Forex Plays

Judging by the participation in the comment section you guys aren’t amused by today’s tape and I can’t really blame you. So let’s mosey over to the Forex side as it’s looking a lot more tantalizing.

2014-08-27_DX_update

The Dollar is taking it on the chin today and the DX is now back at the 100-hour SMA. That’s actually rather healthy as I prefer it see take a breather and shake out some weak hands as opposed to snapping higher and painting a blow off top. Let’s see what happens here – a close today below the daily NLSL could lead to more downside – however, I would watch the 100-hour, if it holds this may be contained. Next support zone is near 82.13.

2014-08-27_EURUSD_setup

I’m short the EUR/USD right now just before its daily NLBL. That is an excellent entry until it clears that 100-hour SMA. Not averse to flipping if being stopped out. It’s been an extended sell off for this pair and if it manages to finally clear a daily NLBL we could see a little jump higher shedding some of the fat.

2014-08-27_AUDUSD_setup

AUD/USD – very nice formation here and also consider that juicy Bollinger compression on the daily. I want to be long above that NLBL with a stop below today’s lows.

2014-08-27_AUDJPY_setup

Finally AUD/JPY – this is an hourly play on a breach above the current NLBL. If it does then we could see an extended squeeze here, which would not be out of the norm for a currency pair. Many top callers here and although I’m only going to drop 1/2R into this it may pay off well if it catches some traction.

It’s not too late – learn how to consistently bank coin without news, drama, and all the misinformation. If you are interested in becoming a subscriber then don’t waste time and sign up here. The Zero indicator service also offers access to all Gold posts, so you actually get double the bang for your buck.

Cheers,

Long Term Perspectives

Equities are bubbling higher with the ES futures touching the 2k mark for the very first time (the cash did it yesterday). Since there’s not much to be said on the trading front this is a good time to run through a few long term perspectives. Now that another major milestone is in the bag the question once again returns to how long equities can keep this pace up!

2014-08-26_spoos_update

Let’s start with price and our volume profile on the E-Mini futures. If you ever entertained illusions of possessing any clairvoyance in regards to the market’s direction then think back to early August when we were in the midst of what looked like a correction with legs. Since that time we’ve seen one of the most profitable reversals of this bull market.

2014-08-26_PnF

Actually there was a very similar one earlier this year in February. Looking at the P&F the setup and ensuing resolution looks almost identical to the one last winter. What followed was quite a bit of sideways churn and plenty of guesswork which lasted all through June. It’s possible that we’ll be entering a high volatility sideways period in a few weeks from now, so enjoy the getting while it’s good. However, that said – I don’t think any correction (sideways or down) would drag out for months again as we usually see more directional tape in the last quarter.

2014-08-26_JNK_TLT

If you recall from a few weeks ago – I was getting quite nervous about the discrepancy between the JNK:TLT ratio and what we were seeing on the equities side. We did get our correction but what’s remarkable is that this chart hasn’t moved an inch while equities were driving higher.

2014-08-26_JNK_LQD

So what gives? Well, it’s a complicated story and quite frankly I’m not a bond expert. But part of the answer may lead back to this chart – a cross between JNK and LQD (investment grade corporate bonds). Seems like bond investors are piling back into corporate bonds and unless we see a significant divergence on this chart there is little standing in the way of this raging bull market. Which unfortunately most retail traders have completely missed out on.

More LT perspectives below the fold – please step into my lair:


More charts and commentary below for anyone donning a secret decoder ring. If you are interested in becoming a Gold member then don't waste time and sign up here. And if you are a Zero subscriber you get free access to all Gold posts, which gives you double the bang for your buck!

Please login or subscribe here to see the remainder of this post.

Cheers,

How To Let Your Winners Run

It’s Monday morning and I’m not going to bore you guys with an exhaustive reflection on why traders should adopt a policy of cutting your losers short and letting your winners run. If you haven’t caught on to this very basic tenet of trading survival 101 then you either are new here or haven’t been paying attention.

2014-08-25_dollar_briefing

Instead I’m going to let our charts do the talking as the two specimen at hand should be considered textbook examples of how a strong trend can extend to unanticipated highs (or lows in the context of short campaigns). The Dollar campaign actually started as an hourly entry which then got converted into a daily setup when it breached a NLBL. I did make quite a fuzz about the long term implications of the inflection point at hand during that time. Unfortunately judging by the comment section it got either ignored or you guys simply disagreed.

Whatever it may be – the tape started to move in my favor for about two weeks, at which point ole’ bucky entered a sideways correction below 81.7. I could have taken partial profits there but given the squeeze potential I simply advanced my stop a healthy distance away and was able to sit things out. Now there is no real recipe for doing this properly – it takes a bit of finesse but my general approach in a nutshell is to gauge daily/weekly momentum and consider the squeeze potential that may feed continuation of the ongoing trend. In this case my verdict was to ‘let her run’ as they say. Currency markets move quite different from equities – so do futures by the way. Once a trend gets going it truly is your best friend.

2014-08-25_NQ_briefing

Similar example here on the NQ – it’s pushing 5R and I simply keep my stop a healthy distance away. In this case I’m using the NLSL at 4032.75 – which would cost me over an R in profits but once again I am unable to determine when we’ll see a correction. Given the fact that we had eight consecutive higher highs the odds are now ridiculously high (i.e. in the 98 percentile) that we’ll put in a red candle or two. If we do I would like to ride it out – hence my stop – low enough to sit out an obligatory correction but near enough to get me out if it turns into a sharp correction. Again, there is no crystal ball and it only will be clear in hindsight.

2014-08-25_spoos_profile_briefing

You may wonder why I’m not running to the bank to cash out right here and call it a trade. That reason should be apparent – we are in absolute no-man’s land and there is no context. A lot of folks are going to try to pick a top here and that’s exactly why I give this trend fair odds of continuation. If I was in cash up here I would wait things out as well – there is no reason for me to short this tape right now. Similarly I simply hold my longs and advance my stops as needed and per my best objective judgment. Whatever happens – I’ll be happily banking coin as it is – given that I am representative of strong hands who got their entry early (either due to skill or sheer luck) and aren’t really worried about missing an R or two.

Anyway, if you’re watching this campaign from the sidelines don’t spend your energy kicking yourself for having missed out. Instead take it as a learning experience for the next time when you manage to get a good entry and the tape starts moving aggressively (in your favor). Being able to simply sit and do nothing is half the battle.

A now to a few short term setups for my intrepid subs:


More charts and commentary below for anyone donning a secret decoder ring. If you are interested in becoming a Gold member then don't waste time and sign up here. And if you are a Zero subscriber you get free access to all Gold posts, which gives you double the bang for your buck!

Please login or subscribe here to see the remainder of this post.

You have been briefed – now have fun but keep it frosty. See you guys later this afternoon.

Cheers,





    Zero Indicator


    Darth Mole Alerts

  1. poll

    • What is your average spread on the EUR/USD?



      view results

      Loading ... Loading ...


  2. search warrant


  3. recent misdeeds

    1. Monday Setups
    2. Better Triptych Than Cryptic
    3. So Far So Good
    4. Forex Plays
    5. Long Term Perspectives
    6. How To Let Your Winners Run
    7. Double Whammy
    8. Let ‘Er Run
    9. Irrational Escalation
    10. Squeeze-A-Licious



  4. links


  5. yes we can!



    NinjaTrader
    Kinetick