Chart of the Day - Page 20

Thomas Long · #**286** (**permalink**) 06-08-2009, 02:06 PM

Quote:

Originally Posted by Dconnell

Hey Tom, check this out:

Looks like a flag to me, which would imply Chf/Jpy losses in the near future.

Any thoughts?

A short-term top is possible, but with the trend being up, I would prefer to wait for a pullback down to support and then look for a reversal to buy this pair. I also see where the GBP/CHF has been moving up since the beginning of the year meaning that the GBP has been stronger than the CHF. So buying the GBP/JPY might offer a better trading opportunity than buying the CHF/JPY. Just my opinion.

abro · #**287** (**permalink**) 06-08-2009, 11:25 PM

i went short at the double top confirmation at 1.6030 stop at 6075 target 5960

abro · #**288** (**permalink**) 06-09-2009, 12:09 AM

Quote:

Originally Posted by Thomas Long

A short-term top is possible, but with the trend being up, I would prefer to wait for a pullback down to support and then look for a reversal to buy this pair. I also see where the GBP/CHF has been moving up since the beginning of the year meaning that the GBP has been stronger than the CHF. So buying the GBP/JPY might offer a better trading opportunity than buying the CHF/JPY. Just my opinion.

well in my opiion all the major monthly and weekly trends are bearish of jpy pairs . like the gbp made lower lows and lower high in monthly time frame . i am waiting the usd jpy to break the 80 barrier . and there is a strong weekly support ( previous support current channel resistance ) acting as resistance at 102 region in usd jpy . thats how the usd fell from 101xx . and this rise of the usd jpy looks similar to the rise from 96 to 110 . a series of lower highs and lower lows . these are just my thoughts well i never trade from weekly or monthly charts just look at them for a view

arsenal · #**289** (**permalink**) 06-09-2009, 03:01 AM

I'm in trade on this. Bought at 1.269 and the pair has moved comfortably since then. Trading with the trend is always helpful and mostly successful.

Thomas Long · #**290** (**permalink**) 06-09-2009, 07:42 AM

Quote:

Originally Posted by abro

well in my opiion all the major monthly and weekly trends are bearish of jpy pairs . like the gbp made lower lows and lower high in monthly time frame . i am waiting the usd jpy to break the 80 barrier . and there is a strong weekly support ( previous support current channel resistance ) acting as resistance at 102 region in usd jpy . thats how the usd fell from 101xx . and this rise of the usd jpy looks similar to the rise from 96 to 110 . a series of lower highs and lower lows . these are just my thoughts well i never trade from weekly or monthly charts just look at them for a view

That may be true, but I am just not sure how important this information is for those who trade on the 15-minute chart. I like to use between a 4:1 and 6:1 ratio of time frames for my trades. Examples are below:

I use the weekly chart to determine the trend and trade on the daily chart.
I use the daily chart to determine the trend and trade on the 4-hour chart.
I use the 4-hour chart to determine the trend and trade on the hourly chart.
I use the hourly chart to determine the trend and trade on the 15-minute chart.

I think that the time frames have to be close enough to offer continuity between the charts so the moves we see on the longer-term charts can be traded on the shorter-term charts.

Thomas Long · #**291** (**permalink**) 06-09-2009, 07:44 AM

Quote:

Originally Posted by arsenal

I'm in trade on this. Bought at 1.269 and the pair has moved comfortably since then. Trading with the trend is always helpful and mostly successful.

Trading with the trend may be the most important piece of technical information a trader can use. If you add a solid money management strategy to that, you have the beginnings of a good approach to trading and put yourself in a position to improve with time.

Thomas Long · #**292** (**permalink**) 06-09-2009, 08:51 AM

The USD weakness appears to be increasing this morning with the USD/CAD moving down on the 4-hour chart. This is really an oil play as this pair has a tendency to fall as the price of oil rises. FX traders use this pair to speculate not only on the economic factors of each country, but also on the price of oil. The US imports more oil from Canada than any other country which explains the relationship between the two currencies. Traders can sell on a move down through support or use their favorite technical indicator to time their sell entry. I have two levels of support on this chart to show how more aggressive traders could use on move down through support #1 as a signal to sell instead of waiting for the market to move down through support #2. Initial protective buy stops could be placed above resistance with targets to take profits set at twice that risk for our 1:2 risk:reward ratio.

jcole252 · #**293** (**permalink**) 06-17-2009, 06:35 AM

Quote:

Originally Posted by Thomas Long

The USD weakness appears to be increasing this morning with the USD/CAD moving down on the 4-hour chart. This is really an oil play as this pair has a tendency to fall as the price of oil rises. FX traders use this pair to speculate not only on the economic factors of each country, but also on the price of oil. The US imports more oil from Canada than any other country which explains the relationship between the two currencies. Traders can sell on a move down through support or use their favorite technical indicator to time their sell entry. I have two levels of support on this chart to show how more aggressive traders could use on move down through support #1 as a signal to sell instead of waiting for the market to move down through support #2. Initial protective buy stops could be placed above resistance with targets to take profits set at twice that risk for our 1:2 risk:reward ratio.

Hi Tom,

Eight days after your last post, USD/CAD is up at the resistance line, looking strong. If just one or two 4-hour candles hit and were rejected, it would be easy to retain full faith in the downtrend on the daily chart, and it would be a great place to go short. But so many candles, so persistently... What do you think? Ready to break out? Or should we trust the daily downtrend and go short? Or just stand aside for a while?

Thank you,

jcole252

Thomas Long · #**294** (**permalink**) 06-17-2009, 07:07 AM

Quote:

Originally Posted by jcole252

Hi Tom,

Eight days after your last post, USD/CAD is up at the resistance line, looking strong. If just one or two 4-hour candles hit and were rejected, it would be easy to retain full faith in the downtrend on the daily chart, and it would be a great place to go short. But so many candles, so persistently... What do you think? Ready to break out? Or should we trust the daily downtrend and go short? Or just stand aside for a while?

Thank you,

jcole252

It appears that the mood of this market has changed, at least for the time being. One of the advantages of selling on a move down through a support level is that this serves as some sort of confirmation that the prevailing trend is still intact. I would still wait for a move down through support before selling this pair, especially now with the buyers in charge.

CStrickler · #**295** (**permalink**) 06-18-2009, 08:25 AM

Quote:

Originally Posted by Thomas Long

The USD weakness appears to be increasing this morning with the USD/CAD moving down on the 4-hour chart. This is really an oil play as this pair has a tendency to fall as the price of oil rises. FX traders use this pair to speculate not only on the economic factors of each country, but also on the price of oil. The US imports more oil from Canada than any other country which explains the relationship between the two currencies. Traders can sell on a move down through support or use their favorite technical indicator to time their sell entry. I have two levels of support on this chart to show how more aggressive traders could use on move down through support #1 as a signal to sell instead of waiting for the market to move down through support #2. Initial protective buy stops could be placed above resistance with targets to take profits set at twice that risk for our 1:2 risk:reward ratio.

In reference to "protective buy stops"...does this mean you have entry/market orders waiting at your stop points to cover the event of a breakout?

Thank you for your input.I am doing much better in my trades thanks to you and the other staff members.

jcole252 · #**296** (**permalink**) 06-18-2009, 08:50 AM

Quote:

Originally Posted by CStrickler

In reference to "protective buy stops"...does this mean you have entry/market orders waiting at your stop points to cover the event of a breakout?

Thank you for your input.I am doing much better in my trades thanks to you and the other staff members.

I don't want to answer for Tom, or to be the poster boy for advertising FXCM's courses, but that's a very basic point covered in the FXCM Power Course, cheap and very helpful.

"Protective stop" (= "stop loss") means at the same time you enter a trade, you place an order to exit at a pre-determined point so as to minimize your loss, in case the price goes the other way from what you expected. Used with a market order and with an entry order.

Thomas Long · #**297** (**permalink**) 06-18-2009, 08:52 AM

Quote:

Originally Posted by CStrickler

In reference to "protective buy stops"...does this mean you have entry/market orders waiting at your stop points to cover the event of a breakout?

Thank you for your input.I am doing much better in my trades thanks to you and the other staff members.

Exactly...we want to define our risk before we get into the trade and have standing orders to exit the trade entered in at all times. This protects us if the market moves against us if we are not looking and also protects us if we are looking but fail to act. The only guarantee in the business of speculation is that if we trade, we will have losing trades. Even the most successful traders in the world have losing trades. How we handle those losses has as much to do with our long-term success or failure as a trader as any other factor. Define your risk, enter your protective stop and then honor it. That is the mark of a successful trader. Glad you are finding value here as that is what we are trying to do. Thanks for letting us know.

Thomas Long · #**298** (**permalink**) 06-18-2009, 08:53 AM

Quote:

Originally Posted by jcole252

I don't want to answer for Tom, or to be the poster boy for advertising FXCM's courses, but that's a very basic point covered in the FXCM Power Course, cheap and very helpful.

"Protective stop" (= "stop loss") means at the same time you enter a trade, you place an order to exit at a pre-determined point so as to minimize your loss, in case the price goes the other way from what you expected. Used with a market order and with an entry order.

Well said and appreciated...thanks.

Thomas Long · #**299** (**permalink**) 06-18-2009, 02:00 PM

The GBP/JPY has pulled off of its recent high, found support and has begun to move back up. This recent low managed to stay above the June 5th low which is one of the few currency pairs able to do that. This is the reason I am looking at this pair for a possible buying opportunity. Using a technical indicator such as the MACD shows a buy signal is close to being generated. That buy signal would be on a move by the MACD line (green line) up through the MACD Signal line (green line). We would wait for the candle to close to make sure we have confirmation of that crossover. Protective stops could be placed below support with targets to take profit set as twice that risk for our 1:2 risk:reward ratio.

Thomas Long · #**300** (**permalink**) 06-19-2009, 09:33 AM

Following up on yesterday's post, the MACD Signal line (green line) did cross over above the MACD line (black line) at 3PM Central/4PM Eastern. This is confirmed at the close of the candle to make sure the crossover is locked in. Technical indicators can change during trading in a particular candle, so we have to wait for the close when these levels can no longer change. The buy level was at about the 157.86 level depending on the spread and time we actually bought. The 157.82 level was the sell side price at the close of that candle. The difference represents the spread of the GBP/JPY at the time of entry. Upon entry, I immediately put a protective sell stop order one pip below the 154.96 support level noted on the chart. This is just my preference as each trader may have their own approach to this. So my sell stop is at the 154.95 level with my buy entry at 157.86. This is a risk of 291 pips on the trade. In a standard account, where each pip on the GBP/JPY is worth $1.04, that represents a risk of $302.64 per standard lot (10K). Since I only risk 5% of my account balance at any one time, I can open one standard lot for every $6,052.80 in my account. I would also place a limit order to take profit at the 163.68 level. This is a target of 582 pips which is twice my risk. This is my 1:2 risk:reward ratio. For every pip I risk, I look for two pips in potential profit. This way I only have to keep my win percentage at about 40% to be profitable in the long run. Some traders do have a fear of watching the market run up to near the target only to see the market reverse and move back down to the stop and end up end as a loss. This is one reason why I might move my stop up to breakeven if/when the market moves halfway to my target. So if the GBP/JPY moves up to the 160.77, I would move my stop up to my entry level of 157.86. At that time, I position myself to either break even on the trade or profit the full amount if the market continues to move up to hit my target. This also allows me to take that 5% risk and look for another trading opportunity. When the markets are in strong trending moves, it would not be unusual to have a few trades open at the same time. But the risk to your account is still only 5%. It doesn't get much better than that. This is only one way to manage a trade and your account, but one thing that most experienced traders have in common is a solid approach to money management. It is often overlooked by new traders and can be the biggest reason that they do not have the consistent success that we all strive to achieve.