Predicting short term currency fluctuations

[GeckoTime]

I would like to start getting involved in FX spread betting, in particular looking at EUR/USD. For the medium term (i.e. maybe next month) it seems to be stuck in a 1.16-1.18 trading range, but I am excited by the prospect of being able to make money on intra day volatility.

Lately in particular, I am finding that the up/down movement is fairly predictable on a day by day basis. It's probably more luck than anything that I have speculated (in my head so far!) correctly, but I am hoping for some advice on predicting intra day EUR/USD currency movement.

The stock mkt is one indicator (US mkts expected to/are going up=demand for dollars=less dollar for your euro). Similarly strong US economic data=dollar appreciation. Are there any other indicators I should be looking at? Am I being too simplistic?

 

[Newtron Bomb]

I know this may seem a silly answer but however you are evaluating the larger time frames then look at the same principles for a smaller time frame, 5 mins for example, and see how the same analysis responds.

You may be surprised as the similarities, if you had something more specific in mind then post or pm me.

Regards
NB

 

[GeckoTime]

I think 5min is a bit too quick! I was thinking maybe a few hours. Today has been a good example for EUR/USD. From a rate of about 1.17 in the morning the $ started to strengthen (I guess on expectation Dow would go up).

Then look at what happened at 13:30 when the empire manufacturing and retail sales numbers came out. Tightened VERY fast to below 1.16 (has started to bounce back but that is beyond the point). My point is that even if you are not that quick off the mark, the potential for big returns is there if your timing is right on things like this.

Now my question is am I being naive? Are there any other indicators that would be useful on a day by day basis?

 

[Newtron Bomb]

You dont need flash indicators

All you need is basic support and resistance which show up very well on forex.

I base my trades on the price action on 15 min charts and flick to the 5 min around key levels. I have a 100 period ema but its not used for anything in particular anymore, also rsi which i look at but it is more to confirm or question my opinion from looking purely at the price action

Unfortunately i cant comment on FA as i dont look at it

HTH

 

[options]

You can use a 5 min chart over a couple of weeks if you want to.
I would consider catching the short moves to start with.
Unless you have deep pockets that is. Because if your stops are too close all you will be doing is giving your money away all the time.
Using the economic indicators that you mention appear to make sense... until you try to trade them.

It's all about timing.

 

[GeckoTime]

By 5min and 15min charts I assume you are talking about intra day charts with the respective periods drawn in before a new price is recorded? I will draw up some so I can take a closer look

Although it appears I am more of a short termist than you guys (thinking about quick in and outs for quick profits) I think the "longer" term trend (i.e. next week or month) is important to bear in mind. Now looking at a chart of EUR/USD with a 15 and 20 day moving average drawn in and a 14 day RSI chart below, it seems to be indicating (albeit not too convincingly yet) that we are in for some dollar strengthening/euro weakining. This seems to run counter to broader estimates that the dollar will weaken and perhaps reach 1.20 by the end of the year on the back of G7?

All comments welcome..

 

[options]

Start off by looking at a chart as far out as you can go, then work in until you find a time period and time size you like then work with that.
I wouldn't pay too much heed to the pundits either.

 

[Bigbusiness]

I only trade the Euro/$ and use a very short timescale. I find there is normally a nice quick move some time between 8 and 9am.

I missed this one today but it would have been a nice quick profit.

 

[GeckoTime]

Bigbusiness - that is exactly what I am talking about - we seem to be thinking along the same lines. I noticed the move today as well. That move or the one back up again were both money making opportunities. Are there any particular methods you use to identify whether one of these short term trends is worth following or a small fluctuation away from the trend? (given that if you wait too long to find out you may miss it)

 

[Bigbusiness]

I just use simple support and resistance lines and look out for chart patterns. Having tried everything else, the simplest method seems to work best. Look at the red support line on the chart above. As soon as it breaks, there is 50 points up for grabs. Shame I was asleep at the time!

My main problem is being awake often enough at 8am to do the trades. I might have to look at different times of day!

 

[options]

Agree with that BB. I was on that move before 8am but the wrong-way! I read it as a false break to the down side from the open. When it played peak a boo above the open I hopped on and it went against by two bars before I bailed and went short with a stop at .1650. Luckily I had other things to attend to so missed the congestion and had a nice surprise next time I looked.
Out at the bottom before it started turning.
So started with x1.5 loss. Ended with x5 gain.

Depending on what time frame chart you were looking at; could/would, have meant trading it different.

A 5 min chart showed an up move beginning from a failed breakdown. The 1 min chart gave an entry point. These I took and they were wrong! Normally this works fine for me so no probs really. But I had already decided from a daily chart that I was only going short today. and the hour, 30 min, 15 min charts confirmed that there was no break to the upside. (I looked after the fact).

The daily chart tells you that there is heavy sup and resistance at .1560 from May/July. Spot on where that drop ended today.
From the daily chart I quite expect it to move sideways for a few days before trying for the .1800 again. If that happens and falters, that's when I am going to start putting out a line of shorts.

You will then have 2 tops a few months apart and 2 tops inside those peaks, with the right hand one lower than the left.
But don't listen to me. This is just my view. I don't listen to anyone, so why should you. Just trade it how you see it. Hence why I went long this morning when half an hour previous I had decided to only go short.

What will keep you in the game is managing the move. Get it wrong. Get out. Get in profit, trail the stops. Get a big drop like that... Take it and say thank you before it starts back to the mean, or at least take some. If it turns into a swing for a couple of days or more than great. Then the stops will have to be a lot wider. But all trades (at least all my trades) start off by being minute trades.

 

[options]

daily

 

[smullaney]

I have some success on an hourly chart using slow stochs. Buy when they go above 30, close when they cross each other over 70. Visa versa for shorting. Its far from perfect but it has produced some success. But I am undisciplined in the money management (stops) side of things and this has cost me!!

 

[options]

In what way are you undisciplined?

 

[smullaney]

I tend to not place stops. When I first got going I placed stops to tight and kept getting hit only to see things turn in the direction I expected. So I got fast and loose and fell into that age old trap - waiting for the market to turn when I did get things wrong.

 

[Newtron Bomb]

smullaney
would you like to post a chart with a typical setup you are looking at and talk through how you would approach the trade... perhaps some of the more experienced traders can chip in and help you get over a hurdle.

Just a thought

 

[GeckoTime]

Yeah that would be helpful! By the way Newtron I am liking the intra day RSI. It seems to be doing a pretty good job in pre-empting moves by signalling over bought or over sold conditions. Have been tracking it for the past couple of days and also looked further back and it seem to work well?

Today is a funny day, a bit directionless in EUR/USD. Doesn't seem to know where to go

 

[Newtron Bomb]

geckotime
RSI is pretty useful at the moment am using it to confirm the validity of a s/r level between the 5 and 15 min charts
1.6680 is my next watch level on gbp if it doesnt head back north

euro$ is a bit directionless today the 5 min charts look a bit more tradeable than the 15 min today
got a longer term trade on eu/$ so am not too concerned with the wobbling around... for now

 

[smullaney]

I keep trying to attach the chart but I get timed out....

 

[GeckoTime]

Newtron a couple of questions if you don't mind - what do you define as longer term and are you a believer in $ strengthening or weakening within that time frame? Just curious, can understand if you'd rather not answer