USD/JPY Daily Video, November 04, 2010

[Sive Morten]

Hello Sive,

I attached a daily chart of USDJPY. What is the stop loss? I suppose for DRPO it is at 61.8 % between the low extreme and the high after the second penetration. In my chart it is the white lines and the 61.8 is the green line. If the daily closes below the green that means the failure right?

As far as the TP goes, I would go for OP. Would you do the same?

How would you trade a DRPO failure in this case?

Rasto

You're right, Rasto, theoretically stop should be below 5/8 at close. But, usually, I use deeper levels, such as 0.786 or even 0.88 for stop placing. Understand, DiNapoli has written his book in 90's. Market has changed significantly. Now 3/8 and 5/8 Fib nodes are well-known and usually cleared by m-makers well.
In case of DRPO failure - you may enter short or just step aside. Don't struggle with it and don't be long.

 

[deanz]

Joe DiNapoli videos

I got an email from SFO magazine with a link to 4 short videos with Joe DiNapoli explaining a few of his ideas, you have to put in a name and email address to see them but any address will work and it will then instantly starts showing the videos.

TraderTube

.

 

[georgeta]

EURUSD butterfly

Hello Mr. Morten!
I was verry pacient and waited for the EURUD butterfly to form. What happens next? Do you think that 1.27 expansion target has been accomplished, or should we wait for 1.62? I know that you expect a stronger greenback.
Thak you for the great work that you are doing for us!

 

[rasto007]

You're right, Rasto, theoretically stop should be below 5/8 at close. But, usually, I use deeper levels, such as 0.786 or even 0.88 for stop placing. Understand, DiNapoli has written his book in 90's. Market has changed significantly. Now 3/8 and 5/8 Fib nodes are well-known and usually cleared by m-makers well.
In case of DRPO failure - you may enter short or just step aside. Don't struggle with it and don't be long.

Sive, since we are watching for the daily close, what you are saying is that MM can push the market not only to pierce through the 5/8 level intraday but even make it stay there at the close?

Rasto

 

[Sive Morten]

Sive, since we are watching for the daily close, what you are saying is that MM can push the market not only to pierce through the 5/8 level intraday but even make it stay there at the close?

Rasto

Well, theoretically we should exit or reverse position. But, usually, I turn to intraday charts to watch what is happening there.
For expample - we have JPY DRPO failure right now, but on 4-hour chart almost perfect Butterfly is forming. Probably it makes sense to take this risk and sit in possition a bit longer to watch will butterfly work or not.
Many things depends on definite circumstances. On commodities and US Bond market triple Repos happen very often.

in JPY there is definitely some support exists. Because - look how CHF dropped compares to JPY. Yen did not move much even on FOMC statement.

 

[Sive Morten]

Hello Mr. Morten!
I was verry pacient and waited for the EURUD butterfly to form. What happens next? Do you think that 1.27 expansion target has been accomplished, or should we wait for 1.62? I know that you expect a stronger greenback.
Thak you for the great work that you are doing for us!

Hi Georgeta,
Hm, I do not expect stronger dollar... Why do you think so?
Currently EUR is overbought on daily time frame. So some retracement is possible. At the same time it hasn't quite reached 1.27 expansion. Up move should continue but in nearest time we can see a pause for retracement to normalize Overbought.

 

[rasto007]

Well, theoretically we should exit or reverse position. But, usually, I turn to intraday charts to watch what is happening there.
For expample - we have JPY DRPO failure right now, but on 4-hour chart almost perfect Butterfly is forming. Probably it makes sense to take this risk and sit in possition a bit longer to watch will butterfly work or not.
Many things depends on definite circumstances. On commodities and US Bond market triple Repos happen very often.

in JPY there is definitely some support exists. Because - look how CHF dropped compares to JPY. Yen did not move much even on FOMC statement.

Thanks Sive. I have reopen my DRPO buy on USDJPY about a half an hour before the NFP announcement. It made sense to move the stop loss as you recommended. It worked out really nice.

I think it was a really good point that some things changed since Joe formulated his method in the book. What would you say are additional point that his published method needs to adjust?

Rasto
Rasto

 

[Sive Morten]

What would you say are additional point that his published method needs to adjust?

Rasto

Rasto, I think that Joe's method does not need much adjustment. It's good, even without any ajustment. The major nuance is a spreading of Fibonacci approach to the markets. And this fact demands softer view, more extended stop losses to give market a breathing space.
Other things work very good even now.