[Soultrader]

I am curious to know if currencies can be traded strictly off technicals? Traders often tell me to watch out for news in the currency market. But with the amount of news that comes out everyday... is there a set of news one needs to watch out for depending on the currency? For example, what sort of news affects the British Pound? I have attached a picture of the pound with some technical analysis. Technically speaking, if this chart was the emini futures... this particular level would be good enough for me to look for a short setup. (based on technicals) What are your thoughts?

[Art Krantz]

Fault lines can be compromized in the absense of news output sure. However, most of the hard & fast moves usually occur on the back of a Fundamental release. Minus the immediate danger of a key economic reading, prices will trade with a technical bias, & the British Pound likes channels. Just look at a 240 or a 30 minute spec chart if you're intending chasing price within the open-close session.

The impact of the big dog releases are keyed in depending on where the big players are looking on a week to week basis, & sometimes on a day-day level. It also doesn't help when the rumor mill gets cranked up either They usually begin doing the rounds a day or so before a major event. Prices can & frequently do become extended on a regular basis. If you're well versed on your pair of choice, you can bounce off the technicals intraday.

I could elaborate, but I'd possibly fill this thread & bore you to tears

I'll just say, ignore the fundamentals at your peril. The releases used to be a darned sight easier to trade than they are now. Even when you line your data research up & cube it, the price strikes get stretched due to all the breakdowns & revisions.

Even the top drawer analysts calling out the reccomm's to a spot desk in real time have to be on top of their game to blanket the current data strikes, & these cats have the cutting edge terminals wired into the circuit.

Your best bet is to fit your technicals extremely tight to your surroundings & be aware of when the Big Dog Data is setting up. Watch the price moves a day or so prior to the major news, & keep your eyes on prior weekly, monthly limit lines. These levels usually trigger the desk flows.

[Soultrader]

Thank you very much for your reply Art. If I was to plot daily pivots on the BP, what close time should I be using? I understand they are traded 24/7?

Also, one thing I have trouble understanding is the volume element with forex. The British Pound futures will show volume while the Forex will not. Futures is referred as spot? And Forex cash?

How reliable is the volume in the currency futures? Im still very new to currencies and the basics are still very confusing to me. I am not confident if I can apply the same understanding I have in the futures market to the currencies market. It seems like banks control most of the price movement with Forex. No floor traders.. no pit noise, makes it a completely different game to me. Thank you.

[Art Krantz]

I see you utilize a volume fix on your price representation. If you're tech trading through the Futures route, then I guess that will assist in shining a light. Whatever floats your boat.

As to your actual triggers? again, that's determined by your set up log & individual trade preference.

I work a very similar process to Anna & Buk. Anna's ops are specific time engineered & level dependant. We grade a channel according to the larger level & whether it's supply or demand related. Buk's are a little more slack given his guy's loosen off the stops & their objectives are wider placed.

A simple % grid or chock quadrant will time you in if price is channeling though, whatever your aims.

Long as the level warrants previously high level activity & the Big Figure back it up? (weekly, monthly s/d line or a confluence area determined by a math rule), the quad will help to identify a probable strike base in the absense of data. Of course all bets are off leading into a key release as the bias will be wholly determined by the consensus/actuals & any revisions or backwriting.

Doesn't really matter what means you identify to climb on, as long as your techs match the bias. A strategy structured exclusively around patterns better be tested thoroughly though, otherwise it'll ship you in & out on so many false signals you'll wonder whether you're on this earth or fullers LOL.

[Art Krantz]

Originally Posted by Soultrader »

If I was to plot daily pivots on the BP, what close time should I be using? I understand they are traded 24/7?

Also, one thing I have trouble understanding is the volume element with forex. The British Pound futures will show volume while the Forex will not. Futures is referred as spot? And Forex cash?

How reliable is the volume in the currency futures? Im still very new to currencies and the basics are still very confusing to me. It seems like banks control most of the price movement with Forex. No floor traders.. no pit noise, makes it a completely different game to me. Thank you.

We use the 5pm New York closing print (interest strip) as the Pivot Line calculation.

Can't help you with your Futures queries I'm afraid. We don't trade them at this office. 100% of our flows are via spot deals.

The money flows & contacts we communicate with don't trade Ftrs.

[notouch]

Fibonacci set ups often work perfectly for the GBP and on both the intraday and daily time frame. It looks to me like we may be about to form the right shoulder of a head and shoulders top on the daily chart. Fundamental releases are not as important as some people claim. Often they just provide a good opportunity to fade the kneejerk spike in favour of playing the longer term move. Remember most currency trading has nothing to do with investing or speculation but is normal business transactions so even if there's a shock CPI release, importers and exporters still need to exchange currencies.

However, there are some big market movers for each currency which you have to watch if you're not to get taken out by a spike. Investors and speculators are focused on interest rate differentials for the most part and to a lesser extend on trade balances. Interest rate announcements are big market movers. On Wednesday we have the minutes of the last Bank of England meeting and everyone wants to know how many members voted in favour of the no-hike decision and how many supported a hike. The quartlerly inflation report is a big market mover. CPI moves the market (Bank of England has a target of 2% and the governor has to write a letter if it deviates by more than 1% above or below that). Retail sales and industrial production are also market movers. Also anything that moves the US dollar like non-farm payrolls and FOMC day also moves GBP/USD.

[notouch]

Originally Posted by Soultrader »

Also, one thing I have trouble understanding is the volume element with forex. The British Pound futures will show volume while the Forex will not. Futures is referred as spot? And Forex cash?

How reliable is the volume in the currency futures?

Spot is another word for cash. So the difference is between forex futures and spot forex. There is no reliable way of measuring volume in the spot market. ESignal provides volume but it's fairly worthless because it includes bucketshops like fxcm that have nothing to do with the interbank market. I think you can get volume based on some interbank banks but it's of limited use because it's incomplete.

The marketdelta website has some interesting material on the use of volume for Euro futures but you have to remember that the futures market is only a fraction of the spot market.

[Soultrader]

Thank you Art and notouch for the thorough explanation. Makes alot more sense now With Forex futures, the BP futures must reflect the price in the spot market? This means that they move identically and trade at the exact same price level? Or are they similar to dow cash and dow futures trading at different levels.

Im probably going to start learning the BP from now and see if I can come up with even one decent trading setup that can I can hold on a longer timeframe (1-3 days) to supplement my current intraday futures trading. It should be interesting....

Why is it that the only available pairs to trade are the major currencies? Do the minor ones exist but just not popular to trade? Thanks