Chart of the Day - Page 23

JForex · #**331** (**permalink**) 07-24-2009, 03:28 PM

You're saying you wont wait for the 1.0800 level to be broken. Did I get you right? I have to make sure because that is my primary question here. So if you would please, thanks.

Thomas Long · #**332** (**permalink**) 07-24-2009, 03:31 PM

Quote:

Originally Posted by JForex

You're saying you wont wait for the 1.0800 level to be broken. Did I get you right? I have to make sure because that is my primary question here. So if you would please, thanks.

Typically I would wait for that kind of a move for confirmation of the trend. I wouldn't consider that necessary here since the downtrend is already confirmed. I would not wait for the move down through the 1.0783 low before selling, but I would wait for a bounce up first.

JForex · #**333** (**permalink**) 07-24-2009, 04:13 PM

Thanks for clarifying.

JForex · #**334** (**permalink**) 07-24-2009, 07:06 PM

Quote:

Originally Posted by JForex

Thanks for clarifying.

Tom would you be deterred to to take the USDCAD short seeing that the Stochastics at all parameters are over sold?

What do we think to ignore this?

Thomas Long · #**335** (**permalink**) 07-27-2009, 07:40 AM

Quote:

Originally Posted by JForex

Tom would you be deterred to to take the USDCAD short seeing that the Stochastics at all parameters are over sold?

What do we think to ignore this?

I think that in a strong downtrend, the market can move down to an oversold situation and stay there a long time. Hopefully with us already in a sell position. This is what identifies the trend as being strong. This market can turn around at any time, but we need to be thinking about how long the move can last, not how soon it will end. We know it will end, but just don't know when until after the fact.

JForex · #**336** (**permalink**) 07-27-2009, 08:23 PM

Thanks Tom.

Once a major price level like Support/ Resistance on the daily, we look for swings on the H4/ H1.

How do we locate these swings? I tried MA cross and Stochastic cross. Can you please share your method of locating swings on lower timeframes?

Thanks,
JForex.

JForex · #**337** (**permalink**) 07-28-2009, 12:36 AM

Dear Tom,

Please help me understand the break of Support/ Resistance and its confirmation.

Many times we say that once a pair breaks a major Support/ Resistance, we have a short/ long trade. But what confirms such a break? As you know, BREAKING a price level and CLOSING beyond a price level are two different things.

In the attached example of AUDUSD, we are saying that when Price breaks the Daily Resistance at 0.8262, we have a long bias. Now what confirms this break? As you see in the picture, Price has already broken the level, but Daily has not closed yet. Should we wait for the Daily candle to CLOSE above this level, or should we consider it confirmed simply because price has broken this level? Another kind of confirmation could be that we wait for price to break this level, and then wait for H4 or H1 candle to CLOSE above it (NOT the Daily close).

Can you please explain what confirms this break, and what must we wait for before start considering a trade.

Thank you very much,
JForex.

Thomas Long · #**338** (**permalink**) 07-28-2009, 08:33 AM

Quote:

Originally Posted by JForex

Thanks Tom.

Once a major price level like Support/ Resistance on the daily, we look for swings on the H4/ H1.

How do we locate these swings? I tried MA cross and Stochastic cross. Can you please share your method of locating swings on lower timeframes?

Thanks,
JForex.

This is a matter of personal preference and mine is to use the Slow Stochastics with the values of 15,5,5. No special reason other than I am comfortable with it. This is the hourly chart of the AUD/USD and since the daily chart shows an uptrend, I would look for buys on the 4-hour or hourly chart. I consider a buy signal valid when the Slow Stochastics crosses over after having been below 20. A sell signal is when the Slow Stochastics crosses over after having been above 70 while the daily chart shows a downtrend. Nothing fancy really....just a consistent approach to trading. The key, as always is to pick the a strong trending move to begin with. This important first step allows the rest of our approach to fall into place.

Thomas Long · #**339** (**permalink**) 07-28-2009, 08:42 AM

Quote:

Originally Posted by JForex

Dear Tom,

Please help me understand the break of Support/ Resistance and its confirmation.

Many times we say that once a pair breaks a major Support/ Resistance, we have a short/ long trade. But what confirms such a break? As you know, BREAKING a price level and CLOSING beyond a price level are two different things.

In the attached example of AUDUSD, we are saying that when Price breaks the Daily Resistance at 0.8262, we have a long bias. Now what confirms this break? As you see in the picture, Price has already broken the level, but Daily has not closed yet. Should we wait for the Daily candle to CLOSE above this level, or should we consider it confirmed simply because price has broken this level? Another kind of confirmation could be that we wait for price to break this level, and then wait for H4 or H1 candle to CLOSE above it (NOT the Daily close).

Can you please explain what confirms this break, and what must we wait for before start considering a trade.

Thank you very much,
JForex.

I use the daily chart to identify the trend which becomes my directional bias on the 4-hour or hourly chart. So I have been looking for buys on this pair since July 14th. That is when I thought the bulls came back in to take over this market. I consider a one pip move up above the previous high or below the previous low as a breakout. The reason is that breakouts cannot happen without the orders that might offer support or resistance are all filled and no longer a threat after a one pip move through that level. So I consider a breakout as an official breakout. It is true though that many traders look for a close above the high or below the low to serve as confirmation. That is also a valid approach and the choice again, is just a matter of personal preference.

Thomas Long · #**340** (**permalink**) 07-28-2009, 01:38 PM

A bounce up off of the lows can be seen on this hourly chart of the USD/CAD. Since the trend is down, this is a selling opportunity. I also have the Slow Stochastics with values of 15,5,5 plotted on the chart. A sell signal from this indicator would be when the line on top crosses down below the yellow line. We should wait for the candle to close to confirm that crossover though. The protective buy stop should then be placed above this high with targets to take profits set at twice that risk for our 1:2 risk:reward ratio.

KP FX Trader · #**341** (**permalink**) 07-28-2009, 02:53 PM

Good call Tom! K Crossed D, I'm curious to see if that June 3rd support I see on the daily gets broke at 1.0794. Thanks!

Thomas Long · #**342** (**permalink**) 07-31-2009, 10:16 AM

The trend on the daily chart of the EUR/GBP is down and after a bounce up off of the lows, this market has turned back down to the downside. On the bottom, we have a 4-hour chart showing the move up and the reverse back to the downside. A selling opportunity would be signaled on a move down through support on the 4-hour chart with protective stops placed above the current high. We will know what the high is after the move down through support, so the risk will be determined by how high this bounce runs and if the market can move down through support. Target to take profits should be at twice that risk for our 1:2 risk:reward ratio.

Thomas Long · #**343** (**permalink**) 07-31-2009, 10:18 AM

Quote:

Originally Posted by KP FX Trader

Good call Tom! K Crossed D, I'm curious to see if that June 3rd support I see on the daily gets broke at 1.0794. Thanks!

This is a good example of why trading on the shorter-term charts can be dangerous. Another bounce up stopped out this opportunity in spite of the fact that the trend is down and this market continues to sell off. I prefer to look at the 4-hour chart for my entries and exits most of the time as this does not happen as often. Thanks for you support.

Krismitt · #**344** (**permalink**) 07-31-2009, 02:29 PM

Quote:

Originally Posted by Thomas Long

This is a good example of why trading on the shorter-term charts can be dangerous. Another bounce up stopped out this opportunity in spite of the fact that the trend is down and this market continues to sell off. I prefer to look at the 4-hour chart for my entries and exits most of the time as this does not happen as often. Thanks for you support.

Thomas:

I am watching USDCAD for a setup. Like you, I am looking at the Daily but I will make my entry from the 4H Chart. Tell me, since this pair has been in a downtrend, would this set-up be a bounce be a reversal?. Also, I am not sure how to determine my target.

Regards.

Thomas Long · #**345** (**permalink**) 07-31-2009, 03:24 PM

Quote:

Originally Posted by Krismitt

Thomas:

I am watching USDCAD for a setup. Like you, I am looking at the Daily but I will make my entry from the 4H Chart. Tell me, since this pair has been in a downtrend, would this set-up be a bounce be a reversal?. Also, I am not sure how to determine my target.

Regards.

While we never know for sure, I always treat these as a bounce and a chance to get into a trade in the direction of the trend. But the key is the trend and how strong I think it is. I think this downtrend on the USD/CAD is strong, so I would treat any move up as a potential selling opportunity. I will be wrong on occasion of course, but more often than not the trend does not change. I first determine my risk on the trade after identifying the entry. I then simply look for twice in profit potential as I am willing to risk. This allows me to be wrong half the time and still potentially be consistently profitable.