euro following any intraday trends. The only longer term trade I have is short GBP/USD (it broke the neckline earlier this week and they are at or near the top of their interest rate cycle) but I will take profits if I see renewed USD weakness. Here is a link to some basic info on a head and shoulders pattern: http://www.incrediblecharts.com/technical/head_and_shoulders.htmBono said:
btw- I'm not indorsing this site, it was the first one I found with a Google search.
Cheers,
TRADERguy
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Apologies, seems I replied to the email sender and not to the thread on this site.
Traderguy, I agree with your description of cautious and aggresive trading but would't an aggressive trader sell just prior to the neckline if his primary indicators are telling him to release a clip.
I am having difficulty determining which stratergy to utilise so any help would be appreciated! Kind of depends on the circumstances but with the H&S we are talking about I would short a few ticks before the neckline. To wait for the break or trade the break?
FYI. I daytrade Euro fx futures- cheers..
-----Original Message-----
From: Oliver Lyons [mailto
[email protected]]
Sent: 31 August 2004 07:04
To: Trade2Win Boards Mailer
Subject: Re: Reply to post 'Euro vs USD'
I would be long above 12085/12100 perhaps later today or this week on a bounce and short aggressively on any breaks downwards towards the neckline of the H&S...
Traderguy, I agree with your description of cautious and aggresive trading but would't an aggressive trader sell just prior to the neckline if his primary indicators are telling him to release a clip.
I am having difficulty determining which stratergy to utilise so any help would be appreciated! Kind of depends on the circumstances but with the H&S we are talking about I would short a few ticks before the neckline. To wait for the break or trade the break?
FYI. I daytrade Euro fx futures- cheers..
-----Original Message-----
From: Oliver Lyons [mailto
[email protected]] Sent: 31 August 2004 07:04
To: Trade2Win Boards Mailer
Subject: Re: Reply to post 'Euro vs USD'
I would be long above 12085/12100 perhaps later today or this week on a bounce and short aggressively on any breaks downwards towards the neckline of the H&S...
spreadboy said:Apologies, seems I replied to the email sender and not to the thread on this site.
Traderguy, I agree with your description of cautious and aggresive trading but would't an aggressive trader sell just prior to the neckline if his primary indicators are telling him to release a clip.
I am having difficulty determining which stratergy to utilise so any help would be appreciated! Kind of depends on the circumstances but with the H&S we are talking about I would short a few ticks before the neckline. To wait for the break or trade the break?
FYI. I daytrade Euro fx futures- cheers..
-----Original Message-----
From: Oliver Lyons [mailto
Sent: 31 August 2004 07:04
To: Trade2Win Boards Mailer
Subject: Re: Reply to post 'Euro vs USD'
I would be long above 12085/12100 perhaps later today or this week on a bounce and short aggressively on any breaks downwards towards the neckline of the H&S...
Spreadboy,
Short it at any time if your indicators are telling you to. However, if your trading the head and shoulders pattern I would think a break of the neckline would signal a high probability trade. Selling a little before the break of the neckline is like selling just above a support area. Because by definition a support area is an area where the price will have trouble falling below (too many buyers at that price), it is usually a bad idea to short just above one.
Cheers,
TRADERguy
btw- use the cash (spot) chart for these types of patterns; doesn’t matter much now but it will after you roll to Dec.
