Making sense

Look at the bigger picture, if what you see makes no sense

You are looking at monthly charts (left to right, top to bottom)

EUR / Pound / Yen

Gold / S&P / Dow / Oil

These charts go from 2009 to 2013 and they tell a story.

The pound is rangebound, while the Euro failed to reach the channel highs, instead stalled below the 61.8% Fib

or not?

20 years Euro and GBP side by side

The Yen building a base for the next leg up. Look at 20 years of Yen trading to see it building.

Gold is another story. The once mighty has fallen from the grace …
There are two lines in the sand, and they are not so far away.

Like the Yen, Gold might be building the base to break lower, but while I see the Yen reaching above 125 on the next long term leg up, I see Gold struggling to break below support. I see Gold moving in a range between 1200 and 1450 in the years to come, supported by the realisation, that pysical gold remains finite, while paper can be printed (as long as others are willing to buy).

Can stocks go higher? Sure they can! Does it look so? Well, there is a 4 year trend now in place.

But let’s look at 20 years S&P

We are at the 138.2% extension of the 2002 to 2008 leg up, which was followed by a “false” breakdown and move to new All Time Highs. Next target is 1937, lets call the round number 2000, which will provide a lot of resistance.

But to get there, we will need a base in the 1666-1602 area. And when we break down to this area, the newsies will call it the end of the world as we know it. Down is such a strange conception after 4 years up.

At last let’s talk about oil. It’s back into its year long channel. Its going down to 90-88 and will bounce.

Winter is coming

Enjoy it cheap, while it lasts and trade the range.

US Default 1 Day ahead

Noone really belives that! Markets are irrational, but if any other country in the world would dare to mention

“Sorry folks, there might be a chance, that coming Thursday, we will not be able to pay our bills. It’s not because we could not print any more money, but because we are not allowed to use our printing presses any longer.” …

Well, the Euro was doomed in the eyes of the markets, because Cyprus had to close it’s banks for a few days. Tomorrow the US of A might not be able to pay its bills, and my charts look like this:

These are daily charts from left to right EUR/USD, GBP/USD, USD/JPY and below Gold, S&P, 30y Bonds and Oil.

Given a rumor of the magnitude we are faced with, I would expect the USD and S&P in the cellar, while commodities are soaring, with a relief rally afterwards.

In numbers I would expect

EUR/USD at 1.48, GBP/USD at 1.68, USD/JPY back to 0.93, Gold at 14xx, S&P barely holding 1600, Treasuries around 125 and Oil around 120 at least.

Instead we get: Euro and GBP on hold for a month, Yen on hold, Gold down, S&P reaching new highs, Bonds trying to reclaim lost territory (they came already down from lofty highs earlier in the year) and Oil down

Never try to outthink the markets. I will stay out of this, as it makes no sense to me.

But …. Maybe, just maybe the markets have reverted to: Buy the rumor, sell the bad news … Kind of what you would expect from a rational market….Markets are irrational, can’t be that reason

News-Trading

Sometimes a tradeplan isn’t worth the feeling after.

Trading oil with the knowledge, that dead people in Egypt will spike the oil price is one. There is talk about a lot of unrest today in Egypt and it will affect the oil price. The more horrifying the news, the stronger the spike, so I thought.

When I took the entry, Oil was trading up to a resistance, took out the high of the previous bar and I entered long. In hindsight: it was looking good, but early! I should have waited and taken the entry at the Tenkan-Sen (orange).

Then nothing happend, the trade went south with prices supported at the Tenkan, then Kinjun, then 50% H/L. Every tick down was met with steady buying until

 

15:42

 

15:44

Now we see strong buying

15:52

… Spike … Exit into spike … Plan worked … feel bad

In trading feelings should be left at the door! There is no room for that, but I think, I will refrain from tradeplans involving gruesome acts of violence to provide the fuse for my trade. It’s not worth the bad taste in my mouth after it worked.

Ps.: The times seen on the tweets updated, while I was writing the article. That’s why the numbers on the left and in the tweet itself don’t add up.

PPs.: The 1 minute chart above shows the 15 minute Ichimoku chart. I like the 1 minute for the look inside the formation, but I need the longer timeview on the Ichimoku to trade.

EUR/GBP summertime

It’s summertime. Expect fast, sudden moves, which retrace without reason, no volume, no moves for hours. Go away, as noone is in town. It might be the best advice for the next 5 weeks.

But if not, trade 1/2 size, take the longer view.

EUR/GBP is trading at highs prior the the FED and ECB decisions due later today and tomorrow. Monday the Pound took a swandive, while the Euro held. The Euro area is in no better shape than the british economy. No reason for the exchange-rate to make a sudden huge move. But in a low volume environment it sure is possible to move first the GBP/USD and then a day or 2 later the EUR/USD, producing a wide swing in the cross.

The daily is testing a breakout level and might actually try a run up.

But that’s not the whole picture. Looking at the daily, you want to look at the weekly as well.

And here we see some warning flags: The Tenkan crossing below the Kinjun and a falling trendline around 0.8750. And that’s not the only trendline we can draw.

Looking at a weekly chart starting in 2007 we see a huge triangle, which was broken to the upside in April 2011, but later resolved to the downside only to test the support becoming resistance blue line right now again.

This fuzzy resistance is around 0.88 right now, right where the EURGBP started trading 15 years back.

But enough, the FED is coming up tonight and I want to trade the retracement of an extreme move

The breaking of the cloud will trigger my short entry, as will a touch of the 0.8750 , 0.8775 and 0.8800 levels for a return to 0.8550.

Oil running into resistance

Here’s a weekly oil-chart

Excluding the huge runup and fall, the 110 area has been resistance for a long time. We had spikes above, but retraced them usually after the hurricane season into the october lows. If 110 can clear, then we run into yearly resistance at 117 and 123.

Gold update

Spike to the upside … but still in Range

Gold bulls need to take out 1302 it seems.

Gold knocking at 1300

Gold had huge resistance at 1398 in June 2013. It held and we saw Gold plummet to 1180. A similiar situation seems to present itself right now. Gold is trying, but unable to rise above 1298 so far. And we hear, that speculative short interest in Gold is huge. But this huge short interest is commited, the trade is made. It’s up to the traders on the sidelines, the not commited traders to move the price. And the charts paint a different picture at 1298 compared to 1398. I see higher lows (and higher highs) in Gold, I see rising cloud support and I know, there is huge short squeeze potential (yes I got squeezed at 1230 and man, was I glad, I had my stops in the market, waking up with Gold trading up to 1258 in the Asian session).

Today Mr. Bernanke is speaking ….

again and it might be, that it’s that lottery again: Slam or Squeeze +/- 50 in a minute

Until then nothing is decided, gold will drift around with a downward bias for the moment, trading up again into the US-Session and in hindsight everything will be clear again.

Draghi, low interest rates and the Bund

Mr. ECB commited the ECB to low interest rates for an extensive period of time. The German Bund futures reacted by jumping 1 full point from 142 upto 143.

But 18 hours later we are back down to 142.30. Something one wouldn’t expect, if rates remain low for an undetermined period of time. Bund traders might be squirmish about the NFP data released later today, but for now it seems the market might call the ECB’s hand by taking interest rates higher regardless of Draghi’s words.

Wisdom

 

Long 7970 at 10:00  ….   stopped                                                            Short 7915 at 11:00   ….   stopped 

Its better to be out of a trade wishing you were in, than being in a trade and wishing you were out!

Have the patience of a crocodile!

13 years DAX monthly

DAX failed at the 3rd attempt to break the highs for now. We have a very steep trendline supporting the from 5000 up to 8500. In the coming months I expect another test of the highs, like we saw in the second half of 2007 with support at 7700, but it’s make or imho more likely deep break into next year to the cloud support around 6500.

Gold 1197.2

This is a weekly Gold futures chart

And the next line of support is at 1197.2. The 61.8% retracement of the whole upswing starting in 2008 at 733. We are on the way. I don’t like catching falling knifes. They hurt. But that level is tempting, very tempting!

Anticipating a cross

Gold was trading up from a recent new low, made a retest attempt which failed and the Tenkan-Sen (blue) was forming the right side of a bowl below the flat Kinjun-Sen (orange).

I took the trade, when the Kinjun-Sen on the 5 Minute came near the Tenkan-Sen expecting a bounce up.

It actually took a bit longer, but the cross of the Tenkan above the Kinjun on the 15 Minute chart was the signal for a nice move up. As 1285 proved to be resistance yesterday, I moved my stop 1285.10 when we traded to the high of that move.

You need to give your trade room to work, but, and here I requote a tweet I saw yesterday:

“Its better to be out of a trade wishing you were in, than being in a trade and wishing you were out! Have the patience of a crocodile!”

Catching falling knives

I’m not made for catching falling knives!

8 min below my entry with PA looking as if we will break down further any minute.

Of course a prior look at the 60min would have told me that the entry should have been at 8218.5 and not 8225!

Slam-dunk into the 60 minute Kinjun-Sen

5 Minutes later:

Of course you always need to set a stop!!!!

Dow–DAX–S&P

The Dow and the S&P marcherd on this afternoon, but the DAX … it couldn’t make a new intraday high, even with the Dow trading 75 and the S&P going 8 full point above the morning highs. We will know in less than 24h who is right…

DAX still in a downtrend

EUR/AUD topping formation

Waiting for a lower low or red candle below the recent high after EUR/AUD made the 100% extension of the previous swing.

Dax on a roll

Gap down – test – reverse – right now 200 points from the low

I expect to see resistance at/below the 8200 level with the USDYEN breaking down again, but it’s Friday and anything can (and will) happen.

DAX

Dax needs to take out 8233 for shorts to work. Trade protected in the money, let’s see what will happen…

Stopped at 8339…back to earth

EUR/AUD, Stops and Platinum trade

Euro / Australian Dollar went vertical with the breakdown of the Australian Dollar and the resurgence of the Euro. But after the NFP Event this afternoon, it might be time for a breather. 1.40 has been hit and a failed retest should provide a low risk / high reward entry short.

Add-On: I had a short open over the weekend from the close and got stopped at the gap-up sunday night.

Finish 2013-06-11:

I have to admit    I DON’T LIKE STOPS

and probably I never will, contrary to all advise given in trading books, articles, and so on.

But over time I learned, that I can’t be right all the time. it’s the same in every profession. You can’t be right 100% and in trading the cost of doing business is taking stops. If I take a stop in one instrument usually I switch the instrument from Forex to indices or commodities.

Because the reason why I took a trade doesn’t change when I take a stop.

And the reason is: There is a signal to take the trade. On the 15min chart above, I had a signal to go short and to add. Unfortunatly, having a signal means, I’m reading the market as well. I see how the market reacts, how it trades and that enforces a belief, that I’m right. I’m right about the market, I’m right about my reading of the market. But if I have to take a stop, I’m usually not. Which means I have to neutralise my reading of the market. Something I can’t do within minutes. Which means, it’s best to trade something else.

Yesterday I was stopped in the DAX right before a huge move up

I was right, but I trailed too fast, as I was in that trade 45 minutes on the brink of getting stopped. So I trailed when I had the chance and got stopped out. 10 minutes after my stop, I did not reenter on the clear long signal, as my belief in my reading of the market was shaken. That in itself was my signal to let DAX be for the day. I missed a huge day, but following Twitter #DAX, as I do, it wasn’t easy to trade DAX yesterday.

Me, I traded Platinum for a change. Search for “Lonmin” on Twitter, if you need to know, if there are any news eventually moving Platinum. AFAIK, it’s the biggest and meanest Platinum mine worldwide and any news from there will move the price.

It took some time, I did not enter at a good spot, but I anticipated a signal on the 30minute, something I should avoid in the future. 2 hours later the Kinjun-Sen crossed the Tenkan-Sen, there was still time to enter at my entry level and risk/reward would have been a lot better.

Btw: Platinum futures trade with a huge spread at times, be careful and only trade with limit orders, as you need to know, that 1 tick is worth just 5$ and not 10$ as with gold.

What about Gold

There were some major spikes yesterday in Gold thanks to that resurgence of Yen appetite. But let’s put that into perspective.

The 4 hour and the daily chart tell the story.

The 4 hour cloud supports, the daily cloud shows a clear stairstep pattern down and unless we close above 1471, the trend will remain down. Any cross of the Kinjun-sen above the Tenkan-Sen will be a weak signal, even if we might get a similiar pattern on the daily as seen on the 4 hour. It’s a bottom building pattern and that takes a lot of time to develop. We can see higher lows on the swings, so I will look to trade the dips to the upside for now. But I expect any advances, any spikes still to be sold heavily.

Perspective

Any bounce today and it will be a bounce from the daily Tenkan-sen. Let’s wait and see what the Beige Book brings later today.

FDAX pushing through the cloud

I took a Long against the 5 minute cloud.

As you can see, there was a test of that 8280 5min cloudbarrier, followed by a sweet spike through the cloud right into my target. (The early morning long was taken from round number support, btw.)

FDAX on June 3rd

I’m following the open of the FDAX this morning, which saw the Nikkei down another 3.7% overnight.

Intraday we’re standing right at the cliff. Another attempt to break 8300, with new lows just made and a bounce back above 8300. Looking at the daily (upper left chart) I see the Tenkan-Sen at 8167. That’s far away for now, but a level to keep in mind. So I’m taking a look at a 8h chart and here I see a steep cloud coming into play in the next 2 days. This cloud was formed by the impressive uptrend in May, which tells me, there will be a lot of buyers, who missed that last move or who will be buyers again after a dip. Even if everything screams Short, as every oscillator tells us we are overbought, I don’t think so. For now we are consolidating in an Uptrend, which means every dip will be bought again.