Market analysis and trading calls

Forex Mind Games

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EURUSD in ABC correction?

There are 2 concepts to understand in trading. One, market is forward-looking. It always looks ahead. The pertinent question to ask in trading is not "What just happened?", The stock market usually looks ahead about 6 to 12 months. However, the forex market only looks ahead for the next 1 to 3 months. For example, the market has been looking ahead for ECB and FED to do 2 things since mid-July. EURUSD was expecting ECB to introduce some sort of bond buying for troubled countries like Spain. And for FED to unleash QE3 to help pull the US out of its doldrums. Both of these programs were unveiled in September, which gives the time lead of about 1.5 to 2 months. This explains why EURUSD formed an inverted head and shoulders and turn bullish on mid-July.
Two, because the market is forward-looking, the better question to ask is "What's happening next?" So what is happening next? What is the next BIG news that the market is anticipating for? The next BIG news is for Spain to request for an official bailout. So the ECB's OMT policy can be officially started. The market expectation for the bailout is a matter of when, not if. When is Spain going to ask for bailout? There is some news from the Obama Administration to delay the bailout request until after the US presidential election on 6th November. So it has to happen before or after the presidential election. From what i can gather, my best guess is either between 20-31st October or 12-16th November.
From the technicals point of view, EURUSD is in a possible ABC wave correction. The bailout request is consider to be bullish for euro. Watch for it to turn either at 1.2740-50 (38.2% retracement) or 1.2600-10 (50.0% retracement) BEFORE the bailout becomes front page news.
 

Joh

Sergeant Major
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976
Thank you for this detailed explanation. Have put dates in my diary and will observe - may take a small trade even :) - great if your correct!.
 

Forex Mind Games

Private, 1st Class
Messages
49
Thank you for this detailed explanation. Have put dates in my diary and will observe - may take a small trade even :) - great if your correct!.
I am not 100% correct all the time. This is my analysis and my best guess. I hope it will work out too!
 

Forex Mind Games

Private, 1st Class
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49
Trade summary

Trade summary part 1 - AUDNZD
Waited for 4 days before the price reaches 1.2500 on Thursday. I went short at 1.2517. However, i felt uneasy about this trade. And i went in and out of this trade quickly. Reason being despite the recent rate cut for AUD, AUDUSD remained strong and trended up well. Looking at the AUDUSD chart, it trended up from Monday to Thursday. Only on Friday it went down after failing to break above 1.0300. With the price action for AUD being strongly bullish for this week, i decided not to fight against the trend. Always leave the trading account intact to trade another trade.

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Trade summary part 2 - AUDUSD
One of the reasons for the uneasiness on shorting AUDNZD was this. I attempted to short AUDUSD twice this week. First attempt show me a small loss. Second attempt was a breakeven trade. These 2 trades give me a strong hint that AUDUSD is trending up, and it is not ready to go down. Maybe AUDUSD will be ready to trend down for week 42?
 

Forex Mind Games

Private, 1st Class
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Cable has been kind to me for this week. I went short on monday's opening. And i have been holding my short position for 5 days from monday to friday.
I took partial profits along the way and shifted my stop loss to breakeven. Decided to hold the trade over the weekend. The best trades are the worry-free trades. As these type of trades move immediately in my favour without going near my initial stop losses.
 

Joh

Sergeant Major
Messages
976
Wow that was a great trade/profit -good for you- it takes courage to run a trade like that for a whole week it reminded me i used to do that quite some time ago but the forex climate has changed and feel far from safe doing this now.
I now take longer term small trades but am learning and in these volatile times i often enter at the incorrect time and then am stuck for ages before it gets back there - it is a learning process i guess. Thanks for sharing -it encourages me to keep going.
 

Forex Mind Games

Private, 1st Class
Messages
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Wow that was a great trade/profit -good for you- it takes courage to run a trade like that for a whole week it reminded me i used to do that quite some time ago but the forex climate has changed and feel far from safe doing this now.
I now take longer term small trades but am learning and in these volatile times i often enter at the incorrect time and then am stuck for ages before it gets back there - it is a learning process i guess. Thanks for sharing -it encourages me to keep going.
I keep a journal of all my trades taken for the past several years. After doing an thorough review of the journal, i realize something fundamental about my trading method. When the trade is caught on the wrong side, it is stopped out on the same day. However, when the trade is correct, that trade takes 1-3 days in order to reach my profit objective. After the initial profit objective is reached a few days later, i take partial profits. Also i realize that i need for the trade to develop further for potentially more profits. The final 20% of the winning position is left to run.

This running serves 2 purposes. One to satisfy my greed ego. Satisfy the greed and it should remain full and thus subdued for a while. Two, it is already a risk free trade. No more fears for this trade. What is the worse it can do? Except to take out my breakeven stop.
 

Forex Mind Games

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Short USDCAD 1.0050-70

It is approaching 1.0050-70, which is a significant pivotal support-turn-resistance zone. From the 4hr chart, it is clearly visible that USDCAD turns at this critical S/R zone. Watch for it to re-test 1.0050-70. Go short if it fails to breaks above this zone.
Short 1.0050-70
Stop loss above 1.0100
First target profit 0.9900
 

Forex Mind Games

Private, 1st Class
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88.6% fibo

I have been posting recently on the 88.6% fibonacci retracement level. It is a less common number than the widely used retracement levels of 38.2%, 50.0% and 61.8%. Nonetheless, this 88.6% holds a better risk/reward ratio. For GBPUSD, last friday's downward move retraces near to the 88.6% of 1.6000.
If there are no significant gaps on monday opening, i am planning to go long. Stop loss is below the previous swing low of 1.5975.
Long near 1.6000-10
Stop loss below 1.5750-60
First target profit 1.6100
Second target profit 1.6180
 

Forex Mind Games

Private, 1st Class
Messages
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Fibo time


I have been turning my attention to FIBO recently. So i went searching for all things FIBO related to trading. Here is a short summary of FIBO summation series.
Start with 1, then add the previous number together to form the next number. Continue to combine the previous number with the new number to get the FIBO numbers. Therefore,
1 + 1 = 2
1 + 2 = 3
2 + 3 = 5
3 + 5 = 8
5 + 8 = 13
8 + 13 = 21
and so on and so forth.
Besides using FIBO to find potential retracement levels, FIBO numbers could be used to time the possible dates for markets to turn. This means market could turn at either day 5, day 8, day 13 and etc. Although it is not precise and may not turn at the exact day, most often it turns close enough to the FIBO numbers. Making it hard to ignore this as a coincidence. This could be a useful strategy to time market turning points.
Look at the EURUSD daily chart. Note that price peaks at 1.3170 on 13th Sept, which is the week after the announcements of ECB OMT and FED QE3. It is used as the starting point for the calculations.

Watch for day 34. This is the next FIBO number. Because it is not exactly precise but a good estimate, watch for it to possibly turn from day 33 to 35.
 
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