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Simple technical analysis

Discussion in 'Beginners Bootcamp' started by Ricex, Dec 16, 2009.

  1. Ricex

    Ricex Sergeant

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    With pleasure..... and it's free... what a cheap skate!

    PhotoFiltre - Free software downloads and software reviews - CNET Download.com

    I got it for it's simplicity, this isn't photoshop but for free I think it's incredible.

    So in MT4 I just click File, Save as picture. This gives you just the chart as a GIF and not your windows screen. Open it up in PhotoFiltre, you may have to click Image, Mode, and make sure it's in RVB for all the tools to work.

    Hope it helps. Will be checking out your site.
     
  2. Ricex

    Ricex Sergeant

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    Hi,
    a difficult day in the european session on the dollar pairs, well for me at least.
    A brief power up first thing this morning caused maybe by the panic selling of Euros on the back of ECB member Starks comment:

    .....nice one Starky, the greeks replied:

    .... oh well that's that sorted then.

    Here is the dollar index today looking very undecided before Fridays monthly circus event, NFP.

    usdx 1.
     
  3. Ricex

    Ricex Sergeant

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    Correlation with commodities and gaps

    Hi,
    this is not really part of the simple analysis that I want to do here, but as an aside it's quite interesting and we had a nice example today to show what can happen.

    Some currency pairs are correlated with commodity prices. The canadian dollar is heavily correlated to oil prices, generally oil up=cad up, oil down=cad down, and this is an example of how they can interact, I'll keep it simple.

    On this 15min oil chart we can see a 50 point gap in the price between the closing and opening of this market. Gaps have a very high probability of being filled within the first hours that the market opens, that's to say that the price needs to comeback to where it left off yesterday. So if you are an oil trader you would be looking to go long and fill the gap, and especially because we are already in an uptrend, that's important.

    oil gap example.

    If your not an oil trader you can still take advantage of this high probability oil move by looking at it's correlated currency buddy the CAD. Now your expecting oil to go up in price so you can expect the CAD currency to go up in price as well, at least just until the gap has been filled. Obviously with the USD/CAD pair this means trading short.

    cad oil example.

    Here you can see that we got a nice 40 pip move in the CAD as the price of oil went up and just to help it along a weakening of USD at the same time. It didn't last long but just enough to start the day with a little profit and to show how keeping an eye on commodity prices can help our trading.

    Last chart example just to show that in some cases trying to play the gaps will not always work, and looking for price to retrace in an uptrending market carrys more risk. Gap A was filled but Gap B just couldn't drop back far enough and so this gap remains open.

    oil gaps example.
     
  4. Forexwatchman

    Forexwatchman Sergeant

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    Cool insight Ricex. This is an area of the market I know little about and anymore examples you have would be good to see.
     
  5. boaz

    boaz Recruit

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    keep it going

    Good exchange between the two of you. I'm new to trading and your dialog is helping me out.
     
  6. Ricex

    Ricex Sergeant

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    Hi,
    the dollar cad pair work well with oil because of the importance of oil in the canadian economy, another well correlated pair is the aussie dollar with gold, Australia is big in gold mining.
    Here are two charts starting from the beginning of the year one of the aussie, one of gold. They look pretty similar.

    gold correlation example. aususd correlation example.

    ....and the two superimposed on top of one another...

    gold aus correlation example.

    The key is if you trade these currencies is to just keep an eye on their commodity partner, it can help sometimes in giving direction or confirmation, or as we saw today with oil playing the gap, a case of being aware of the overall picture.

    Another example that finished better than expected, hope it gives some idea.

    oil gap example 2. cad oil example 2.
     
  7. Ricex

    Ricex Sergeant

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    appreciate that thanks, please join in if you have any question or ideas.
     
  8. Ricex

    Ricex Sergeant

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    Cable long

    Hi,
    this is a trade that I didn't take today as I was unfortunately doing other stuff and couldn't spare the time, but this is how I would have done it had I been at the coalface. I would have taken the conservative route.

    gbpusd 5min break.

    There's not a lot to say really about this trade technically. Since NFP cable has been well supported and we were down in the lower regions of the range that we can see on a daily chart with plenty of room above. A simple break of previous highs, break of previous DT, in an uptrend with the $ not really showing any real strength and I think we have potential for a decent move.

    The chart shows two entry points, one on the break, and one where price comes back and finds support off of the previous resistance line. I tend to trade the second option called a 123, but it's whatever you feel happy with.
    A news event further on could have been your call to exit, 70 odd pips is a pretty good haul and you may have decided to quit and run, or at least take a sizeable percentage off the table.

    The news was mixed and stalled cable for the next 45mins before continuing on it's merry way. Next exit would have been signaled by the 'shooting star' candlestick at resistance which would tell me that a reversal was likely, it might not be terminal but if you want to grab the cash and run....now would be a good time.

    So with either exit the risk to reward ratio comes out positive, above 3 anyway which in my book is a result...... pity I didn't take it :unhappy:

    Btw I've started a blog if you fancy visiting, good trading soldiers: FOREX DAWN
     
  9. Forexwatchman

    Forexwatchman Sergeant

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    Keeping it simple and sticking to the basics, I love it. These are the types of trades that makeup the life and blood of a successful retail trader. I've been trading the ranging EUR/USD all week and its been a pleasure just waiting for price action to reach the suuport or resistance line and then watch it reverse. Talk about a double top, we've seen a quadruple top to the EUR/USD this week! It also just so happens to be stalling at a nice 61.8 fib level on the 4hr chart. Sometimes I just get too excited at how easy it can really be, but then I remind myself to leave emotion out of trade (New Year's Resolution).
     
  10. Ricex

    Ricex Sergeant

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    Sometimes with trading a trader can feel really in harmony with the market and practically everything he/she touches is a winner. These are great feelings and make up for the times when it's just not happening for us...... certainly make the most of it, but as you say don't let the emotions carry you off to some distant cloud, keep those feet firmly planted on terra firma.

    Cable now 150 pips away from that entry that I didn't take...... keep smiling Ricex.
     

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