Best Thread BBmac's Gbpusd thread

[bbmac]

A bullish divergence based Reversal set-up and price action trigger on 1min (Reversal Aii seq) supported by a 5min Reversal B set-up..shown below @ the prev 1hr sw lo=prev supp=potential supp zone previously posted and shown again below: A +24pip gain booked;

The supporting 5min regular bullish divergence set-up is here:

G/L

 

[bbmac]

...You mention osma and i have tried googling this but not with great success. Could you tell me what osma is and, as i trouble you for the last time, what is rbs and sbr stand for?...I have found. i believe, MNI is Market News International....This will help me keep on track with your posts ...ATB!

Hi,

Answering your questions below, in the order you raised them in your post;

1. Osma is the moving average of oscillator indicator and is standard in the MT4 charting package, it is effectively the difference between the macd signal line and ma line plotted as a histogram ie the histogram on the ' standard macd ' The macd I use is a histogram of the signal line.
2. SBR/RBS = Support Becomes resistance and Resistance Becomes Support and refers to the tech phenomenon of broken support may act as resistance in a downtrend on any pullback re-test from the underside / broken resistance may act as support in an uptrend on any pullback re-test from the topside.
3. Mni is indeed as you suggest and their market updates.

G/L

 

[bbmac]

W/e fri 23rd Oct 09

Friday's fall from 6692 Hi hastened by the worst than forecast -0.4% fall in 3rd Qtr Uk Gdp has altered the technical outlook somewhat following the rapid rise off 5707 recent swing low. The move down has resulted in a Daily bearish thrust candle close on Friday engulfing the previous 3 day's candles, and a pinbar candle on the Weekly T/f....The Daily and Weekly charts below show the area of potential resistance @ that 6692 hi from where the selling started and included the 76.4% fib fan of the 7044-5707 move down, as well as the Weekly descending potential resistance trend line, in the previous Daily swing hi=previous resistance=potential resistance zone..

Effectively the top of the right shoulder on the Weekly H&S formation was the area of the 6692 Hi before the 393pip fall on Friday, which sliced through both the 23.6% and just through the 38.2% fibs of the 5707-6692 rise as well as any ascending potential support trend lines on 1hr and 4hr t/f's. Price has also gone below the last 2 x HL's of the 1hr/4hr uptrends. The drop also breeched the 100sma's on the 1hr and daily t/f's, with price settling just below the 200sma on the 1hr also, back inside the descending price channel on the Daily t/f, following it's upside breech to that 6692 Hi.

Below current price, the zone marked as a on the 4hr chart below is a previous swing lo=previous support=potential support zone that is co-existant on the 1hr t/f also. Below here the previous swing hi=prev res=potential rbs zone marked as b is also co-existant on the Daily t/f. The fibs shown on this t/f are the unbreeched retraces of the 5707-6692 move up.

(100sma = yellow line, 200sma = red line)

Potential sbr/res to the upside of current price can be more readily seen on the 1hr t/f with a fib drawn from the 6692hi to the current lo.

Xe.com are already quoting 6409 (??) against a Friday close (dependant on broker) of around 6305-10

Certainly there are extreme oscillator readings on 1hr with the sub 1hr beginning to exhibit regular divergence readings, and the 4hr hidden-divergence building:

G/L to all for the forthcoming week's trading.

PS: What price an upward revision in this 3rd Qtr Gdp and a 4th Qtr positive growth print on next release?? (or is that just the conspiracy theorist in me.)

 

[bbmac]

Great post over a FF.com

Replicated below is a great post over @ FF.com on a thread discussing whether it is possible to make a living from trading. The author makes some very valid points.

The link is here; http://www.forexfactory.com/showthread.php?t=34249&page=8

----------------

I can only speak for myself, but I actually do make a living at trading. It was hard won. It took intensive study and a level of due diligence and discipline that most jobs don't require.

It is a certain breed that rises to the challenge and thrives in this environment.

So cutting the wheat from the chaff starts at the bottom. If anyone finds themselves in any one of the categories of the "people who shouldn't trade" below, then save yourself a lot of money and give up now. What I'm going to share may sound harsh, but it's not mean spirited in the least. The market is brutal and honesty is critical. Anyone giving people false hope or encouragement is doing a great disservice.

The Unspoken Rules of Trading

1. Stupid people shouldn't trade.

It takes a level of mental acuity that pushing the button for the fries doesn't. Trading is professional work and requires an aptitude for strategic thinking as well as a high level of problem solving skills. Here's a link for industry IQ averages. http://iqcomparisonsite.com/Occupations.aspx The chart includes administrative functions as well as professionals, so you need to look at the 50% mark and above. In Finance the cutoff is 110 IQ for professional work, for general employment the cutoff for professional work is 100. There is another statistical table here http://www.geocities.com/rnseitz/Definition_of_IQ.html. Remember these are minimum cutoffs, not levels of excellence. These polls are based on actual employment figures, so it isn't an opinion whether someone has what it takes, it's just reality. Do yourself a favor and take a simple IQ test online. There are plenty.

You are going up against the top minds in the world in this market, so you need to ask yourself, "Do I really have the necessary fire power?" The market isn't an equal opportunity employer, it's a predator.

2. Lazy people shouldn't trade.

It's hard work. Anyone who thinks they can cut corners are deluding themselves. The problem is most lazy people don't realize they're lazy. I don't mean the people who can't be bothered to get out of bed kind of lazy. I mean the one's who went to college, got a degree and spent their time until now being handed work to do rather then ever taking an initiative to improve upon a process, to strive for a level of excellence above the bare minimum of what was expected of them, and always sought the line of least resistance kind of lazy. Trading takes a high level of commitment, a willingness to make sacrifices, and an ability to innovate. If you've never risen to the challenge or developed these skill sets, putting large sums of money on the line is a tough way to find out you don't have them.

3. Emotionally weak or unstable people shouldn't trade.

You need to have a high degree of emotional intelligence, stability, and self awareness to make it. If you don't have the constitution for it, or haven't dealt with your emotional weaknesses they will interfere with your decision making process and you will lose. Fear, greed, ego, hope, and anger are obvious things that need to be overcome. More serious maladies will have an even greater impact so it's up to the individual to introspect if they have the emotional stamina for this profession. Trading will push every button, bring out every demon, and then some you never knew existed. If you haven't seen the "coffee's for closers" speech on youtube, it's worth watching, and if you think that's abuse, then you have no idea what you're up against.

4. Substance abusers, alcoholics shouldn't trade.

For obvious reasons besides drunk courage and nodding off for 12 hours while a trade's going with no stop loss at 500:1 leverage.

5. Unlucky people shouldn't trade.

If you've never won at anything in your life why would trading be any different? There is an underlying cause for unluckiness. I don't buy into the notion that some people are naturally lucky and others aren't. We create our own luck and lot in life. If you are a glass is half empty person, or constantly of the view that the deck is stacked against you, it will be. State of mind defines our path. Losers love to be proven right. The "see I told you, no one's a winner" types.
With that vantage point someone has already cast their own misfortune. They usually try to find like minded beings to substantiate their view so they can blame it on the system and not take personal responsibility for their own failings or correct them. Misery loves company.

Naive people don't really belong on this list, but should always trade demo first. We all have to start somewhere. So being new to something doesn't mean you are not going to make it. But heading into this with a notion that it's easy or listening to people brag about their winnings on a forum and thinking "I can do that too" is a completely false impression. I watch the Interactive threads and from half the stuff I read you'd think people are making a fortune.

This is just not true. There are a handful of good traders, but you need to understand enough about the market dynamics to know who is good at this and who is full of it or just demo trading.

Then there are the scammers. The people who shake down newbies by throwing fairy dust in their eyes. So be cautious of trading systems and signal services that sound too good to be true. They are.

No trading system will replace real knowledge. People who put their faith in a trading system will lose. You need to study from the bottom up. Candlestick patterns, chart patterns, price action, all the components that create market dynamics. If you can't understand what's happening on a naked chart, no indicator is going to help. There is no holy grail, no magic bullet.
There is only thousands of hours of chart time and studying everything you can get your hands on for technical analysis, trading psychology, and learning how the global financial market operates.

Then there's money management, risk reward, and overcoming negative expectancy. Trading is a business, not a game. It needs to be approached with a high level of professionalism. The bottom line is critical. You are the President, the Trader, the Analyst, Systems Technician, and Accountant. You have to wear each hat equally well and your business is only as strong as it's weakest link. If you have no prior experience running a business, then you need to learn. Trading is more than just placing trades.

After you've put all this together, then there's the market, which is a fickle beast. It eats the best and brightest as a snack before lunch. It's unforgiving, uncompassionate, and unrelenting. If you get cocky, or complacent, it will rip you to shreds. Even if you do everything right, sometimes you get broadsided, which is why money management is so important.

The last one's standing are the one's you're up against. And they are 10 moves ahead, have years of collective experience and inside market knowledge that retail traders don't.

No mean feat. But if you think you've got what it takes, great.

Trading is not a glamorous job. It's a boring, rote, solitary activity. You need lots of patience and to remain passionate about it at the same time. Personally, I love it. It's like playing financial chess against a thousand Kasparov's. When you get the moves right there's an indescribable satisfaction to it. Making money is the end game, but the side effects are personal improvement and self autonomy, and an in depth understanding of how the global financial system actually works. All good stuff.

Anyway, that's my take on it.

I hope some of this is useful to someone just setting out on the path.

Best of luck.

 

[bbmac]

Extension to QE tomorrow ??

Just wondering out aloud: Tomorrow's Boe/Mpc rate decision is likely to be n/c @ 0.5% with the market consumed by the decision on whether to extend the QE from the present £175Bln in light of the poor Q3 gdp # of -0.4%. This said this figure is more likely than not to be revised upwards with the market expecting growth, however modest in Q4, as the other major economies returned to growth in Q3.

Consensus seems to be that the Mpc will decide to extend QE to £200-225Bln from the present £175Bln but with other confidence and output surveys showing some strength I wonder whether the decisoon to extend will be bold enough to £225Bln? The Boe have aleady intimated that they are not in favour of negative rates so QE seems the only possible measure open and having been stung in the past by criticism of being slow to react/over-concerned about inflation risks -vs- other indications of a contracting money supply and economy it seems probable that some QE extension may be on the cards...but they will trun their eye back to inflation at some point and with the likely return to growth soon I wonder whether they will be wanting to stoke those potential inflation fires too much with the exension to QE?

Probable £ weakness on any extension of QE to £225Bln is the conventional wisdom? but any less than that and it is harder to guess the market reaction...will no QE extension be viewed as a sign of confidence in the economy/worries about stoking inflation in the future and therefore a positive for £ ? or as the wrong decsion, thus too see-ing a knee-jerk £ sell-off?

Of course there is a chance of a double whammy if U.s NFP reaction the day after (Friday) see's $ strength or weakness thus comounding any overall market reaction re the Uk Boe/Mpc's decision re QE, and ahead of that the Fomc later today.

We will know tomorrow.

G/L

 

[bbmac]

re above post

Uk Pmi services comes in above forecast @ 56.9?? .....any effect on the QE decision??
(Above 50 is seen as expansive?)

G/L

 

[bbmac]

QE again

Ahead of that Boe/Mpc decision tomorrow is the Uk manuf and ind production data due for release tomorrow at 0930am gmt. Last month's numbers came in well below forecast, showing contraction not expansion, although this month's forecasts are again for expansion m/m. Is this the last piece in the jigsaw during this 2 day Mpc meeting before the QE expansion (or not) decsion is made?

The previous month's figures are highlighted to the left of the forecasts

G/L

 

[bbmac]

Qe - decision due later today

It will be interesting to see the U.k industrial and manufacturing production data later this morning, and whether this like all recent surveys have suggested a pick-up and expansion in U.k economic activity. Mni services y/day 56.9 for example...Indeed many suggest that the -0.4% Q3 Gdp figure is simply wrong and will be revised sharply upwards with Q4 showing growth albeit small?

The Fed (Fomc) suggested stable rates for time being at it's meeting yesterday, and tghis is likely to be the case in the Uk , so the question is; Will the Boe/Mpc reists further additions to the QE programme fearful of storing up future inflation when the economy has alraedy started growing -or- As some are suggesting will they expand it? some are suggesting an additional £50Bln taking it from current £175 to £225Bln.

It's worth remembering that before the bad -0.4% Q3 Gdp there were implicit suggestions that it had topped out at £175Bln, but also that there were votes in August for an additional £75Bln when it expanded to £175 from £125Bln, and that the bank had been stung by criticisisms of it's slowness to act during the height of the crisis and beyond not see-ing the downside risks, concentrating on the upside inflation risks too much. Bear in mind too that the U.s, Japan, France, Germany returned to growth in Q3 with Uk lagging behind.

On balance, some expansion in QE seems the most probable outcome and the decision will be announced @ 12pm gmt later today. Likely £ weakness with a £50Bln QE expansion would be the conventional wisdom?

G/L

 

[bbmac]

Manuf prod m/m 1.7%, Ind prod m/m 1.6% are the numbers released...certainly ex mpc member Blanchflower is certain as to action needed:

http://www.telegraph.co.uk/finance/...obs-before-the-economy-falls-off-a-cliff.html

G/L

 

[bbmac]

30mins to go to Uk Boe/Mpc announcement

Most likely reactions to following scenarios re Boe/Mpc decisions

1. Rate n/c, Qe increases by £25bln...hard to say could go either way

2. Rate n/c, Qe increases by £50bln +, likely knee-jerk £ sell-off

3. Rate n/c, Qe does not increase staying at current £175bln...likely £ strength knee-jerk reaction

* It is very unlikely that there will be a rate hike?

Anything can happen, trade what you see...not what you think.

G/L

 

[bbmac]

U.s Nfp data later.

So Boe/Mpc fudged it and did something (£25bln addition to Qe programme) probably the least they could...fearful of being accused of not reacting to the downside dangers re Q3 gdp.

Roll on, U.s Nfp due later....generally expansive data from the U.s of late as Q3 showed growth in gdp. As usual it will be the revisions of previous, un-emp rate, manufacturing jobs and deviation from the -175k forecast that will determine market's reaction. Un-employment is of course a lagging indicator but the initial claims fell to a 10mth low yesterday with ADP forecasting -203k against -263k in the headline # last time. Consensus seems to be for -175k with un-emp rate rising to 9.9% from 9.8%.

The 3 main scenarios are:

a. Headline # comes in around forecast (possibly with positive revision to last month's headline # and only 0.1% or no jump in un-emp rate of 9.8%...probable indecisive -$ strength on knee-jerk reaction
b. Headline # comes in considerably less than forecast with positive revision to last month's headline # and stable un-emp rate....probable $ strength on knee-jerk reaction
c. Headline # comes in higher than previous month with or without revisions to previous month's headline # and an increase in un-emp rate...probable $ weakness on knee-jerk reaction.

Anything can happen of course, and there are other scenarios. This is historically the most volatile data release on the calendar, so as usual trade what you see, not what you think, and if you don't understand what you see/it is not clear-stay out, is the best advice for a tech trader.

G/L.

 

[bbmac]

Just over 30mins to nfp

My favoured tactic (simplistically put below) post nfp release if, and only if there is a clear direction taken by the market in reaction to it is to either;

a. price goes up-sell first hi-and buy first pullback @ any retest of broken resistance

-or conversely-

b. price goes down-buy first lo-and sell first pullback @ any re-test of broken support

As I say above this is a simplistic explanation and whether I actually do it depends on a number of other factors, not least having a claer trigger set-up (s) to do so , but it is a typical post news/data play that may develop (or not.)

G/L

 

[bbmac]

w/c M 9th Nov 09

The Daily candle on Friday and the weekly canle closed-bullish.



Price closed friday in an uptrend 1hr/4hr, with daily t/f in a weak uptrend having seen a H, HL, LH then another HL, finding resistance at the descending potential resistance trend line on that t/f at the bottom of the previous swing hi=previous resistance=potential resistance zone on that t/f. The weekly t/f is in a range consolidation at the moment.

The 100sma remains above the 200sma on 1hr, 4hr and daily t/f although below on the weekly, above on the monthly.



Above current price and 6665-92 area is a previous 4hr and daily swing hi = previous resistance = potential resistance zone that intersects another daily t/f previous swing hi = prev res=potential res zone running 6689-6736 area in which the 76.4% fibb of the 7044-5707 fib resides @ 6724 area.



Below current price and 6312-6260 is a previous 1hr/4hr swing lo=previous support=potential support zone. Below that the 50%, 61.8% and 76.4% fibs of the 6260-6635 rise up @ 6447, 6403 and 6348 respectively, and below those a previous 4hr/daily swing lo zone resides @ 6302-6260



G/L to all for fothcoming week's trading.

 

[bbmac]

$ weakness, a gap up @ new week's open and more with 1hr/4hr trend price action has resulted in an upside breech of the 76.4% 7044-5707 and descending potential resistance trend line on the daily t/f.Price has reached 6800 area where it has encountered some supply, correct at time of writing. In respect of further potential resistance to the upside there is nothing obvious on 1hr/4hr chart and even the daily until the previous swing hi=prev res=potential res zone around the current yearly hi, 6990-7044.

G/L

 

[bbmac]

Re post above, price has entered the previous swing hi=previous resistance=potential resistance zone on the weekly t/f...of course this does not help at the moment if your trigger is anything below the Daily and looking for a short.

Speaking of looking for shorts, it never ceases to amaze me how many traders are constantly trading counter-trend looking for cricket scores. There has been a right old bun fight over @ FF.com's gbpusd thread recently (nothing new there it is very ego driven) culminating in it's iluminati (!) leaving the thread over an ongoing dispute as to whether the trend is up or down (lol) and the validity of analysis/trading calls made in that respect.

Many keep shorting it in the hope of a complete reversal, unable to understand that the technical trend is up on so may t/f's even though the £ fundamental evidence is weak (such as Q3 gdp) fogetting that the instrument is also half $ and that any strength in it may have more to do with $ weakness as opposed to intinsic £ strength. As technical traders, it matters not (interesting though the prevailing fundamental environment re U.s and U.k may be..) all we need to know is what the technical trend is on the t/f's of interest to us (and whether this trend is with or contra any that exists on the t/f's above those,) not necessarilly the fundamental reasons behind it. Technically the reasons for a trend are that there are more buyers than sellers or vice versa.

G/L

 

[gamma]

A useful weapon to add to ones arsenal is the USD index.
Helps to see if cable is strong or USD is weak.

 

[bbmac]

A useful weapon to add to ones arsenal is the USD index.
Helps to see if cable is strong or USD is weak.

Good tip, Thx.
------------------------------

Cable found supply @ 6842 area @ 116% L-H of it's average 20day pip range , and is now 100pips off that current i/day Hi...The near-term obvious previous imbalances of supply/demand=prev swing hi's = prev res=potential rbs -and- the near-term obvious previous imbalances of demand/supply=prev sw lo=prev supp=potential supp, as wellas the unbreeched fibs of moves up to current 6842 hi from 6260(yellow,) 6464 (orange,) and 6516 (grey) and unbreeched ascending potential support trend lines on this 1hr t/f are shown below.

The zones marked as a and b are co-existant on 4hr t/f also

Above current i/day hi @ 6842 and price remains in the previous sw hi=prev res=pot res zone on the Weekly t/f discussed in a post above here today, with that 6990-7044 prev sw hi=prev res=pot res zone on Daily t/f at the top of that weekly zone.
G/L

 

[bbmac]

Strong sell-off in the asian/overnight session from a 6788 Hi, finding support inbetween the 61.8% 6464-6842 and 76.4% 6516-6842, around the 100hr sma, at the ascending 1hr potential support trend line....Recovery in the late asian/early london session off 6599 lo, despite worst than forecast trade balance data has seen price trade through the 38.2% of the total 6842-6599 current drop.

The 1hr chart as I see it in respect of potential support/resistance factors is below;

Zones marked as a,b and c are co-existant on the 4hr t/f.

G/L

 

[bbmac]

set-up of day so far

Price pulled back off point x, finding support at the previous 5min swing hi's at which point a hidden divergence based 1min re-entry (to next t/f trend after a pullback) set-up developed at point y indicating a hi-probability entry into the next higher t/f-5min/growing 15/30min uptrend. At point of entry 5min macd signal line was crossed above it's axis and next higher t/f-30min was pointing up (as was 1hr) so a nice ' with trend ' trading opportunity at this potential rbs zone.

It is one of only 2 trades I have done so far today, even on the 1min trigger you have to have the patience and discipline to await the right set-up (s.)

 

[bbmac]

A favoured set-up

re set-up above

it is one of my favoured set-ups, and can indicate a hi-probability 'with trend' tradinhg opportunity across any time frame combination..ie price is trending on a t/f per overall price action-peak/valley analysis, and begins to pullback...look for an obvious previous swing hi (s) zone -uptrend, swing lo (s) zone-downtrend on this trending t/f (better if multiple swing highs or lows before it broke with trend as was therefore stronger resistance/support and therefore potentially stronger potential rbs/sbr respectively). If price re-tests the said potential rbs/sbr zone, drop down to the lower t/f and look for a good price action trigger with hidden divergence in the oscillators to get back ' with the next t/f trend ' after the pullback. It is useful also to ensure that the macd signal line is crossed above it's axis-uptrend/below-downtrend on the trending t/f, and at least pointing in direction of trend on t/f above that, if not already crossed above/below it's zero axis. It is also useful to ensure tha the set-up occurs at ;

a. uptrend - a HL or L on the t/f it sets-up on, also corresponding with a HL on the trending t/f
b. downtrend - a LH or H on the t/f it sets-up on, also corresponding with a LH on the trending t/f

In respect of the potential rbs/sbr zone, I like to see this nearest to current price action ie: a near-term prev swing hi/lo zone, not way back in time on the trending t/f.


These technical conditions make for a very high probability trading opportunity.

G/L