On hourly point and figure chart, yen made a double top breakout at 98.25 confluenced with the breakout of resistance line. The up thrust stopped at 99.25. Looks like yen need more time before made a decision how to attack the key 100 level.
Tuesday, March 31, 2009
03/31/09 Forex Market Comments
Both cable and euro showed reduced volatility today. Their rallies stopped at 38.2% Fibonacci retracement level. For cable, there was a pin bar on hourly chart at the rally top. Cable formed a NR20 (the narrowest range in 20 trading days). Watch out for tomorrow might be a trending day.
On hourly point and figure chart, yen made a double top breakout at 98.25 confluenced with the breakout of resistance line. The up thrust stopped at 99.25. Looks like yen need more time before made a decision how to attack the key 100 level.
On hourly point and figure chart, yen made a double top breakout at 98.25 confluenced with the breakout of resistance line. The up thrust stopped at 99.25. Looks like yen need more time before made a decision how to attack the key 100 level.
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03/30/09 Forex Market Comments
This is fourth down day for Cable. Usually it's time for swing trader to cash in. On hourly point and figure chart, 1.41 was the support. There was a pin bar on hourly candlestick chart pointing the swing low at 1.4109. It would be unwise to initiate a short trade. Too late to the party.
On hourly candlestick chart, euro had a MACD divergence signals the stop of slide.
Yen is still in the swing mode. The quick slide stopped at the beginning of London session, then snapped back. The long lower shadow on daily chart indicated the support.
On hourly candlestick chart, euro had a MACD divergence signals the stop of slide.
Yen is still in the swing mode. The quick slide stopped at the beginning of London session, then snapped back. The long lower shadow on daily chart indicated the support.
Sunday, March 29, 2009
Day Trading Rules - Trade What You See Not What You Think
Thursday for euro was a NR7/ID (narrow range 7 & insider day). Since euro already stayed in a top range for 5 days, such kind of volatility dried up would indicate a high probability trending day on Friday. For a NR7/ID, there is no need to predict which direction market will breakout, cause either direction is possible. We just need to follow what the market is leading us.
The first short signal was given at breakdown Thursday's low. On hourly point and figure chart, it's a double bottom breakdown at 1.3500 confluence with the break of support trend line. The second short signal was given at breakdown the bottom of the top range, on hourly point and figure chart, this was a breakdown at major support at 1.3433.
1st downward target: 3356 (average daily range)
2nd downward target: 3265 (average daily range + 1std)
3rd downward target: 3174 (average daily range + 2std)
The major downward movement happened in London session. In US session, euro found support at its daily 2nd downward target. By the way, Friday formed a WS7. This was a classical NR7 setup. Detail information about NR7 setup can be found in Linda Raschke's Street Smarts: High Probability Short-Term Trading Strategies
or Toby Crabel's book.
Cable made a similar breakdown at the bottom of its top range. Before the breakdown, cable already made a series of lower highs and lower lows, on point and figure chart, cable formed a downward channel, the short signal was given at the double bottom breakdown at 1.4533, confirmed by the breakdown from the channel at 1.4433, then followed by the breakdown from the support at 1.4400.
Yen met the same resistance from 99. Last week on hourly point and figure chart, there was a triple top false breakout. This time we got a double top false breakout. History does repeat itself.
The first short signal was given at breakdown Thursday's low. On hourly point and figure chart, it's a double bottom breakdown at 1.3500 confluence with the break of support trend line. The second short signal was given at breakdown the bottom of the top range, on hourly point and figure chart, this was a breakdown at major support at 1.3433.
1st downward target: 3356 (average daily range)
2nd downward target: 3265 (average daily range + 1std)
3rd downward target: 3174 (average daily range + 2std)
The major downward movement happened in London session. In US session, euro found support at its daily 2nd downward target. By the way, Friday formed a WS7. This was a classical NR7 setup. Detail information about NR7 setup can be found in Linda Raschke's Street Smarts: High Probability Short-Term Trading Strategies
or Toby Crabel's book.
Cable made a similar breakdown at the bottom of its top range. Before the breakdown, cable already made a series of lower highs and lower lows, on point and figure chart, cable formed a downward channel, the short signal was given at the double bottom breakdown at 1.4533, confirmed by the breakdown from the channel at 1.4433, then followed by the breakdown from the support at 1.4400.
Yen met the same resistance from 99. Last week on hourly point and figure chart, there was a triple top false breakout. This time we got a double top false breakout. History does repeat itself.
Thursday, March 26, 2009
Apply Point and Figure Charts for Forex Day Trading
On hourly point and figure charts, yen made a double top pattern at 98.50, which is at the same level of the triple top before last week's slide. Then the double top breakout met the same resistance from 99. It would be interesting to watch whether this up thrust will challenge the key 100 level.
Euro met a double top resistance at 3633 in early US session. The slide ended with a higher low, which indicates buying interest.
On pound's candlestick chart, it's clear the lower highers indicate selling pressure.
On hourly point and figure chart, pound formed a downward channel. After met the overhead resistance from the top of channel, pound broke down from the pivot point (4598). The slide stopped right at the bottom of channel, which is also the 38.2% fib retracement level. The key support level 4392 is still intact.
After five days of top building, euro's daily range contract and today is a NR7/ID, we might have a trending day by the last trading day in March. Yen formed a NR7.
Euro met a double top resistance at 3633 in early US session. The slide ended with a higher low, which indicates buying interest.
On pound's candlestick chart, it's clear the lower highers indicate selling pressure.
On hourly point and figure chart, pound formed a downward channel. After met the overhead resistance from the top of channel, pound broke down from the pivot point (4598). The slide stopped right at the bottom of channel, which is also the 38.2% fib retracement level. The key support level 4392 is still intact.
After five days of top building, euro's daily range contract and today is a NR7/ID, we might have a trending day by the last trading day in March. Yen formed a NR7.
Day Trading Rules - Patience is a Virtue
The top building phase for euro is very tricky. The lower boundary was attacked three times and made a series of lower lows. Finally, the support was found at 3415 - the low of 3/19. Each breakdown, each lower lower, made it look so like a trend reversal. It's definitely not a time to take the break signal during the phase of range building. Most likely it is a trap. Since the boundary was built, we can shift our attention to the upside breakout. If euro want to stay longer inside of this range, that's fine; if euro take a breakdown, we will respect that. We don't predict how long euro will stay inside of this range, nor which direction it will break, but we do know if ever euro breakout from this range, we would like to follow it.
Pound found its top at 4776, the morning up thrust made a lower high. Key support level is 4392.
Yens retracement was less than 38.2%. So the up trend on hourly chart is still intact. It would be interesting to watch how yen gonna deal with the overhead resistance.
Pound found its top at 4776, the morning up thrust made a lower high. Key support level is 4392.
Yens retracement was less than 38.2%. So the up trend on hourly chart is still intact. It would be interesting to watch how yen gonna deal with the overhead resistance.
Tuesday, March 24, 2009
Day Trading Rules - No Setup No Trade
As mentioned in yesterday's post Inside Day for Three Major Currency Pairs, euro is in a top building phase. It's a very tough switch from a trend mode to a swing mode. There were three false breakdowns from the top range. At the beginning of US session, euro formed three pin bars which indicated indecision. At 1:00pm, euro closed under the lower bound of the top range. Although we were anticipating a top breakout for trend following, we need to respect what the market is telling us now. There is no long signal yet. Patience is a virtue here. 3415 gonna be a key support level.
Pound did breakout and formed a higher top range. That's the kind of price action we would like to see in an uptrend. Pound made a 2nd new high of 20 trading days (H20).
Yen kept moving up and almost retraced last week's slide. Whether this up thrust will challenge the key 100 level, only the market can tell us.
Pound did breakout and formed a higher top range. That's the kind of price action we would like to see in an uptrend. Pound made a 2nd new high of 20 trading days (H20).
Yen kept moving up and almost retraced last week's slide. Whether this up thrust will challenge the key 100 level, only the market can tell us.
Monday, March 23, 2009
Inside Day for Three Major Currency Pairs
Friday was inside day (ID) for three major currency pairs. Since there was no reduced volatility, we should be on alert about false breakout.
At the beginning of London session, euro made a triple top on candlestick chart, just 2pips shy of Friday's swing high. Noticed the divergence given by the MACD, even if euro did breakout, we wouldn't take a long position. There was a strong support zone just above 1.3500 (swing high 3533, Friday's low 3516, and 23.6fib 3524.) 3500 is today's downward average daily range. Since the uptrend was already established, the probability for euro to reverse is slim. The downward movement took Friday's low by 32pips, then crawled back. That's a classical stop hunt. Now euro formed a perfect top range from 3736 to 3516.
Unlike euro, pound did breakout, but all three attempts failed, and formed a triple top.
Yen was staying in an upward channel, made a series of higher highs and higher lows. It retraced more than 61.8% of last week's slide. On hourly point and figure chart, yen made a double top breakout. Yen reached its upward average daily range 97.30.
At the beginning of London session, euro made a triple top on candlestick chart, just 2pips shy of Friday's swing high. Noticed the divergence given by the MACD, even if euro did breakout, we wouldn't take a long position. There was a strong support zone just above 1.3500 (swing high 3533, Friday's low 3516, and 23.6fib 3524.) 3500 is today's downward average daily range. Since the uptrend was already established, the probability for euro to reverse is slim. The downward movement took Friday's low by 32pips, then crawled back. That's a classical stop hunt. Now euro formed a perfect top range from 3736 to 3516.
Unlike euro, pound did breakout, but all three attempts failed, and formed a triple top.
Yen was staying in an upward channel, made a series of higher highs and higher lows. It retraced more than 61.8% of last week's slide. On hourly point and figure chart, yen made a double top breakout. Yen reached its upward average daily range 97.30.
Saturday, March 21, 2009
03/20/09 Forex Market Comments
According to The Taylor Trading Technique
, today was a buying day for yen. After cleared pivot point (94.87), yen met some sell pressure at a confluence resistance zone - 95.65 (swing low), 95.60 (38.2% fib), 95.62 (50sma on hourly chart). Then yen achieved its average daily range at 95.98 (yen's 10 day average daily range is 184pips). Statistically, the probability of yen reaching average daily range is 46%. So more than half of the time yen won't go to the full stretch of its average daily range. Recalled what happened two days ago, yen's daily range was ADR plus 3.1std, that's a 3% probability for yen.
At the beginning of London session, pound formed a quick double top. There was a strong support at 1.44. Likewise, after a double top pattern, euro found its support at yesterday's high.
On hourly point and figure charts, pound met a double top resistance at 1.4566. A clear resistance line formed. Then a double bottom pattern at 1.44 offered support. We will watch this level closely.
Friday, March 20, 2009
03/19/09 Forex Market Comments
All three markets followed through Wednesday's move. Yen's daily range is 306pips, that's 2.1 std over ADR. Euro made another new high in twenty trading days (H20). Pound's daily range is 435pips, which is just 19pips shy of yesterday's move. Looks like all three markets find their support and resistance. We might expect some congestion behavior.
Wednesday, March 18, 2009
Point and Figure Charts Compounded with Narrow Range Bars (NRBs)
As mentioned in Toby Crabel's book, Day Trading with Short-Term Price Patterns and Opening Range Breakout, range contraction days usually are followed by a trend day. The commonly used range contraction days are NR4/ID, and NR7.
Yesterday, we had extremely low volatility on all three markets. Yen, after a NR7/ID on 3/16/09, formed a NR20. That was the narrowest range in a whole month (20 trading days). Euro had a NR20 two days ago (3/13/09). And yesterday's daily range was just 7pips more than the bar of 3/13/09, it's alright to deem it as another NR20. Pound was a NR20/ID.
So we had the most promising contraction pattern yesterday. Today would be reasonable to anticipate a trend day.
Euro took off at 8:00am and surpassed both highs of last two days. So that was a legit NR20/ID breakout setup. On hourly point and figure chart, euro broke out from a double top pattern at level of 3066, which worked as resistance in January three times.
Yen broke down at 8:00am. At 10:00am the downside move took the low of yesterday and formed a double bottom pattern at 97.75 on hourly point and figure chart.
Pound formed a downward channel on hourly chart, and took the low of NR20/ID in London session. That's a double bottom breakout at 3066 on point and figure chart. At 8:00am, pound jumped back and sit just above the low of NR20/ID.
The ultimate move was triggered by the 2:15pm event - Federal Funds Rate. Yen's breakdown stop right at the former swing low 95.65, with a daily range of 317pips, which was a WS7 day with 3.1 std over the average daily range (ADR). Pound jumped from the bottom of the NR20 and surpassed its top, which indicated the breakdown in London session was a bear trap. Pound ended with a 454pips daily range, and a WS7 with 2.5 std over ADR. Euro's daily range was the highest - a whopping 511pips, which was 5.0 std over ADR.
All these breakdowns and breakouts are clearly illustrated by point and figure charts. That's the beauty of simplicity.
Yesterday, we had extremely low volatility on all three markets. Yen, after a NR7/ID on 3/16/09, formed a NR20. That was the narrowest range in a whole month (20 trading days). Euro had a NR20 two days ago (3/13/09). And yesterday's daily range was just 7pips more than the bar of 3/13/09, it's alright to deem it as another NR20. Pound was a NR20/ID.
So we had the most promising contraction pattern yesterday. Today would be reasonable to anticipate a trend day.
Euro took off at 8:00am and surpassed both highs of last two days. So that was a legit NR20/ID breakout setup. On hourly point and figure chart, euro broke out from a double top pattern at level of 3066, which worked as resistance in January three times.
Yen broke down at 8:00am. At 10:00am the downside move took the low of yesterday and formed a double bottom pattern at 97.75 on hourly point and figure chart.
Pound formed a downward channel on hourly chart, and took the low of NR20/ID in London session. That's a double bottom breakout at 3066 on point and figure chart. At 8:00am, pound jumped back and sit just above the low of NR20/ID.
The ultimate move was triggered by the 2:15pm event - Federal Funds Rate. Yen's breakdown stop right at the former swing low 95.65, with a daily range of 317pips, which was a WS7 day with 3.1 std over the average daily range (ADR). Pound jumped from the bottom of the NR20 and surpassed its top, which indicated the breakdown in London session was a bear trap. Pound ended with a 454pips daily range, and a WS7 with 2.5 std over ADR. Euro's daily range was the highest - a whopping 511pips, which was 5.0 std over ADR.
All these breakdowns and breakouts are clearly illustrated by point and figure charts. That's the beauty of simplicity.
Tuesday, March 17, 2009
03/17/09 Forex Market Comments
Yen did breakout but without much following through momentum, and met resistance from former swing high 98.91. If yen drop under 97.54, which will null the NR7/ID setup. Today's volatility dried up and formed a NR20 (narrowest range in 20 trading days). On hourly point and figure chart, yen formed a triple top. Today's trivial breakout only surpass the triple top formation by one box (25-pip). There is a perfect support line when yen edged up. I will post the point and figure charts tomorrow.
Pound formed a NR20/ID too. Watch out when market approaches today's high and low levels(4135-3963).
Monday, March 16, 2009
Point and Figure Charts for Forex Day Trading
If you are looking for a point and figure software, Click here to visit Forex Point and Figure System
What is Point and Figure Charts?
Unlike any other traditional charts, point and figure charts do not plot price against time. It applies alternate columns of stacked Xs and Os to track the change of price direction, in which X columns represent price rise, O columns illustrate price fall.
The Benefits of Using Point and Figure Charts
The primary advantage of using point and figure charts is to filter out trivial price fluctuation while removing time effects, which makes identify major support and resistance levels much easier.
Applying Point and Figure Charts to Forex
While point and figure charts are quite common among old timers in stock trading, it’s relatively new to the community of Forex day trading.
The old fashioned way to create point and figure charts is using graph paper and pencil. I use Excel to construct point and figure charts for the three currency pairs I am currently watching (USD/JPY, GBP/USD, and EUR/USD). For the day trading purpose, I keep two types of point and figure charts – daily point and figure charts (dPnF), and hourly point and figure charts (hPnF). For the daily point and figure charts, I use 100-pip box size, and 3-box reversal. For the hourly point and figure charts, I use 33-pip box size for euro and pound, 25-pip box size for yen.
The hourly point and figure charts are updated in real time. The daily point and figure charts are updated by the end of the US session. If you decide to use Excel to generate point and figure charts, I recommend get at least one year data to draw the daily point and figure charts, and at least two months data for hourly point and figure charts.
There are lots of patterns in point and figure charts. I found the most useful point and figure patterns are double top (DT), double bottom (DB), triple top (TT), and triple bottom (TB). It really highlights the tug of war between bear and bull, supply and demand, resistance and support. For more information, visit PnF Master.
What is Point and Figure Charts?
Unlike any other traditional charts, point and figure charts do not plot price against time. It applies alternate columns of stacked Xs and Os to track the change of price direction, in which X columns represent price rise, O columns illustrate price fall.
The Benefits of Using Point and Figure Charts
The primary advantage of using point and figure charts is to filter out trivial price fluctuation while removing time effects, which makes identify major support and resistance levels much easier.
Applying Point and Figure Charts to Forex
While point and figure charts are quite common among old timers in stock trading, it’s relatively new to the community of Forex day trading.
The old fashioned way to create point and figure charts is using graph paper and pencil. I use Excel to construct point and figure charts for the three currency pairs I am currently watching (USD/JPY, GBP/USD, and EUR/USD). For the day trading purpose, I keep two types of point and figure charts – daily point and figure charts (dPnF), and hourly point and figure charts (hPnF). For the daily point and figure charts, I use 100-pip box size, and 3-box reversal. For the hourly point and figure charts, I use 33-pip box size for euro and pound, 25-pip box size for yen.
The hourly point and figure charts are updated in real time. The daily point and figure charts are updated by the end of the US session. If you decide to use Excel to generate point and figure charts, I recommend get at least one year data to draw the daily point and figure charts, and at least two months data for hourly point and figure charts.
There are lots of patterns in point and figure charts. I found the most useful point and figure patterns are double top (DT), double bottom (DB), triple top (TT), and triple bottom (TB). It really highlights the tug of war between bear and bull, supply and demand, resistance and support. For more information, visit PnF Master.
Click here to visit Forex Trading Made Easy with Point & Figure
03/16/09 Forex Market Comments
As mentioned on Friday's post, both euro and pound did breakout. The tricky part is before the breakout, there were shaken outs on Sunday afternoon. Both breakouts happened at 3:00am, and reached daily high before the US session. Euro also made a new high in 20 trading days (H20). The whole US session retraced back and found support at Friday high. Both euro and pound formed a nice up channel on hourly chart. It might be an opportunity to enter long position when the retrace touches the lower bound of the channel.
Japanese yen still stays at the top range. And today is a NR7/ID (narrow range 7 and inside day). If yen does breakout, it could challenge the key 100 level.
Friday, March 13, 2009
03/13/09 Forex Market Comments
Euro edged up in a 280pips up channel on hourly chart. Friday euro built a 70pips range (1.2944-1.2870) at top. Watch out for the breakout.
Pound broke out from the 300pips bottom range (1.36-1.39). After the 2nd up swing, the whole US session formed a symmetrical triangle. Prepare for the upside breakout.
Yen formed a double top at yesterday high at 98.51. The higher low indicates the long interest.
Pound broke out from the 300pips bottom range (1.36-1.39). After the 2nd up swing, the whole US session formed a symmetrical triangle. Prepare for the upside breakout.
Yen formed a double top at yesterday high at 98.51. The higher low indicates the long interest.
Thursday, March 12, 2009
03/12/09 Forex Market Comments
USD/JPY: the momentum of yen's reversal is quite impressive, which reminds us yen is in uptrend on daily chart.
EUR/USD: a trivial breakout formed a pinbar on hourly chart, then found double bottom support at 1.2731 (also a higher low). The real breakout happened at 2:00pm.
GBP/USD: pound breakout the bottom channel, but not in a very decisive way.
Wednesday, March 11, 2009
03/11/09 Forex Market Comments
GBP/USD: breakdown yesterday low by 34pips made a new 20 days low (L20). 11:00am formed a pin bar on hourly chart. Then 2:00pm breakout the head-and-shoulders pattern. The min target is 4020.
If yen could breakdown 96.57, we will have a 316pips head-and-shoulders pattern.
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