Trading Week 31/10/11

Saturday 5/11/11 End of week summary: Another great week for TS!

The dreaded NFP (US jobs report) did little to shift the markets last night. There has been mixed data during the last trading session and the indices, and most pairs, continued to trade sideways in a ranging fashion (see indices charts below).

The USDX is still ranging between 76.5 -77.5 and the EURX between roughly 107.5 -106.5. Remember that these charts represent the strength of USD, and EUR currencies respectively, against a basket of other currencies. To me, they're like a quick overview 'health check' of how the USD and EUR are going at any point in time. For example: a sinking USDX means that a short on the USD in pairs is probably safer than going long. I did post more details about these indices in an earlier post so, if you missed it and are unsure about these indices, please search back through the earliest posts in this blog.

The great thing about ranging markets though, as I continue to say, is that it lets the ADX get back down to the waterline of 20 making it easier to spot new trade setups. This seems to be the case with most of the major pairs (except G/J, USD/CAD and AUD/CAD). Thus, next week might be exciting with the potential of new trades looming.

The pip haul this week was 265 from just one trading session and 3 trades. I've realised that this tally must get added on to the October tally as the week started on Mon 31/10/11.

Friday 4/11/11

Most of the pairs are back to drifting sideways in narrow ranges. This makes it very hard to trend trade on longer time frames, such as on 4 hr charts. A look at the chart of the indices, EURX and USDX, bears witness to this. The USDX is still stuck between 76.5 - 77.5 and the EURX between 107.5 - 106.5. The US jobs report is out later tonight and the Euro zone debt circus continues. These events will continue to be potential triggers for price movement though. I will not look for further trades until next week.

ADX: 4 hr charts: a look at the ADX on these charts reveals how this indicator can keep you out of being drawn into losing, ranging markets. The ADX has been trending down towards the 20 level on both pairs for the last 10 or so 4 hr candles, that is, for the duration of this ranging movement. This observation should have kept you from entering trades on USD and EUR pairs over longer time frames.

Shorter time frames: For those of you who can trade on shorter time frames though there have been trading possibilities over the last couple of days. The 15 min chart of the AUD/USD shows two possible long trade opportunities over the recent sessions. (these are simplified templates of the full trading templates that I use).

Thursday 3/11/11

Not much has happened overnight. A look at the chart of the indices reveals this. Both the EURX and USDX are pretty much just trading sideways. (see charts). The Fed announcement didn't cause much of stir in price action. This is good news for the ADX though. It is heading back to the 20 level on many pairs making it easier to see the next new trend.

The USDX is hovering around the monthly pivot and trapped between the strong S/R levels of 77.5 and 76.5.

The EURX is also lurking around the monthly pivot and ranging between 107.5 area (weekly S1, 4hr 200 EMA) and 106.5 area (daily & monthly pivot).

There is still a lot of news to come this week so I will refrain from trading.

I've made more than my quota in pips (265!) and I'm not going to risk giving them back, especially if the markets go back to ranging sideways.

Wednesday 2/11/11

I did end up taking 3 TS signals last night but was rather undisciplined. The upward surge on the USDX and downward move on the EURX gave me confidence to Long USD and Short the likes of EUR, AUD and NZD etc. I jumped in late on the short A/U and then later N/U. I also too a short on the G/U based on 1 hr TS and a trend line break. I say undisciplined as this was breaking my trading rules somewhat. Chasing trades is not advised. I am finding it hard to control my trading emotions though. I saw that I had missed a few good TS setups on Mon and Tue am whilst I was busy. Thus, I was keen to jump in and catch up. It worked for me this time to the tune of 265 pips. Not bad for one day and 3 trades but, yet, undisciplined. I am only human guys!

PS: I am avoiding JPY pairs this week post BOJ intervention.

Short A/U: 130 Short G/U: 53 Short N/U: 82 Total: 265pips!

The market has retraced a bit somewhat overnight. The USDX and EURX had both broken through their monthly pivot points. They have both retraced to re-test those levels. (see charts below). There is major news out of the US over the next few days. I'm going to try to not trade through this. Wish me luck!

Tuesday 1/11/11 (5.30pm)

The Aussie interest rate cut seems to have had some negative impact on the AUD. I have been busy today and have not been able to trade (Melbourne Cup). Earlier today, after the interest rate news, there were signals to short the AUD on the following trades:

Short AUD/USD, Long GBP/AUD and short AUD/CAD.

There were also signals to Long USD/SGD and Short NZD/USD.

Hmmm...my day out has been VERY expensive due to lost opportunity. To say nothing of the actual Cup race! I must remind myself though of the pip haul from last week.

The USDX is butting up against a major S/R level at the 4 hr 200 EMA. A clean break above this level will be a clear signal to look for further opportunities to Long the USD in new trend trades or continuation trend trades. The EURX has broken below its major support level. The GBP/USD has not signaled yet. It might be the next to go though if the USD continues to surge up.

Tuesday 1/11/11

An interesting night. I have woken to see that the synchronicity of the EURX and USDX has unraveled a little over night. The USDX has pretty well drifted sideways, after the initial reaction to BOJ intervention. It is trading once again in a narrow range around the 76 level. Whereas the EURX has had quite a move downwards. It has broken below the daily trend line but the 4hr 200 EMA which is looming may hold price up again as it did so effectively over recent weeks. (see charts below).

I am still going to wait for a clearer signal about the main trend direction; It is currently looking like 'risk off' with long USD and short EUR etc. This means, for me, waiting to see if the USDX can break up above and hold above the 76.5 level. There are some EMA road blocks in the way around this level. Although the EURX has broken below a daily trend line I will wait to see if it breaks down and holds below the significant support level of the 4hr 200 EMA.

There are a lot of 'red flag' news announcements this week which could move price along so, caution is needed.

Most pairs are drifting and this is enabling the ADX to get back down to the 20 level, good for spotting further TS trades. There were 2 signals that I missed overnight though, a short on the EUR/USD (up 90+ pips) and short on the EUR/CAD ( up 120+ pips).

Monday 31/10/11

Well, all that technical analysis on the indices for this week has just been shot in the foot due to intervention by the Bank of Japan. The BOJ have intervened to reduce Yen strength and the result has been to catapult the USD upwards. (see chart). Unfortunately, I was out all morning so missed this move.

I will wait to let things settle down before taking any further action.

Sunday 30/10/11

Some reflection to start off the trading week:

TradeSpotting had a fantastic week last week! Patience and discipline paid off and I will exercise the same values again this week. My study of the USD and EUR indices last week led me to conclude that I needed to wait for a clear break of these indices out of their narrow trading channels before placing any trades. That meant, for me, waiting until Thursday to trade. This patience was rewarded though with an abundance of pips, more than I could possibly harvest. This is often the case with trend trading though.

I was much more disciplined with my interpretation of TS signals as well. I caught myself out during the ranging period last week, out of a desperation to trade, by relaxing my trade entry criteria! I have learnt that I must be patient and wait for the more valid signals.

This week my indices analysis reveals that the same respect is required. I need to wait to determine whether the current trend (essentially: long EUR & Short USD) will hold moving forward or, whether a reversal is in store. My TS system does not try to catch tops or bottoms of trends rather; it tries to capture a chunk out of the middle of a trend, once one is in place. The ADX is well above the 20 water line level making it more challenging to spot new trends. Please read my indices analysis to see what I am looking for with this weeks trading.

Indices for week 31/10/11

USDX

monthly: Last month’s bullish candle was almost 500 pips. The candle this month, so far, has retraced to almost 80% of that move.

weekly: The trend is down on the weekly chart. The last weekly candle was a large bearish candle. Price broke through the 76 level, pierced the 75 but closed just above 75 level. 75 is a psychological number as well as previous strong S/R. Sound familiar?

Daily: The trend is still down on the daily chart for this month. Friday’s candle, almost a Doji, was small compared to Thursday’s big candle after the EU meeting announcement of positive outcomes. Overall, price has now retraced down to the 78.5% fib level on the daily chart from the last high, earlier this month.

4hr: Price broke through the 76 level to finish off at the 75 level. The descending wedge formation, of last week, did evolve into a bearish continuation pattern and resulted in some good trades last week. The last 6 x 4hr candles have been smallish indecision candles lurking around the 75 level. This could be viewed as a bear flag pattern too; that is, a temporary pause before the next move down.

Thoughts: The market is still digesting the news out of the EU summit from last week. It will be interesting to see how long this positive ‘risk on’ sentiment will last. By 'risk on' it usually means short USD and long the likes of AUD etc. As far as the technical evidence goes though, I will wait and see if the new support level of 75 holds. This is a significant level of S/R and also the 78.5% daily fib re-trace level and, as such, could hold price up. If price holds up, I would be cautious but, I would look for other reasons to long the USD in pairs. Alternatively, another break, close and continued hold below this 75 level though would be a signal to further short the USD. In the absence of any major fundamental news though, I wouldn’t be surprised if price went back to ranging sideways for a bit, again.

EURX

Monthly: Last month’s bearish candle was almost 500 pips. The candle this month, so far, has retraced almost 80 % of that move. This is the reverse of the USDX chart. Price held under a monthly bearish trend line.

Weekly: the trend is down on the weekly chart. A symmetrical wedge pattern is still evident and continues to contain price. A weekly bearish trend line in place as well. Last week’s candle though was a bullish engulfing candle...just to confuse matters!

Daily: The trend is up on the daily chart for this month though, opposite to the weekly chart. Positive EU news catapulted price up to the 78.5% daily retrace level of last month’s down move. The last daily candle on Friday was a bearish inside candle. This candle struggled to move up past the 78.5% level which is also near the psychological level of 109 and weekly pivot R2 level. Price closed under the daily 200EMA level of 108.5. There are significant road blocks to further up move for this index.

4 hr: Price has stalled in its up move at around the daily 200 EMA level. There have been a few indecision candles whilst the market continues to digest the implication of the EU news. This price action could also be viewed as a bull flag though; a pause before the next up move. This is the inverse of the USDX.

Thoughts: There are a lot of road blocks to continued up move for this index. I will wait to see if price can break, close and hold above the 109 level. I will be cautious here though as the weekly bearish trend line is just above this price at around 109.5, the weekly R3 pivot level. If price breaks, closes and holds above the 109.5 level though, I would look to long the EUR in pairs. If price struggles to break and hold above the daily 200 EMA I would look to short the EUR in pairs.

NB: The above constitutes technical analysis of these indices. Major news announcements and other fundamental news items can void this analysis at any time though.

TS on 1 hr & 30 min charts during ranging markets.

The current ranging markets are making it very difficult to trend trade on longer time frames, such as the 4 hr or daily charts. Trends may appear but there is little follow through. The 4 hr charts are my preference to trade from and this is mostly due to time zone issues given that I live in Sydney, Australia.

There have been moves on smaller time frames over the last 2 weeks though that could have been caught. The example below shows how there were 2 possible TradeSpotting (TS) trades on the AUD/USD yesterday (24/10/11) using 1 hr charts that netted a possible 95 pips. This is almost a weekly quota of pips! The chart is a simplified template of the main chart that I use for finding TS trades and I have expanded the zoom for easier viewing.

I often lament when I update my charts in the morning to see that a beautiful trend occurred during the US session; when I am tucked up in bed! Often these trends can be caught on shorter time frames such as the 1 hr or 30 min charts. I have not found that there is enough consistent move with the FX pairs during the Asian session though to warrant, and justify, sitting in front of the charts and looking for trades during my daytime. The chart below illustrates this more clearly. This is a chart of the 30 min AUD/USD and has blue boxes drawn on it. These are often referred to as 'Tokyo Boxes'. The left hand blue box denotes the Asian trading session, the right hand blue box denotes the London open and the clear space between the boxes denotes the US trading session. (see chart). It is easy to see from this chart how there is more price movement during the London and US sessions. Those people lucky enough to live in the US zone would have much more opportunity to catch my TS trend trades during their day time!

Trading week 24/10/11

Friday 28/10/11 (6am)

What a FANTASTIC 24 hrs for my TradeSpotting system! They say you need to control your emotions when trading but it's very hard when you're on a winner! I've locked in 450 pips worth of trades! there were another 770 pips on offer though!

Positive Eurozone sentiment has continued the 'risk on' approach to trading. The USDX not only broke the 76 barrier but the 75 psychological level as well.

Many other signals kicked in overnight for me, that is, during the US trading session. Well, one can't be everywhere now can they! I will not jump into any of these trades. I will list them below for the sake of completeness though. I have a full day here with private commitments so will not enter any new trades for this week. I am still wondering if this 'risk on' sentiment will last!

Trades Closed:

Long NZD/USD: stopped out for 100 pips

Open Trades:

Long AUD/USD: stopped move to lock in 200 pips

Short GBP/AUD: stop moved to lock in 150 pips

Total Pips Locked in: 450 pips!!

Other signals from last 24 hrs:

Long E/U: up 200 pips

Long A/J: up 200 pips

Short USD/SGD: up 220 pips

Short EUR/AUD: went 150 pips before reversing

Total of extra signals: 770 pips!

Thursday 27/10/11 (7.30pm)

It never rains...it pours.

I took the LONG AUD/USD. Locked in 50 pips. Rest to b/e. Currently up 100 + pips.

The long AUD/JPY is currently up 75 pips since the signal came through.

I also took:

SHORT GBP/AUD. Locked in 100 pips. Rest to b/e.

LONG NZD/USD. Locked in 40 pips. Rest to b/e.

There were signals to SHORT the USD/SGD and EUR/AUD too. I'm late with these though so not jumping in on them...They're correlated to the other trades though..essentially 'risk on' trades. I'll keep track of them though from the point of view of validating my TradeSpotting system.

The above results go to show how patience has paid off; waiting for the clear break on the USDX to confirm trend direction...for the time being at least. I've moved STOPS to b/e on these trades a bit earlier than usual because, as we've seen, trends can reverse in a heartbeat at the moment given all the EUR uncertainty.

Woo hoo though. Trends back and TS working again!!!!!!!

Thursday 27/10/11 (3.30pm)

The outcome of the EU meeting, so far, has been greeted with a 'risk on' reaction. That is, USD down and the likes of EUR and AUD back up. I wonder how long this sentiment will last?

The USDX has finally broken down, closed and held below the major S/R level of 76. (see chart below). The EURX is working its way higher too. Not explosive moves on the indices or any of the pairs.

The only TS signals received so far are for LONG on the A/U and A/J. I would expect more signals to evolve if the current sentiment holds.

The EU news announcement earlier reversed the short trend that had started on the AUD/CAD. It did yield 50 pips before reversing though.

Thursday 27/10/11 (6am)

It's Thurs am here but Wed evening in Euro zone land where they are still thrashing out details of the EU bailout plans at the EU summit. I had expected to see some clear break out from the narrow trading ranges on both the EURX and USDX. This has not happened yet.

The only TS trade signal I received overnight was to short the AUD/CAD. This signal came through over 4 hrs ago and is currently up 35 pips. I will not be jumping in late on this trade.

I am still waiting, patiently, for a break out on both the EURX ( 108 - 106.5) and USDX (76 - 76.5 level) to garner some clear direction of any new trend before trading. See charts below.

Wednesday 26/10/11 (5pm)

Very little has changed today with many of the pairs. The EURX and USDX are still trading in a very narrow range. There is now some doubt whether there will be any clear outcome from the EU meeting to be held later today. That fear was what caused the spike in gold and silver last night. I suspect that I will wake tomorrow though to see some major moves and, hopefully, some new clear trends.

Wednesday 26/10/11 (6am)

Not much has changed overnight. The USDX is still just drifting sideways and hanging in there just above the 76 level. The EURX is also drifting along in a narrow range around the weekly pivot.

Gold and Silver did move sharply higher though, probably in anticipation of Wednesday's EU summit meeting outcome.

There was also a lot of wild moves in the CAD pairs. It seems that this CAD weakness was due to an announcement of cuts to official growth rates. It is very difficult to catch news related spikes, especially when you're not at your computer.

I will continue to wait until there is a clear break out of the narrow trading ranges on the USD and EUR pairs. This probably won't come until after the EU summit.

Tuesday 25/10/11

I have just woke to see that the USDX is still hanging in there above the 76 level...but just by the skin of its teeth. Thus , I will still wait to see how this reacts around this level before being confident with future trends. The EURX is still trading within its range bound area of 108 – 106.5 too so, no more clarification is available there either.

The AUD/USD long signal identified by TS yesterday did evolve to deliver 70 pips. There were also signals overnight to :

LONG: GBP/USD, NZD/USD and AUD/CAD and

SHORT: EUR/AUD (gave 100 pips!) , USD/SGD and GBP/AUD.

These trades are essentially all correlated though to read as SHORT the USD. So, until I’m more confident with the direction of the USD from the USDX, I will stand aside.

I am finding that some TS signals are coming in but my indicators are aligning over a range of candles. I'm beginning to see this a sign of continued volatility or swinging of price within range bound areas.

Monday 24/10/11 (5 pm)

I had a signal after the 5 pm candle to LONG the AUD/USD. I have not taken this trade though because of the price action on the USD index (USDX). The USDX is trading just above a very strong S/R level of 76. I said I would wait to take trades until after there was clearer direction on this index: either a break, close and hold below 76 or, a bounce up. USDX is currently trying to pull back up so, I will continue to wait. I may miss a good trade by waiting but, at least I won't lose! Patience and discipline being tested again!

Monday 24/10/11 (10.30am)

I am taking a cautious approach to my technical TS trading this week given the potential of significant fundamental impact by way of EU summit news due out on Wednesday, to name just one event. I also explained in my Indices update posting for this week why I would be waiting; I'm waiting for a clear break out of range bound areas before being confident of future trends. Please check this post out for more details.

Looking at the indices just now and they are still bouncing around within the narrow ranges of the last week and a half. The EURX currently bouncing down and the USDX bouncing up.

The exciting thing for me though is the position of the ADX on all charts. The ADX is down below the waterline level of 20 on all the pairs that I watch with the exception of silver, gold and EUR/CAD. This makes new trends much easier to pick. I will also be more disciplined this week and wait for all of my indicators to align before taking any trade...something I did not do last week!

I am keeping an eye on the ADX level of 25 this week to see if this works better on the TS system than the 20 level.

Indices for week 24/10/11

USDX

monthly: Last month’s bullish candle was up almost 500 pips. The candle this month, so far, has retraced almost 50% of that move. This is not surprising after such a previous big move.

weekly: The weekly candle is an inverted hammer candle formation, having formed in a downtrend on the weekly chart. This is traditionally viewed as a potential reversal candle, especially when seen around support levels in a downtrend. The 76 level is certainly a significant support/resistance level for the USDX.


Daily: A large bearish candle formed after 3 days of spinning top ‘indecision’ candles. Price finally broke through the 200 EMA which has been support for the last 2 weeks. Price has retraced down to the 61.8% fib level on the daily chart, which also coincides with the strong support and resistance level of 76.

4hr: Price bounced around for most of last week in a narrow range bounded by 77.5 and 76.5 levels. It struggled to break and hold above the 200 EMA on the 4hr chart. This level is also near the daily, weekly and monthly pivots! Price fell out of being range bound and down through the daily 200 EMA late on Friday. It has since re-tested up to this this level and finished moving down from this point but has stayed above the key 76 level. There is also a descending wedge formation evident on this 4 hr chart. Descending wedge patterns are usually viewed as bearish continuation patterns in a downtrend.

Thoughts: The EU summit this week will probably impact on price action so, any predictions may end up being quite mute! As far as the technical evidence goes though, I will wait and see if the 76 level holds at all. This is a significant level of support and resistance and also the 61.8% daily fib re-trace level and, as such, could hold price up. If price holds up, I would look to long the USD in pairs. A break, close and hold below this 76 level though would be a signal to short the USD.

EURX

Monthly: Last month’s bearish candle was almost 500 pips. The candle this month, so far, has retraced to almost 50 % of that move. This is the reverse of the USDX chart.

Weekly: A symmetrical wedge pattern is evident and is still containing price.

Daily: Price struggled to keep moving up past the 61.8% retrace level, 108 level, of last month’s down move. Since bouncing down off that 108 level, price has traded in a narrow range. The last daily candle was a hammer candle after 3 days of indecision candles. Hammers are usually viewed as bullish signals.

4 hr: Price has bounced around between the monthly pivot R1 level of 108 and the main monthly pivot level of 106.6 since mid last week. Price finished the week just resting above the weekly pivot level of 107.4. The 107 level has been a significant support/resistance level in the past.

Thoughts: The EU summit will probably impact this index this week so caution will be needed until outcomes from the meeting are released. I will also wait for price to break out of the current trading range ( 108 – 106.6) before being confident with the direction that this pair will take.

Trading week 17/10/11

Saturday 22/10/11. Hmmm. Musings after a difficult week.

This week has been a difficult week for trend trading as well as other types of FX trading. We did not get the follow through on many of the moves. It was rather like my front loader washing machine, one way one minute, the other way the next! I stood aside towards the latter part of the week. I belong to a trading forum with people who trade a range of systems and all of them have struggled this week.

I’m not sure what was more bruised though...my ego or my account. I have hardly had a loss using TS to trade FX so it was hard to take this week. I have looked back at the trades I took and human error/judgement was probably more at fault than anything. I noticed that I jumped in too early on almost every trade without waiting for all the indicators to align together. Basically, I took trades when the signals had not formed fully. I was overly confident with TS after a lengthy run of success and, as a result, took trades too early without waiting for proper confirmation. That essentially is the ‘greed’ they talk about in trading when they discuss the ‘fear and greed’ concept.

I have also tweaked my ADX indicator a bit. I’ve raised it to 25 rather than 20, thus meaning I’m waiting for a stronger indication of trend. I'm thinking that this may help to protect from being drawn into the sideways choppy moves, like we had for a lot of last week. I'll trial it from next week and see how it goes. The ADX is only one component of my TS system though but an important one.

Friday 21/10/11 (6am)

Markets still ranging. USDX and EURX still bouncing around in the narrow ranges as shown in the charts below. The last 3 daily candles on the both indices have been indecision candles. I'm reading elsewhere that many traders are struggling this week so, that is some comfort to me.

Thursday 20/10/11 (6pm)

Another look at charts of the EURX and USDX show the narrow range that price has been bouncing around within since the middle of last week. (see highlighted area on charts below). The dotted vertical lines on the charts are weekly divisions.

I'm thinking that it is probably safer to wait until price breaks out of these narrow ranges before trading any further using a trend trading strategy, such as my TS system. Yes...you might miss some good moves but at least you're less likely to lose!

Thursday 20/10/11 (5pm)

I've just had a 4 hr candle close here and, although there seems to be continued USD strength and EUR weakness, I'm not getting convincing signals on my TS system. There are weak signals to short the A/U, silver and gold, all basically correlated and long USD trades, but that's about it.

I'm not giving this EUR weakness much credibility until it breaks, closes and holds below the 200 EMA on the 4 hr chart. (chart below). You can see how this level has acted as support over recent sessions.

I've spent much of today mulling over how to avoid getting caught up in this choppy side-ways type of movement. Far better to stay out of 4 hr trend trading when the moves aren't following through sufficiently. I'll post more on this later or over the weekend though.

Thursday 20/10/11 (6am)

I have woken to see another trend reversal overnight. The USD swung back up and EUR went back down. Trend trading is impossible during these times. A look at the USDX shows how range bound price is. (see chart).

Many pairs are showing head and shoulder patterns on the 4 hr charts..interesting. The E/U H & S pattern is shown below. There are H & S patterns on the E/J, A/J, G/J and NZD/USD as well. It seems to be more a time for trading breakout/continuation strategies, such as these H & S breakouts, at the moment as trends are just too short lived. Otherwise, trend trade on 30 min or 1 hr time frames.

Wednesday 19/10/11 (8.30pm)

There is still a lot of USD weakness and EUR strength around tonight. Well..at the moment there is but we all know how quickly this can change! I have seen signals on my TS system to short USD/SGD and long the A/U. These are both USD trades though and thus correlated. There are some road blocks in the path way of these pairs (previous support /resistance and trend lines etc). There is also red flag USD news out in a few hours. So, what does all this mean? CAUTION needed.

Wednesday 19/10/11 (noon)

One look at the 4 hr charts of the USDX and EURX shows how choppy this week, so far at least, has been. (see charts below). Trend trading on 4 hr charts during this is not easy. I'm down in pips this week..a first for me with TS..... and I'm not happy. It has literally 'rained' pips using my TS system over recent weeks so I know I need to put this 'blip' into a monthly perspective. BUT.....poor decisions, or rather, discipline (jumping into trades too early and, then, too late) and poor trade management have been even more to blame than the markets themselves so I'm cross with myself!

All trades this week had pips in profit before reversing so, I need to investigate using an EA that moves my STOP to entry once my first profit target has been reached. This is especially the case for Asian session traders who are usually asleep when many of the big news announcements etc occur causing big market moves or swings. The good thing about all this sideways chop though is that it has resulted in the ADX getting back down below the 20 level on most pairs, making it so much easier to pick the next new trend.

Wednesday 19/10/11 (6am)

Have woken to see a reversal in trend for the USD and EUR. There was good USD data released overnight as well as positive talk out of the EURO zone. These have combined to see a return to 'risk on' trading. Thus, the USD is down and the EUR is up. This is 'Grand Ol Duke of York stuff' at the moment!

Swings like these will test any trend trading system unless you move down to smaller time frames and work within the swings. 4 hr trend trading will struggle at times like these, especially when you sleep through most of the swing events, like we tend to do down here in Australia.

The short Gold made 100 pips (was up 300+ at one stage!).

The short silver and USD/CAD were stopped out though.

Tuesday 18/10/11 (9pm)

In spite of the USD strength and EUR weakness over recent hours, few TS signals have evolved fully. I did receive a signal to long the USD/CAD and short silver and gold. These are all correlated trades though, essentially long USD trades. There is USD 'red flag' news out later. This is always a problem for Aussie traders, that is, being asleep when news might affect a trade.

I did lock in some pips on the G/A and N/U trades earlier.

Tuesday 18/10/11 (5pm)

I have had signals to short NZD/USD and long GBP/AUD.

Tuesday 18/10/11 (noon)

The USDX is pausing on its uptrend at the 4hr 200 EMA level which is also near the weekly and monthly pivot point. (see chart)

Still no clear signals on the pairs just yet. A swathe of China data due out a 1pm so this could cause some movement. I will wait to see if the USDX breaks and closes above the resistance before taking any further long USD positions.

Tuesday 18/10/11 (am)

We got the bounce in the USDX and pullback in the EURX as suspected. A lot of the pairs are adjusting to this new trend and signals look like setting up on many of them after the next 4 hr candle close ( in 3 hrs time).

The EURO weakness did not help my trades from last night though. Bad CAD data overnight pushed the CAD down and my GBP/CAD was stopped out and I closed out the EUR/CAD. I did get into these trades a bit late though. It is worth noting that after the initial signal, the EUR/CAD made 85 pips before reversing and the GBP/CAD made 150 pips before reversing. My loss on these trades can be put down to greed...I chased these trades. By that I mean I entered a few candles after the initial signal. Bad CAD news overnight then finished this off. What have I learnt??? DON'T CHASE TRADES! I'm pretty annoyed by my lack of discipline! My TS system works, even these trades reflect that BUT, my lack of discipline compromised my progress. Good horse...dud jockey!

Monday 17/10/11

It's early stages yet but the suspected bounce up in the USDX and drop in the EURX seems to be unfolding. (see my post on Indices for this week).

I have a new signal to short the EUR/CAD (1.3965). I am also breaking one of my rules to 'not chase trades' and I'm short on the GBP/CAD (@1.5927), a short signal received last Friday. This trade had already moved 100 + pips from the initial signal before I entered it though!

A rally in the USDX, if it occurs, will trigger some further new signals though so I wait with patience and discipline to see how these indices progress.

Indices for week 17/10/11

USDX

Monthly: price had broken out and up of a symmetrical triangle the previous month.

Weekly chart: price bounced off the weekly 200 EMA two weeks ago. Last week's candle was a huge bearish candle but it is still within the Bollinger bands.

Daily chart: Price has retreated from last month’s up move to almost reach the 61.8% fib retrace level. This is a hugely significant area as it is near the daily 200 EMA, daily pivot S3, the bottom Bollinger band, a previous strong support/resistance level of 76 as well as being a psychological level at 76. Price actually touched the daily 200 EMA and bounced off this slightly.

4Hr chart: price broke down through the 4hr 200EMA last week and still looks rather bearish.

Thoughts: All the indicators point to further bearish tendencies for this USD index BUT I will wait to see how price reacts after market open this week around the daily 200 EMA level (also near the 61.8% fib retrace level) before taking further shorts against the USD. Price could react at this level and bounce back up suggesting a Long USD approach.

EURX

Monthly: price has bounced off the bottom trend line of a symmetrical triangle that dates back to June 2010.

Weekly: last week’s move was a huge bullish move. This up move was signalled by the previous week’s pin bar reversal candle.

Daily: Price has retraced just past the 61.8% fib level from last month’s down move. It stopped at the psychological level and previous S/R level of 108 which is also near the daily pivot R2 and monthly pivot R1 level. The daily 200 EMA is still a bit above the current price and is also near the daily pivot R3 level.

4 hr chart: the last two candles were spinning top/Doji indecision candles.

Thoughts: I will wait to see how the USDX reacts at the daily 200 EMA as this will probably give some direction to the EURX as they tend to be inversely correlated. The USDX is closer to the daily 200 EMA so should react earlier than the EURX at its daily 200 EMA. Thus, whatever direction the USDX adopts it will more than likely be inverse to the EURX.

Requests to publish my TradeSpotting (TS) System

I'm getting quite a few requests to publish my TradeSpotting System in full. The charts I am posting here are only part of the trading template that I use. I'm currently seeking advice as to how I can best protect my system from being assumed by others and, then, on-sold as their own. Please be patient with me as I sort through these issues and try to formalise a delivery process that will benefit everyone. Until then, please keep track of my progress with TradeSpotting on Forex through this blog.

Thank you for your patience.

Mary

Trading Week 10/10/11

Saturday 15/10/11

Some new trends kicked in overnight. I would take these signals now if the market wasn't about to close for the w/e. The USDX and EURX are both very close to the 200 EMA on the daily charts. This strong S/R level could cause some pause in the pairs so this is another reason to wait until next week to take any new trades. Gold and silver are still drifting sideways.

The signals received over Friday night were:

Long: E/U, E/J, A/U, A/J, G/J, G/U and NZD/USD

Short: USD/CAD, GBP/AUD, USD/SGD and GBP/CAD

Friday 14/10/11

Most of the pairs just drifted sideways over the last 24 hrs. The E/U and E/J had some volatility in their moves though. If you look at charts of the EUR and USD indices though you see spinning top candle formations for the last daily candle on both. (charts posted below) This is a sign of indecision in the market place and explains the sideways drift in the pairs. Gold is also just nosing along into the apex of the symmetrical triangle formation.

Update on signals from Wed night:

I had posted earlier in this thread that the following signals triggered on Wed night:

Long E/U, E/J, A/U, A/J, G/J and NZD/USD.

Short: G/A, USD/CAD and E/A.

Of these, all except for the USD/CAD moved to give at least 100 pips. The USD/CAD isn't called the 'loonie' for nothing though! This is another fantastic performance for the TradeSpotting system. I look forward to trading this system next week.

Thursday 13/10/11: Afternoon update

I'm looking over the signals that triggered from last night. I thought I'd post a chart of how one of the trades appeared when it signaled. I've selected the AUD/USD trade. The 4 hr chart is a bit squashy so I've moved down to the 1 hr chart to post for illustration purposes. I've labelled the chart showing where I would have got in and where I could have got out with my first parcel, although I usually set a 100 pip profit target for the first parcel and let the second parcel run. Entry and exit would have been after the candle close with the line through it. This trade would have yielded 170 pips to date, more than a week worth of pips! Another fantastic result for my TradeSpotting system. I missed these trades last night as I was out for the day and evening with visitors. It's great to know that my system keeps on working though!

Thursday 13/10/11

I have woken this morning to see that there were some TS signals that triggered overnight. These trades are continuing in the trend direction from last week though. Positive Euro talk last night (Sydney time) helped to continue these moves. A quick look at the indices confirms that the trend direction from last week is still intact. That is, long on EUR and short on USD. (see daily charts). The daily 200 EMA is looming ahead for both of these indices so, some caution is required. This may offer some resistance to the continued move. I'm not going to chase these trades by jumping in late. I will keep track of them though to confirm the merits of the TradeSpotting trend trading system.

The signals that triggered last night:

Long E/U, E/J, A/U, A/J, G/J and NZD/USD.

Short: G/A, USD/CAD and E/A.

Wednesday 12/10/11

Most of the FX pairs are bouncing around in a sideways pattern in narrow ranges. A good time not to trade. This will be good for the ADX though as it will give it time to trend back to the 20 water line level. This is of great benefit to the TS system as it enables me to better determine the next trend signals on the pairs. The EURX has broken up above the 4hr 200 EMA. This is helping to hold up EUR pairs at the moment. USDX still holding above its 4hr 200 EMA though. Very messy at the moment.

Gold Update

I posted about Gold earlier this week. The triangle set up is still looming a

nd price is getting very close to the apex. I did adjust my trend lines a bit to accommodate price action for this week. Still worth keeping an eye on I think!

Tuesday 11/10/11

No new TS signals at the moment. Some of the trends that TS identified last week are still running. I exited these trades for profit. It is worth noting the current status on these trends:

Long A/U: now up 350 pips

Long A/J: now up 300 pips.

Short USD/CAD: now up 150 pips

Short GBP/AUD: now up 300+ pips

So, in hindsight, I should have left my second parcel on the above trades stay open. I have previously stated that I am still grappling with trade management. This is a clear example of my need to deal with this.

The USDX and EURX are currently stalling at the 200 EMAs on their 4 hr charts. These areas are also the monthly pivot points. We will need to see if the current trends continue or reverse at these key S/R levels.

The ADX on many pairs is way above the water line so it may take a few sessions for new trade set ups to occur. This is where you need patience and discipline. I have made a ton of pips over recent weeks so I shouldn't be too greedy in trying to find more.

I have visitors here this week so will not be trading that much. I will take a set up if I see it and will record trades here on the blog.

Monday 10/10/11

No TS signals at the moment. Also, it is a public holiday in Canada, USA and Japan so the markets will be a bit thin. I will not be looking for trades until Tuesday. Get in the habit of checking your trading calendar at the start of each week before entering any trades!