Busy Day Tomorrow

[Sledge]

I feel like I am a bundle of questions today.

This one is for Art: You mentioned in a number of posts "2 way stop activity" or "2 Way" Could you define the term and possibly elaborate on it and how it may apply to the term "2 Way stop activity" or maybe their is such a thing as "2 way continuation activity" if I am thinking of it correctly?

In one post you had mentioned "I'm essentially seeking out confirmation of probable 2 way stop activity"
Does this mean that in a consolidation period or "zone" that you are seeking bars that paint as a "Doji" or defined as a bar where it appears the bears and bulls interests are conflicting? In order to prime yourself for your next move- either you will let the position ride and continue or you will see this area as a signal to exit your positions or scale out?

Thank you.
Aaron

[milliard]

	Quote:	Sledge
	I was going back over the thread and wondered if you could explain the Horizontal Grids you mentioned in #1 above?

I’m guessing that comment maybe followed on from a post including a graph Aaron? I’m sure Arty stuck up a range grid example a while back?

Anyhow, it simply refers to the plotting & observation of horizontal s&r levels is all. The grids are something Art & Jimmy occasionally use to get their bearings if price is stringing out into a confined range.

Apologies for the confusion. You’ll get all you need from plotting & observing the traditional s&r levels & zones.

It’s definitely nothing to do with Gann or Elliott material. We don’t pay any attention to that stuff.


Art has left for the w/end Aaron, but I'll answer that call for you.

2 way is: buy & sell. It means he was seeking confirmation that continuation buy orders would swamp & overwhelm possible counter (sell) stop activity at a specific level, (usually a previous area of supply) if prices were travelling back up the ladder in Bull mode.

Key levels will generally harbour 2 way traffic, where buy & sell orders are stacked (layered). Until all the tickets are worked thru the system & absorbed, prices will bounce around & string out.

Obviously, if the order book is light of counter flow activity, price will punch thru a level unchallenged & head straight for next level bid or offer zone.

[milliard]

If you look back at the graphs which have been posted up on here, you'll see the highlighted area's on them contain the info mentioned in the above post.

But here you go, we got ourselves a live one from yesterday which nails it right down for you. Anna-Maria's post (#125) tickboxed this lower demand zone @ .7750-780 as a likely brake on this leg down on EU v/s Sterling?

She had one of the fella's peel off a little more profit today as it shunted into that zone & pinged back towards her next secondary line @ .7840 ahead of stiffer tests at the highlighted levels further up.

These area's hide 2 way activity up & down the map & will often slow prices as a trend attempts to mature & string out. Sellers will resume their aggression on pullbacks to near-term supply lines if the bid activity below fades & (profit) liquidation eases.

These are the area's you might want to focus your attention on if you're seeking to generate decent, high percentage set-up & trigger opportunities.

[Sledge]

Andre-
You are the man! Thanks for the clarification on both. I figured you meant something along those lines with the "grid" but wanted to be sure. I know you guys pay zero attention to Waves, dots, or other items. But I wasn't sure if you did look at the angle of the ascent or descent as part of your technical analyis. All of these answers are helpful in lifting the fog for me.

So is it fair to say that the prices on these instruments will travel between these zones fairly easily without much resistance?

Obviously you'll get your early exit folks on a bull move who will close positions and temporarily stunt the forward (upward progress) but if I am to use your example if I were keen enough to have gone long @ .7750, would I be farily confident to let that ride until it gets to the 780 neighborhood (zone) and then re-assess upon its arrival @ 780 to see if:
A. It would form a contuniation pattern and stay in the trade
or
B. See a rejection or reversal pattern and cash out

Am I getting warmer?
Much Thanks!
Aaron

[cowpip]

	Quote:	Sledge
	So is it fair to say that the prices on these instruments will travel between these zones fairly easily without much resistance?

Nothing in forex travels fairly easily without much resistance, imo. There is always resistance. From the micro to the macro time frames, previous support and resistance will be tested. Once in a while, price will take a good jaunt toward the next S/R zone (particularly post-news), but even those zones are usually retested at some point.

	Quote:	Sledge
	... but if I am to use your example if I were keen enough to have gone long @ .7750, would I be fairly confident to let that ride until it gets to the 780 neighborhood (zone) and then re-assess upon its arrival @ 780 to see if: A. It would form a contuniation pattern and stay in the trade or B. See a rejection or reversal pattern and cash out

If you see the price action that supports a quick jaunt back up higher to the 7800 area, then carefully consider it. But contra-trend punts are always riskier. In this case, (and imo) there wasn't a good signal on anything but some sub-hourly bars to attempt a long on. In this particular case, you would have been wiser to be careful because:

1. You're punting contra-trend (always a bad idea).
2. Your target is so small that your entry would have to be quite well defined (on the micro frames - 5 to 15-min frames) and be well executed in order to reduce your risk / reward to a justifiable level.
3. The hourly and (particularly the) 4-hour bars were not encouraging for longs.
4. Pre-weekend position adjustments would have made this an 'iffy' trade.

The price action you saw where it bounced off of the 7750 zone was almost certainly more to do with pre-weekend profit-taking / adjustments. That zone hasn't really been well tested yet and will almost certainly be tested harder next week.

In fact, the current price indicated on the chart (7823) is a former S/R boundary (from the base of the bigger pattern - it's testing the underside of that now) and may actually be a good place to start looking for a reversal signal to run price back down to the 7750 zone.

The safer direction is always with the flow (and in this case, that means short is the path of least resistance). That means being patient and waiting for pull-backs. Then waiting for price action to confirm a reversal back in the direction of the dominant trend.

[Anna-Maria]

	Quote:	Sledge
	So is it fair to say that the prices on these instruments will travel between these zones fairly easily without much resistance? if I am to use your example, if I were keen enough to have gone long @ .7750would I be farily confident to let that ride until it gets to the 780 neighborhood (zone) and then re-assess upon its arrival @ 780 to see if: A. It would form a contuniation pattern and stay in the trade or B. See a rejection or reversal pattern and cash out

It’s fair to say we have absolutely no idea whether price will travel effortlessly to next level reaction or not Aaron. We can’t control that. What we can control however is what we’ll do if it doesn’t, what we’ll do if we get an opportunity to compound on the way & what we’re going to do if & when it gets there.

Our priority is to obtain maximum value entries wherever possible, whilst managing our risk & exposure as efficiently as possible at all times. We locate our upside & downside vibration levels, & always have a trade management plan in place. What price does & how far it travels in our favor, is purely down to the strength of the participation.

As Cowpip quite rightly points out, the flows on this pair are currently weighted to the downside.

I earmarked .7750-780 as an area of interest for reaction/profit taking purely on the basis of previous price action behaviour.

If you glance a little to the right of that zone around April 3&4, you’ll note that prices got shunted back up there 100 odd pips early last week as it vibrated against it? It found supply at .7935-50 (as highlighted prev on here) before continuing back down on it’s current trend run.

Point is, these zones or levels are merely markers or guides. They’re not set in stone, neither are they automatic trade triggers. Sure, the chances of them reacting are usually high because they are being observed & traded by a varied selection of players with different agenda’s. Stops & orders will usually be active on & around these key levels to assist with price flows.

But whatever you personally choose to do as prices butt off a specific level or zone will be wholly dependant upon your strategy & style of execution. Your key priority is to manage your trade as efficiently as you can in accordance with your trade plan.

If your signals offer you a ‘long’ at .7760 or .7780 & it reaches 100 pips further up the ladder without any undue stress, then you’ll already know what your next move will be because it’s part of your plan….or at least it ought to be. On the flip side, if it starts flapping around & begins taking on water at this current lower high (.7820-40), you should also know what actions to take.

It’s very dangerous (psychologically) to allow yourself the luxury of confidence or assumptions that because price has behaved impeccably before, it will repeat the process again. Never assume anything, & always have an each-way plan.

Your research, planning & execution simply offer you options. If you cover your bases correctly from the get go, they’ll be no surprises if the trade registers a profit & scratch or a loss.

[Sledge]

Cowpip and Anna-
Wonderous depth. Thank you for your clarification!!

Cowpip:
You are indeed correct that the bias is a downward trend, and one would have to be VERY careful in taking a long trade in this situation. As I don't trade this pair personally, figured I could ask this general question off the charts provided. Apologies if I meant to say that anything in forex is a simple- buy here and sell here scenario. As with all trades the utmost eye and keen awareness is critical to maximizing the trade and watching it carefully.

Anna-
Thank you as well. This is a great, sort of, all encompassing post that tidy's up some loose ends in my head. See I'm still at a phase (who knows if this would mature later on in the trading career) that if I were able to grab a 100 pip move- even if on a one day bounce. That for me is a stellar day and one that will put plenty of profit into the account. I'm kind of a chicken s*it in the sense that if I gain 100 pips, I take it and bank $. The pullbacks are for me to re-assess and look to see if their is another opportunity for entry. As you folks are far greater skilled than I am, I would expect (as your clients probably do) that a 100 pip move and peeling off the position would not be acceptable to them. But you guys play in the majors, I'm still in the bush league ;-)

Once again, I thank you both for your contribution and insight. This is by far the most kick-ass thread going on the TL forum- hands down!
Aaron

[Sledge]

Another question (What a shock I know) I have posted a Daily GBP/USD chart and wondered if I could get some feedback on it. On the chart below and if you watch this pair as of the last 2 weeks or so, it has been a constant and daily up and down battle.

The blue lines are the top of the channel that is in a downward trend off the 2.0397 high of 3/24/08

The red lines are the ever shrinking ping pong match that we have seen transpire ever since the 4/17/08 channel breakout. We see clear testing of supply on the top of that channel and we also see the range of movement starting to get to the point of constriction where little movement (i.e. elbow room) is in there to make a play.

My consideration is that this pair will indeed breakout to the upside farily soon, but I'm still humble enough to be skeptical of it and not 100% sure that I am reading it the right way. It appears to be basing, but with little signs of long tails to show testing, or long wick bars to show attempt to go up with extreme selling going on, this is a tough nut to crack. Their just are not clear signs to look at. Add into it the fact I just learned a few days ago that at month end, inventory build-up or book tidying may be taking place- makes the pond a little more muddy.

I'd like to learn from this chart, maybe someone sees something I do not on it-to someone it may be clear as crystal of what is transpiring, but since I have just recently moved into the longer term, zoom out, phase of my trading, I have yet to see something like this.

Thanks,
Aaron
gbp_daily_ping.jpg

[Anna-Maria]

Man, you sure must enjoy busting your balls on that waste of space pair Aaron?! It’s a car wreck.

I guess for folks who enjoy getting down & dirty roughing it inside crowded spaces, then it’s a traders paradise. But it’s not for me.

I'm not in the least bit interested in learning anything from a technical chart Aaron, only earning from it, & that pair isn't offering me wages at this time, therefore it's off the radar.

I won’t even begin to get interested in it until it breaks & re-tests 9965 to the north….9600 to the south.

If you can’t see a high opportunity trade on it anywhere soon, then flip thru the menu & locate a pair that does offer one.

I guess you’re going to have to obtain feedback from someone whose currently trading it.

[cowpip]

	Quote:	Anna-Maria
	I guess you’re going to have to obtain feedback from someone whose currently trading it.

Anyone who is trying to trade that pair is undoubtably looking like this:

Screen's full of bars that do not stack nicely will almost certainly sap your cash faster than an unguarded bank. That's why eur/gbp has been such a nice pair to trade over the last few months. Nothings friendlier to the account than predictability, and bars that stack nice are a whole lot more predictable and liquid than those that don't.