Week 50

[Reaver]

Thanks Texxas,
that helped alot!

[torero]

Looks like that bounce right off the 9676 perfectly. It's amazing how fast it recovered from the support. Since I missed this boat, let's if the next boat comes around.

[Anna-Maria]

	Quote:	texxas
	One of our colleagues is closely observing the 14EMA on the 240m Cable chart. If you plot it, you'll see what I mean. It's managed to hold it's close against that trend marker since it broke up thru 8850. Any prolonged close below it, especially should the NFP's offer the buck a temp kicker, will be a decent buffer as to the potential strength of Cable in the short term Mov Averages, in a trending phase, are certainly as good as any other price aid for offering a heads up. As long as they're observed via the longer timeframes & utilized correctly.

Not sure whether anyone here observes or uses moving averages in their trading? Most of the mainstream trade sites out there appear to be infested with mov avg crossovers on various timeframes, with no apparent understanding or appreciation of how to filter/maximize their usage.

Continual "blind triggering" of any price aid is a sure fire route to the poor house (especially mov averages), & like any other form of price aid activity, a good understanding of it's weakness/strength capabilities is essential.

I mentioned y'day one of our colleagues has been plotting the 14EMA on the 240m frame (a favored math reading on this swing frame) during this aggressive shunt up on the Cable.

He had 2 options as price began threatening this consolidation zone.

1) He could have extracted some more profit from the swing position ahead of Friday's NFP data & focus on his trailing stops into weeks end...or

2) Run a 'jobbing' trade (a counter short) on an intraday basis to soak up any potential move back to his 1st line trailing stops before considering legging out on the swinger. Thus balancing out the p/l to ensure this temp top up at 9850 wasn't a critical top?

He elected to execute the latter. With NFP so close, he doesn't want to compromize the profits on this leg should the Payrolls come in negative for the buck. If the data prints $ negative, we should get another fierce leg down on the buck & punch prices thru this consolidation top.

If prices roll over here, he can calmly close out further swing positions and/or close out fully & reverse tack.

The 240m chart highlights the break of the 14EMA line off the 12.00 London bar. The preceding neutral bar prints were telling him price was struggling up here & a potential (temporary?) 'topping out' was unfolding.




By drilling down to the 15m frame, he can guage the pullback strength off the 4hr low bar print & assess the potential of either partially encashing/running a short-term contra position. This now offers him total control on the primary swing position. It's not forcing him into a panic scenario wondering whether this consolidation top is a genuine "rollover" or simply a profit taking/temp exhaustive phase in the overall Cable Bull run.

If prices move back to his intraday entry, he can fold at the b/e & remain positioned 'long' the move on the remainder of his trades. If it continues down thru 1.97+ he can ride it & adjust his lower trailing stops to capture a "double profit" scenario.

The point being: whichever indicator/price aid mechanism you choose to employ, don't trade it blindly...look for the pullback or test of a price bust area to ensure you're not being lulled into a trap!

Hope it helps sparks an idea or two as to how folks might incorporate indicators/price aids into their arsenal?

[cowpip]

That is excellent money management, texxas. Without this kind of money management, accounts are surely more prone to bleed unnecessarily.

Excellent post! Thanks.

[Anna-Maria]

Cheers Cary!

It's just one option. This type of activity works best when prices are trucking along aggressively in a trend.

It's certainly not financially productive to bolt it on when prices are contained inside >150 pip or so ranges. Otherwise it's likely to result in a cancelling out scenario. Not to mention ramping up comms/costs etc.

It really comes into it's own when you've scaled out of your 1st profit leg & maybe re-adjusted stops to protect the initial entry?

It then saves diluting the profit of the original entry by scaling out. Sure, scaling/compounding is still a sensible option, as we never really know how far a move is gonna run.

But when prices ramp up/down aggressively & you trail it to sensible swing zones, jobbing can satisfy the "greed/fear" concerns.

All it really does is buy the trader time. Sufficient time in which to assess the price action moving away from a potential "turn" against the trend.

Eventually of course a decision needs to made. But rather than instigate a knee-jerk reaction (only for price to fake out the weak hands before re-engaging the original directional move), it affords a little more observation time!!

[torero]

That's excellent observation and advice. I'm sitting tight today, not sure which way the market wants to go just yet now that 9650 is blown but I'm not convinced just yet.

[Anna-Maria]

Yeah, they're treading cautiously ahead of Friday by the looks.

The UK printed a softer than anticipated Industrial Production number earlier this morning & there's obviously pockets of profit taking unfolding this week too.

As you say, it's not particularly convincing nor is it going to worry the Bears too much either at these levels.

It's shyed away from this 1st (23.6%) Fib above the 1.96 round number pretty smartly, which undoubtedly equates to continuing range trading in front of the Payrolls.

It's playing a game of bluff with the nervy traders trailing tight stops at the mo... 'shake, shake, shake'

[torero]

Looks like we're near or at 21.4% on 240min frame. Let's see if this will make a double-bottom to make sure this is good support. A bullish pennant is still at work and I'm still flat. It's also curious to note that the opposing pattern is the inverted cup-and-handle pattern at play as well. Hmmmm, ambiguous isn't it?

[Anna-Maria]

A quiet week leads us into one of the months most volatile data prints. Cable has held it's footing quite comfortably during this profit paring phase, & continues to flirt with it's 1st pullback Fib off the larger swing run above this 1.96 big fugure.

The 2 near term support zones (on the 4hr chart below) are clear initial targets for the ($) Bulls should the Payrolls offer an excuse to run prices up on the buck.

No real danger as yet for $ shorts, as prices have at least another 2.5 cents to shift (back to the 50% zone) in order to honor a satisfactory retrace/pullback point on the swing chart.

Volumes, as expected, are on the light side leading into 8.30 EST. Some decent guages now exist both North & South of this level into the day's close - should be an interesting NY session.