Thread: Trend Line Trading

Now that I've put out the statement from FXCM...I'd like to add on to what they had said (from my own perspective).

The NYSE and NASDAQ had errors and order issues.

Electronic Trading to Blame for Plunge, NYSE Says (Update1) - Bloomberg.com

May 6 (Bloomberg) -- Computerized trades sent to electronic networks turned an orderly stock market decline into a rout today, according to Larry Leibowitz, the chief operating officer of NYSE Euronext.

While the first half of the Dow Jones Industrial Average’s 998.5-point plunge probably reflected normal trading, the selloff snowballed because of orders sent to venues with no investors willing to match them, Leibowitz said in an interview on Bloomberg Television.

Nasdaq to Cancel U.S. Trades That Moved More Than 60% (Update1) Nasdaq OMX Group Inc. said it will cancel stock trades on all exchanges that were more than 60 percent above or below prices at 2:40 p.m. New York time, just before U.S. equities plummeted.

I believe the first 1/2 of trading earlier today was over Greek fears. For instance, Here's something Japan just announced that they are doing right now:

Bank of Japan Pumps 2 Trillion Yen Into System on Greek Crisis The Bank of Japan said it will pump 2 trillion yen ($21.8 billion) into the financial system after the Greek debt crisis caused instability in financial markets in the U.S. and Europe.

FXCM would like to apologize for any difficulties you have experienced trading on May 6, 2010. In particular between 2:30 PM – 4:30 PM ET some clients may have experienced hanging orders or other difficulties.

The root causes of these issues were extraordinary market conditions. Unusual events occurred in all financial markets, including the US equity market. In a period of several minutes the Dow Jones Average dropped around 1,000 points and then rebounded several hundred points. The currency markets behaved equally chaotic. At the height of the market uncertainty, several banks stopped providing liquidity and stopped executing trades.

BELOW IS TIME TABLE OF TODAY’S EVENTS & ANALYSIS

FXCM did experience a few technical issues that were caused by the strain on the system that the lack of liquidity created. FXCM is going to be fully investigating the technical issues that occurred. FXCM’s order routing system currently reroutes client orders to actively quoting banks and there are measures underway to improve the order routing and order processing logic. We expect these further system improvements to be rolled out in the coming weeks.

Again, we would like to apologize for any problems that you may have experienced today. While FXCM cannot make any overriding statement on adjustments to positions that were negatively affected by today’s events, if you would like us to look into one or more of your trades, please submit an audit. To submit an audit please visit Audit Form and our audit committee will follow up with you as soon as possible.

May 6th Timeline & Analysis

First, institutions were very cautious due to the next day’s UK Elections, US Nonfarm Payrolls, and the Canadian unemployment rate announcement.

In addition to that we had several market moving events. These include:

7:45 ET – European Central Bank Interest Rate Decision

8:30 ET – Trichet speaks at ECB Monthly News Conference

14:46 – Dow dropped almost a thousand points and the bulk of the drop happened in less than an hour. The reason behind this drop was reported to be that Citi Bank’s trading desk accidentally sold 16 billion US Dollars worth of e-minis, when they were supposed to sell 16 Million.

After the big drop, two Fed officials came out with back to back announcements to help stabilize the market.

15:04 – Report that Fed’s Hoenig states that tomorrow’s jobs report will be positive

15:06 - Report that Fed’s Evans sees 3.5% economic growth in the US this year

Over the recent months, there has been a strong correlation between the US stock markets and the Japanese Yen. When the Dow plunged today, so did the Japanese Yen crosses. We saw JPY crosses drop between 350 (USD/JPY) and 1250 (GBP/JPY) points. We saw comparable volatility in non Yen crosses as well.

Market volatility and liquidity has returned to close to normal levels. However, there are still some major market moving events coming up tomorrow so manage your market exposure accordingly.

Originally Posted by brad_1199

The EUR/JPY Monthly chart left a beautiful hanging man candlestick pattern in place in April signalling the bears are likely still in control of the market.. I favor a test of 119.85 in May..


EUR/JPY Monthly Chart ---->

For any of you people out there that may have missed the boat... EUR/JPY has bounced back beautifully offering bears short entry once again... The 1500 pip downward slide in this pair already this month is only a prelude to further selling pressure... The market looks to me like it was stretched too far down, way too fast, and has slingshot back upwards towards equilibrium.. It may hold out around the 119.85 area for a while as there is a 61.8 Fib Level there and price likes to get sticky around those levels.. However, worst case scenario here is that we see a bit of stalling, as bears are now confirmed big time with a push below 112.05 now in place.. This pullback is a golden opportunity for late bears to get on board the short side for some big pips... Short stops should be kept above this months high price at 125.44 ----

Many JPY crosses are showing this bearish wedge pattern. Could be more JPY strength coming that brings these pairs down lower again in the near term.

I have been following your posts -they are extremely useful, Thank you. Is it too late to short EUR/NZD?

Originally Posted by kpip

I have been following your posts -they are extremely useful, Thank you. Is it too late to short EUR/NZD?

The EURNZD is in a strong downtrend on the Daily chart. Ideally we would like to see a close below the current low of 1.7369 or, after a retracement, a trader could short the pair as price action stalls at a Fib level and then begins a move back in the direction of the Daily trend. The last way mentioned to trade the pair would be the more aggressive approach while the former way would be the more conservative approach.

Originally Posted by Sean Hyman

Many JPY crosses are showing this bearish wedge pattern. Could be more JPY strength coming that brings these pairs down lower again in the near term.

this is the most beneficial post you have made since I have been a member. Thanks,
Sean...

Originally Posted by brad_1199

Last week I posted comparison charts of the long term down trends in both EUR/AUD and EUR/NZD --- In that post I showed EUR/NZD is due for a large push lower still as it continues to lag the EUR/AUD lower... A short trade in this pair will likely end up being one of the best trades of 2010... And I'm all over it

Price just keeps dropping like a rock month after month

There's not a buLL in site

EUR/NZD Update---

Price is still in a very strong down trend and has now penetrated down through a multi-year support line, showing there is clearly no support in site.. Right now the market seems to be clothes-lined at the broken trend line after putting in substantial losses.. This looks like stalling... The market should ultimately break lower from current levels... I favor the bear trend to continue...

sean and brad, you guys make identifying chart patterns seem so easy. would this be a correct head and shoulders pattern? if so the price should test around the 1.644ish mark, if it does not hold there should be some downside to the pair? any advice would be greatly appreciated.

ernie

Originally Posted by ealarcon

sean and brad, you guys make identifying chart patterns seem so easy. would this be a correct head and shoulders pattern? if so the price should test around the 1.644ish mark, if it does not hold there should be some downside to the pair? any advice would be greatly appreciated.

ernie

Hello ealarcon.. Take a look at the daily chart of GBP/CHF here.. Notice that price is snuggly up against the bottom side of long term down trend line resistance.. This area should force the market to drop lower eventually and continue on it's long term bear trend.. However, just be careful if the price moves up above the trend line on a daily closing basis, that would signal a bullish continuation.. In all likelyhood, I favor a continued push into the down side...

Originally Posted by brad_1199

Hello ealarcon.. Take a look at the daily chart of GBP/CHF here.. Notice that price is snuggly up against the bottom side of long term down trend line resistance.. This area should force the market to drop lower eventually and continue on it's long term bear trend.. However, just be careful if the price moves up above the trend line on a daily closing basis, that would signal a bullish continuation.. In all likelyhood, I favor a continued push into the down side...

thanks brad..... lesson learned take a look at the longer term charts to check the overall trend of the currency. if i had done that i would have seen the overall down trend. i could use the heald and shoulders pattern i found in the hourly charts for possible scalping or shorter term trades, but always check daily or longer term charts for the trend.

Originally Posted by ealarcon

thanks brad..... lesson learned take a look at the longer term charts to check the overall trend of the currency. if i had done that i would have seen the overall down trend. i could use the heald and shoulders pattern i found in the hourly charts for possible scalping or shorter term trades, but always check daily or longer term charts for the trend.

No problem bud... Glad to help

Recent head & shoulders pattern that is in line with the daily chart's trend direction. It hit its minimum price target.

symmetrical triangle on AUD/NZD. See which way it breaks out. If it breaks lower, I may hop on board.

USD/CAD is building a base prior to en expected bullish break out... Bulls, this one has got your name all over it

USD/CAD Daily Chart ---->