P2: A batch of FX market trades

[peter2]

pre 7pm update: before tennis

Indices: My anticipated BO on SP500 and DAX didn't happen. Clearly too many sellers. It's likely that a reversal may happen during this UK session, but I'll not be here to see it.

AUD: going sideways, AJ looking stronger, while weakness against the EUR and GBP continues.
EUR: early pop that I traded has waned. EJ I missed this. EURNZD continues higher without me.
GBP: trending higher and is now the strongest currency, GJ entry was 7pm last night, missed it.
NZD: weak, like the AUD

WTI: going up, against trend, this rally may provide a short setup.
Gold: going sideways, no momentum
Silver: going sideways, no momentum
Copper: going sideways, ready to move up?

Conclusion: If I was in the office I'd be watching the indices for a bullish reversal, oil for a bearish reversal and gnashing my teeth for overlooking the EJ and GJ setups.

 

[kid hustlr]

My god, if I'm following that EUR/USD trade correctly I think you sold almost the exact high?

 

[aus_trader]

My god, if I'm following that EUR/USD trade correctly I think you sold almost the exact high?

Yeah, the profit taking 4H bar now looks like a pin bar followed by a reversal (bearish engulfing) bar which is still forming...


Well Done Pete, for Profit targeting to perfection

 

[CanOz]

Regarding the dax, yesterday wasn't too convincing, consider the volume pushing higher was relatively low. The day was balanced, an indication of acceptance of these prices. I would have preferred to have an inside day to trap shorts. Not to be and the auction today failed to stay above yesterdays value are high even. My algorithm made short work of it....literally

 

[peter2]

11pm update; No time to do it as I've only just arrived in the office.
Significant moves in the last 4hrs that indicate further follow through is probable.

Gold/silver going down along with AUD.

US market just opened and I'm looking for perfect patterns to trade. They'll most likely be shorts because of today's gap down. Longs need a market bounce soon after the open. It's possible. Micron (MU) is a fav day trading stock for me.

 

[peter2]

Sloppy/choppy day with low volume in the US markets. They opened down and immediately bounced, patriotically. The charts that I was watching didn't form the patterns I trade. My trading day is done in 20min. This allows me to review the last 4H bar in the fx markets.

AUD: NZD: Weakened further,
EUR: Big reversal, flattened the trend and the EJ trend.
GBP: Huge 4H doji, would frighten me away. Trend now flat.
Gold/silver produced the best opportunities. Let me show you the charts. On my MT4 charts these markets close 1hr later than all the currencies. The 4h bar closed at 8pm, an hour after I left the office.


The silver (XAG) chart shows a good outside reversal bar (ORB). Price went higher, but the sellers slammed it down and it closed below the low of the prior bar. When we see the the same pattern in both markets the probability that price will fall further is quite high. Price did fall in the next 4H bar and fulfilled the promise of a further fall. Whether you would have earned any profit depends on how you managed the trade because the markets have bounced back up.

 

[peter2]

4:50pm review: Halfway through a 4hr bar I know, but I've had some time to check things out.
AUD, EUR, GBP: All going sideways. Generally this means there's movement in the cross pairs, but not now. The CAD has strengthened after last night's news and has been the only mover since then.

Indices: I've got to be bullish after the moves yesterday, but doubt they'll fire up again tonight unless there's news about the trade wars.

I couldn't find a thread on trading cannabis stocks (other than ASX). I assume those interested know that Canada passed legislation to allow recreational cannabis use via oils and tablets. It all starts on Oct 17. I mention this because there's been a flurry of activity on the publicly listed cannabis growers on both the US and Canada markets. They've been hot, hot, hot as companies seek to get into a possible 5 - 10 billion /yr market.

If you want to check some charts: US: CGC, CRON, TLRY, MJ(etf)

 

[peter2]

T06: AUDUSD long: System 4T
Bought BO at 0.7134, SL 0.7109, T1 0.7159, T2 0.7184
exit stop at 0.7172 (+1.5R) if it doesn't hit T2.

This trade has just bolted higher as I was writing it up. Gold has also bolted and I like that combo.
Note: for an unknown reason my internet gets a little spotty after 1am.


... price now 75, 74, 75...

Edit: I'm also in the SP500 reversal and day traded SQ short for a quickie.

AUD done at 72 for +1.5R.

 

[peter2]

For those following the system. There's always going to be some discretion required, at least I think so. I may try to automate this system at some stage, but I know it will take some time and a hell of a lot of thought.

Four of the eight charts I have up on a monitor are the majors. I want to buy the strongest and short the weakest. I could see (I hope you can also) that two bars ago there was some weakness in the USDJPY (USDCHF not shown, but also going down). The AUD looked the strongest of the three as EUR and GBP were going sideways. The AUD needs a kick from commodities and got it from oil and gold tonight.

It was an obvious choice to buy the BO on the AUD. I prefer to start two trades as I rarely pick the trade that works out to be better, but I didn't like either the EUR or GBP. I hope this helps if you're trying to follow along.

 

[peter2]

I realise that I'm talking to myself at the moment, but I'm happy posting educational examples until @Kryzz gets back. Kryzz is keen to contribute but won't be able to until mid-Oct.

I'll also use these examples to assist me in writing a more objective set of rules that's a requirement for an automated system. This is not a high priority item for me as I'm going along quite nicely without one.

Of course anyone can join in.

ps: I came upon this indicator that with a bit of modifying should alert me to new 4H trend changes in markets that I'm not watching. Another item on the to be done list.

 

[hallph]

I'm following every trade Peter, haven't placed any trades but am getting my head around it. You've definitely expanded my outlook rather than just equity-focused I'm considering forex and formulating a plan on how to best do so.

The MA ribbon is a cool feature which I'll try to code up in Prorealtime, so both your 4hr and 1d trends are defined by the 8 period EMA(Close) and 9EMA(Open).

Nice targets on the AUDUSD trade - well done. Really enjoying following the action

 

[sasch]

Hi Peter,

Thanks for doing this thread, I have been waiting on a series on forex trades from you.

I am learning a lot, from your methodical approach, and am sure a lot of others are as well. You go
into great detail, which helps a lot.

My forex trades so far, have lacked consistency, jumping through different methods, scalping, swing trading, doubling and tripling down on losers, which usually result in whacking my fist on my desk.

A question relating to your currency strength chart. Where do you access this, is this a service you subscribe to, or part of mt4. I am using cTrader at the moment.

Thanks.

 

[peter2]

@hallph @sasch Thanks for your comments.
I'm glad you're both looking at the process rather than the results.

The currency strength indicator is a freely available MT4 indicator. There are many forms of indicators to show the relative currency strength. I like this one as it shows historical values and I can see the current value relative to it's past values.

 

[peter2]

pre 3pm update: Not much happening now, wait until UK open (time to look at ASX scans)

AUD: Continued higher, now at support. It doesn't worry me that I missed out on more or that there were setups missed in other AUD pairs. Now need to wait for pull-back setups.
EUR: Continued higher, but not as strong as AUD. Also at support. Now need to wait for pull-back setups.
GBP: 4H trend is up, but is becoming a little spiky (volatile)
USD: Weakness continued against CAD, CHF

ASX: rolling over again
US: Going sideways
Gold/silver: initial spike up, any follow up for pull-back setups?
Oil: back at MAs, consider bracket setup as it could go either direction, (cyclone)
DAX: sideways
FTSE: sideways but looking likely to go up this evening

 

[sasch]

Thanks for the info on the indicator.

Peter, I notice you state that the AUD is at support.

I can see that there are about six green 4 hour bars at the moment (last one not complete) which supports an upward trend at the moment. However, there does appear to be price rejection or selling at this level which indicates resistance, especially based on the negative sentiment recently.

This is where I get confused. Is it a higher percentage play shorting from here based on negative market sentiment or going long. I tend to try and predict bottom and tops, but struggle going with momentum. Is it better just to wait for a price signal, such as a pin bar for example?

 

[peter2]

@sasch My mistake, AUD is at resistance.
It's easy to get confused at these levels. We know there's a trading opportunity coming up but not sure what to do. That's why it's important to know what you're waiting for.

One plan: Wait for clear signs of rejection, such as a pin bar as you mentioned. Then short it.
Another plan: Wait for shallow pull-back and buy into the up trend (ignoring possible resistance)
Another plan: Wait until price gets above resistance before buying it.

All plans are possibilities for a prepared trader. Which strategy appeals to you? This is why it's important to know what strategy suits your personality. People generally have a preference to buy on support or sell into resistance. Once you know your preference then you can assemble appropriate tactics into a trading plan. Test it, refine it, test it some more and when it works, trade it.

At the start of this thread I outlined two systems.
Sys 4B would trade the 4H pin bar or ORB if one set up right here (at resistance).
Sys 4T would wait for a shallow pull-back to the trend EMAs and trade it.

Don't try to trade both systems. Start with one and master it.

 

[peter2]

@sasch If you like pin bars (I do) then we could create a pin bar trading plan. We would have to start by defining our pin bar, then I'd add a few filters to try to select those with higher probabilities for a successful trade. eg You might like to trade pin bars with or against a short term trend, with or against a longer term trend. You might like to find pin bars that reject a defined level. You might like to trade pin bars at the extremes of a volume profile.

Starting with a simple pin bar, the possibilities for research are huge and if you find an edge, priceless.

 

[peter2]

DAX: sideways
FTSE: sideways but looking likely to go up this evening

T07: DAX (de30) Sytem 4T break-out setup
Buy 12020, SL 11990, risk 30, T1 12050, T2 12080

T08: uk100: Break-out at start of session.
Buy 7312, SL 7298, risk 14, T1 7326, T2 7340



T07: DAX: Reached T2 Result +2R.

T08: FTSE: Reversed quickly and stopped me out. Result -1R loss.

Looking at the 4H charts, the DE30 was a clear BO setup, while the UK100 chart needed a better pull-back setup. I preferred the FTSE trade and took them both. I think there's a message for me, but instead I'm going to hit a ball around a court.

 

[Lone Wolf]

Just to show people are playing along...

I was going to ask if the longer term trend matters to you, or if you purely look at the EMA's on the 4H. That AUD long trade seemed very much downtrend when you bought it. But you did say that it was in conjunction with the move in commodities. And it was actually showing support with a pinbar on the daily at the time. You also said at the start that you want in on the trend as early as possible.

Personally I was thrown off by the overall trend and was waiting for a reason to continue the short side. I like seeing you find opportunities in places I overlook.

 

[peter2]

@Lone Wolf Thanks, I know there's a few following along without posting. I don't really mind.
Nice pin bar. I wouldn't have taken that one either. The daily trend is strongly down. The 4H chart shows price going sideways and then breaking out. There were sixteen 4H bars in the sideways trading range before price went higher. What can I say, 4H bars rock.

There are times when I'm not sure what the 4H bars are indicating and the best thing to do is to look at the daily chart and EMAs.

Back in the office and I see I've missed a few more opportunities.
EURUSD pull-back long, GBPUSD pull-back long,
GOLD pull-back long (not missed, nailed it before leaving)
No point looking at the cross pairs. There's always opportunities setting up somewhere.
AJ and EJ were beautiful pull-back setups. OK I looked.