exceptionally clear currency setup

Long time no post.

I have no idea about the $spx market direction, and the only thing to add beyond what Mole has already covered with previous posts is that it is also a retest variation buy as well as an inside day, triggered on break of the daily high.

There is, however an exceptionally clear setup on AUDUSD, which as we all know, is really $spx without the sneaky games.

So my operating theory is that since AUD opens first, Sunday night for you Norteamericanos, we should get a little clue before the shit goes down.

As you can see we have a very clear channel, with a very clear break to the upside. Note that the candle making the break had an open at the lows, close at the highs, with an expanded range. What this indicates is that the bulls were firmly in control all day, and finished the day in control.

At this point the highest probability is for increased upside, after a retest of the channel line to shake out the weak hands, which is *exactly* what we have.

We have a retest variation buy setup, triggered on break of the high. In this instance I think it would be permissible to scale into a long position at the open with a super tight stop a few ticks away, 1 tick below the daily low. I would personally increase that position on break of the daily high.

So conceptually what is happening here? We have a binary outcome. The highest probability is for an extended move to the upside, which you DEFINITELY want to be on. Why is it the highest probability? The bears have been in control for a whole month, and have driven price down, but in a choppy inconclusive fashion. If the bulls wrest control back you can expect a move lasting longer than a few days.

The other option, the LOW PROBABILITY OUTCOME, is that the break to the upside was a false break. If that was the case then buying pressure could be exhausted and the bears can have an opportunity to catch the break buyers wrong way, and force them to sell into weakness, driving price down in a feedback loop.

Remember that low probability outcomes catch participants wrong way, and cause expLosive moves.

What are the odds? Who cares! Just trade the setups as they appear.

Scott

This entry was posted on Sunday, April 15th, 2012 at 3:08 am. Both comments and pings are currently closed.

  • Schwerepunkt

    Thanks Scott. China’s currency “reform” announcement Saturday should also propel AUD and markets in general forward.

  • Anonymous

    Thanks Scott. Will keep an eye. I am kinda favoring the long side but will wait for a break above that candle. It was a similar setup last summer and it retested the highs at that time.

  • Schwerepunkt

    I still say “sell in May,” but May is not for a couple more weeks. We could get a rise and retest the highs before it fades. 

  • Anonymous

    thanks for this, as i was actually too focused at the weak friday closure, didn’t do my homework this weekend (too much other stuff) and overlooked this. your post is correcting my bearish bias.

  • Joe_Jones
  • http://iberianviews.blogspot.com/ catracho

    But no break out yet on weekly chart

  • http://iberianviews.blogspot.com/ catracho

    might be a bit too obvious..since last year was a “sell in May”..

    weak April to shake out weak hands and rally into summer..may be on the cards..but only speculative GUESS!

  • Schwerepunkt

    Plucky vikings. 

  • Anonymous

    News don’t matter mate :-) 

  • Anonymous

    The breakout did happen, its not a question of opinion. The purpose of going to weekly and monthly views is to remove noise from the signal. 

    In this case I think that going to a higher timeframe causes you to miss something, rather than see something clearer :)

    To me, the outcomes in order of probability

    1) Sustained upmove
    2) Deep retest of the 29/2 highs
    3) Falling away HARD

  • Joe_Jones

    After reading that I feel like moving there

  • Joe_Jones
  • Joe_Jones
  • http://practicalt.blogspot.com/ Darth_Gerb

    certainly.

  • Joe_Jones

    ;-)

  • Anonymous

    I do have one question on this setup though CS – are you suggesting entering at Monday’s open or the FX market open?

  • Anonymous

    Markets open flat as Lindsay Lohan..

  • Anonymous

    Took a few trades on from previous posts which are looking ripe:) Short /ZS and long /CC.

  • Anonymous

    Hmmm I took a short /ZS too. So far no divergence on /CC. I was wondering if we could see a lower low before rally.

  • Anonymous

    /CC just make a higher low and tested it 4 times:)

  • Anonymous

    Always amazes me how far they push in one direction before turning. The whole world stop eating chocolate or something?

  • Anonymous

    Well, their capital’s mayor is this gentleman:

    http://en.wikipedia.org/wiki/J%C3%B3n_Gnarr

  • Anonymous

    Preacher telling the truth and it hurts!

  • Anonymous

    No. Its only a long setup at this stage. 

  • Anonymous

    /DX breakout to new high:)

  • Anonymous

    At this stage AUD is falling in early trade. I would now wait for a break of the daily high before getting long

  • Anonymous

    I was just about to double check with you on that. I took a small position at the open but set my stop at 1.035 which obviously got knocked out, but had posted previously just to confirm that given its RTV Buy and not an inside day, a breach of the low didn’t mean it was a short signal. 

    Thanks for the clarifying post before…

  • Anonymous

    ZFX flat-lined? Anybody else?

  • Anonymous

    Doesnt look like its on.

  • Anonymous

    Might get interesting

  • Anonymous

    Time is current but no signal.

  • Anonymous

    Hehe, 3 of 3. Just saying:)

  • Anonymous

    EUR/USD looking rather unhealthy. 

  • Anonymous

    Ya, 1.30 and kiss that goodbye.

  • Anonymous

     Kiss your momma AUDUSD

  • Anonymous
  • Anonymous

    To think I closed that short last week at a LOSS! Damnnnnnn…

    With the Greenback finally showing strength, I think we’re going to see a retest of 1355 and possibly beyond….

    I’m watching the Dollar regain parity right now with the C$. Once it does so convincingly with the Loonie, the AUD is most likely next.

  • Anonymous

    I know how you feel. Let it go. There will always be another trade around the corner.

  • Anonymous

    Haha…I let it go. Of course it helps that I had a decent outing on the uptrend day on Wednesday to get me back to flat after all the whipsaw on AUD related things last week.

    Looking forward to tmr…I think I’m sick in the head, I look FORWARD to Mondays and the beginning of trading.

  • Anonymous

    At 200-hour SMA now, could start a bounce.

  • Anonymous

     Sorry to hear that.  It might be doing the kiss now…

  • Anonymous

    My psyche is better than it used to be so I’m not too phased. A little frustrated by it all and I missed a few moves because I didn’t want to be in the market when the China data came out.

    Plus, a few well managed losses won’t kill me. If anything, there are some intriguing movements to watch – like the Greenback finally show some semblance of getting off the mat. Maybe it’ll finally break out…maybe not. And just look at ZB! It’s crawling up to the point where it might slowly turn from a juicy looking short opportunity to a potential bullish breakout.

    It may well be a very interesting week! (and potentially filled with profitable opportunities =P)

  • Anonymous

    Chanelling Precter?

  • Anonymous

    Don’t follow him, is that what he is calling?

  • Anonymous

    He’s poking fun at you because Prechter is well known for looking at things 3 waves at a time

  • Anonymous
  • Anonymous

    LOL…that first bit made Bert look like he was humping his bed!

    “Damnit Ernie now you gave me morning wood with all your poking!”

  • Anonymous

    haha yeah. hes been calling for P3 since 2010!

  • Anonymous

    He’ll get it right eventually with that persistence…a broken clock is right 2 times a day after all…

  • Anonymous

    agree

  • Anonymous

    Don’t you mean “turd of a turd”?

  • http://practicalt.blogspot.com/ Darth_Gerb

    Unless /ES can pull some serious 30 pts higher overnight…
    He’s DEAD Jim.
    http://i44.tinypic.com/oh379j.png

  • Anonymous

    Hehe! yes…..

  • Anonymous

    Noooo inject some green stuff quick. Wheres Ben?

  • Schwerepunkt

    Bones! There must be SOMETHING we can do?

  • Anonymous
  • Anonymous

    He is buying treasurys:)

  • Anonymous

    Quick! Someone sacrifice a red shirted Ensign!

  • Anonymous

    Dammit Jim!!!!!!!!!

  • Anonymous

    /HG looks like it wants to free-fall to 3.4:)

  • Anonymous

    Remember that FCX chart I posted weeks ago? Does seem to precede copper.

  • Schwerepunkt

    Funny . . . I guess it’s a three-man game and he’s the odd man out.

  • Anonymous
  • Anonymous

    Yes, do remember it:)

  • Anonymous

     It’s generally a smart move not being in the market when reports come out.  I find it’s best to simply follow momentum created by the reports :).  I hope it’s a profitable week for you and you gain back those losses!

  • Anonymous

    http://content.screencast.com/users/AMCabrera/folders/Jing/media/4db55ce3-c1ad-4945-84d6-ad51a3dd5200/2012-04-16_0439.png
    http://content.screencast.com/users/AMCabrera/folders/Jing/media/b5f071ce-10f9-41f2-bf7a-a4f28fb580a1/2012-04-16_0440.png
    The /es and S&P index. In the /es we are getting a test for 1370 but for the S&P index if it does reach that level will be the nightie night right sort of kind of. GET READY boys trading week starts! I know im excited.

  • Anonymous

    http://content.screencast.com/users/AMCabrera/folders/Jing/media/01772667-fa0b-4924-9c47-f92326a338ad/2012-04-16_0624.png
    alright it is looking like it will give us that nightie night test back for cash S&P. This quick test is showing we could touch 1380 before the selling starts to the downside where we will see 1367

  • Anonymous

    Shorted /HG on the bounce here:)

  • Anonymous

    http://content.screencast.com/users/AMCabrera/folders/Jing/media/9c9a3dd5-b8d9-49ee-82ed-061c68579fcc/2012-04-16_0819.png
    I have to say it again. BE wary of buying dips. Dont let the obvious ruin your account and avoid the should have, should have known crap. PLan ahead. Again my opinion is not of the epic collapse we saw during 2008 but just a good violent pullback that will trigger sell orders. We could easliy see 1355 today or next day. In long run I could see this reaching 1280 before summer but first we will more than likely see this thing pop above 1400 again once we reach 1355.

  • http://practicalt.blogspot.com/ Darth_Gerb
  • Schwerepunkt

    Wow, Canadian securities are in high demand. Bad news for USD.CAD Drew. 

  • Schwerepunkt

    It’s a trap!  

    Whoops, wrong show . . . . 

  • Anonymous

    Had a thought this morning… Anyone ever try using Net Lines for liquid options? Something like AAPL?

  • http://practicalt.blogspot.com/ Darth_Gerb

    well if you were counting Sunday evening profits, there gone for now..

  • Anonymous

    ZFX down for anyone else? Time is updating, but not the chart.

  • Anonymous

    Been out all night.

  • Anonymous

    I think Mole’s been out all night.  No Daily Zero for a few days, no ZFX.  Must have found some sweet thing to keep him busy.

  • Anonymous

    Tell me about it. A large chunk of my assets are in C$ but the other half is in US$ and GBP.

    This gap up was quite what i was expecting after seeing last night. SHould be an interesting week…time to settle in and wait for the end of amateur hour.

  • Anonymous

    Doesn’t look like the market has the staying power. 2nd div on the hourly, see if it can hold.

  • Anonymous

    http://content.screencast.com/users/AMCabrera/folders/Jing/media/16b57274-7c16-4ad7-aaac-9bf8ef4aab3f/2012-04-16_0938.png
    Keep steady.  You can clearly see that the 10th and 12th were screw you and screw you and then the price was brought back to the middle. So be careful with over excitement.

  • Anonymous

    Ah, pulled an all nighter! Makes for a rough Monday:)

  • http://practicalt.blogspot.com/ Darth_Gerb

    AAPL, breaks 600

  • Anonymous

    And on this fine morning, we have an example of getting whipped overnight and whipped right back in the morning…hehehe

  • Anonymous
  • Schwerepunkt

    I’m in the same boat. I live in Ontario. House and some assets in CAD, a lot of cash and properties in USD. Income in both currencies. 

  • Anonymous

    AAPL puked!

  • Anonymous

    Well there appears to be some divergence that’s bullish on the ZL – worth keeping tabs on but I’m also reluctant to do anything until the trend alert comes out…just in case.

  • Anonymous

    That is a thing of beauty:)

  • Anonymous

    Next stop 560 (50 on the daily)

  • Schwerepunkt

    No breakout on AUD. Instead we’re below Friday’s low and headed back down to Thursday’s low or Wednesday’s low. 

  • Anonymous

    LOL – you’re puts took a beating thursday but I’m sure you’re one step closer to having a money room a la Scrooge McDuck today =P

  • Anonymous

    Nearly there on the inside day setup trigger…

  • Anonymous

    This is an impulsive wave we are in for sure. AAPL puts are even better:)

  • Anonymous

    Now wait for close below. Still running my what seems to be IMO a win win short. AUD/USD.

  • Anonymous

    Inside day triggered…but bullish divergence (small) in the ZL, decisions decisions….

  • Anonymous

    original recipe please. :)

  • Anonymous

    I was just thinking that right after my post so I took the trigger but once again, my hesitation is something that needs to be ironed out.

  • Anonymous

    Q’s approaching support at 65.24 (50ma) so will likely dump AAPL puts their.

  • Kudos

    aapl down, single handedly bringing S&P down?

  • nyse

    Did anyone have any luck getting the NLBL/NLSL rules coded into TOS (llike Mole has done)? If you have, please let me know; I will pay you if you’re willing to share.

  • Anonymous

    Technically we have break lower of fridays inside day. But what about the gap open, then drop – could be shake the weak longs out, then BEN to the rescue?
    What do market internals & centiment indicate

  • Anonymous

    short triggered in EUR/JPY at 105.20

  • Anonymous
  • Anonymous

    Shorting at VWAP….

  • Anonymous

    I just bought the indicator package at ThinkScripter. He has Net Lines in the package, and the code is there so you can adjust if you like.  I think it’s $75 for lifetime access.

  • Schwerepunkt

    Shorting what?

  • Anonymous

    http://content.screencast.com/users/AMCabrera/folders/Jing/media/3a127a15-f009-4b6f-ac33-42158917d7e7/2012-04-16_1053.png
    you see what just happened. Obviously grabbing both sides. No one is committed to either side.

  • Anonymous

    Sorry ES…

  • Anonymous

    Hum, indeed!

  • Anonymous

    I have Net lines for TOS. I do not know how to post it on this forum. Help advise and I will share.

  • Anonymous

    It’s not breaking down but at the same time, look at that flat ZL for this entire upswing from the low…

  • nyse

    Awesome. Im on that site right now. Thanks man.

  • nyse

    Go to STUDIES > EDIT STUDIES (box pops up)
    Find the Script on the left hand among the studies, RightClick > VIEW
    Select all the code in the “thinkScript Editor” and COPY
    Paste

    I can send you money if you want. 

  • Anonymous

    Playing out nicely on a retest.

  • Kudos

    Seems like we got a wedge on the hourly. Likely a big move is coming, direction unclear.

  • Anonymous

    That worked out well and got me my target 4 handles…

    But so far no breakdown so my inside day short is just fluttering atm…

  • Anonymous

    A bit of bullish divergence too…but lets see if the ZL might tip us off towards the direction…

  • http://pulse.yahoo.com/_IF7HINHIP5ITYT6TDHACMWJUXQ Huisok

    Mole what about a copper update?  your bias was bullish when it was building the flag no?

  • Anonymous

    copper is not buying move north..

  • Anonymous

    I am on a mac. Once I find the code how do I copy?
    Or I can export and then attach the .ts file if you know how.
    Once you get it if you like it you can send some money if you would like.
    Thanks

  • Kudos

    apple + C then to paste apple + v

  • Anonymous

    Anyone get a Trend Day Alert today?  Not me…

  • Anonymous

    No alert today – although it has traded SO FAR like a downtrend day given that Zero mark touches were good shorts and we haven’t breached VWAP or +0.5…but we are north of Zero mark now, so that could change in the next bit…granted, lunch hour coming up.

  • Kudos

    no. but I dont think we’d have a trend day. http://dl.dropbox.com/u/30359092/4-16%20tick%20%26%20S%26P%20intraday.gif the red line on the bottom panel (which represents tick EMA 10 min) is 0. We started out pretty positive then dipped so I would guess no edge. Hope this answers your question.

  • Anonymous

    Unlike the good shop Titanic, this market is unsinkable, it seems!
    (disclosure – i have a small long position punt)

  • Anonymous

    Net Lines for TOS

    #DEF VCLOSE = (((HIGH + LOW) + (CLOSE * 2)) / 4) ;
    DEF VCLOSE = (((HIGH + LOW) / 2)) ;
    #DEF VCLOSE = CLOSE – (((HIGH + LOW) + (CLOSE * 2)) / 4) ;
    #DEF VCLOSE = CLOSE;

    def VBI = (((VCLOSE[1] < VCLOSE[2]) * (VCLOSE[2] < VCLOSE[3])) * (VCLOSE[3] VCLOSE[2]) * (VCLOSE[2] > VCLOSE[3])) * (VCLOSE[3] < VCLOSE[4]));

    def vmovebi = (sum(vbi, 5) / 5) == vbi;
    def vmovess = (sum(vss, 5) / 5) == vss;

    declare upper;

    rec top;
    rec bot;

    top = if 
    VBI then High[3] else top[1];

    bot = if  
    VSS then Low[3] else bot[1];

    plot BUYline =  if vmovebi then Double.NaN else TOP;
    BUYline.SetLineWeight(1);
    BUYline.SetDefaultColor(color.BLUE);
    BUYline.SetPaintingStrategy(PaintingStrategy.dashes);

    plot SHORTline = if vmovess then Double.NaN else BOT;
    SHORTline.SetLineWeight(1);
    SHORTline.SetDefaultColor(color.MAGENTA);
    SHORTline.SetPaintingStrategy(PaintingStrategy.points);

  • nyse

    You are a pimp. Thanks man.

  • nyse

    Send me your paypal and Ill send you a few bucks once I get it working

  • Anonymous
  • nyse

    Done.

  • Anonymous

    This might end up being one of those “keep hitting VWAP all day and getting rejected” before a crazy rejection or a sky rocket to the moon. All the coiling probably lends itself to this too.

  • http://pulse.yahoo.com/_IF7HINHIP5ITYT6TDHACMWJUXQ Huisok

    or close unresolved and gap tomarrow …..

  • http://pulse.yahoo.com/_IF7HINHIP5ITYT6TDHACMWJUXQ Huisok

    funny day dow up .6% nasdaq down .6%…….

  • Anonymous

    Rocket spike on the ES!

    Shorts knocked out…boohoo.

  • Tronacate

    EURUSD squeezing north

  • Schwerepunkt

    AUD.USD daily MACD did crossover to the upside end of last week. It crossed down way back on February 10. See arrows on chart. So, it’s probably time for a relief rally at least. I’d place a stop below the recent low at 1.022630.

    http://content.screencast.com/users/Schwerepunkt/folders/Jing/media/196d5e09-a9ae-4198-8809-0858a5ede658/2012-04-16_1341.png 

  • Anonymous

    ZL says no to this move, short /ES:)

  • Schwerepunkt

    Would that be a No Dong?

    [50SMA was holding ES down, when that failed, I think a lot of shorts were squeezed]

  • Anonymous

    I just did again after seeing the divergence…

  • tradem4alpha

    till the bottom last week, IWM was clearly an underperformer; but from then it clearly outperformed; on Friday, when SPY was down 1%, IWM was down 1,3%; when SPY started to slide in the last hour, IWM didn’t even move; and today, very peculiar phenomenon: till around 11 am it clearly underperformed (down 0,7% versus SPY down 0,3%), but look what happened now (SPY up 0,3% and IWM up 0,68%). This clearly shows that at least a short term bottom is in; so for me, no shorts today.

  • http://pulse.yahoo.com/_IF7HINHIP5ITYT6TDHACMWJUXQ Huisok
  • Anonymous

    Aussie down .5% as well.

  • Anonymous

    AAPL sinking like a rock:)

  • tradem4alpha

    plus, XLF is clearly outperforming, up 1,02%; no true correction starts with the banks outperforming; these always underperform.

  • Tronacate

    interesting……

  • Anonymous

    Hell, we may see 560 on AAPL today:)

  • Anonymous

    http://content.screencast.com/users/AMCabrera/folders/Jing/media/ce8cc18a-51c5-4d86-a288-b6dd8de570c0/2012-04-16_1435.png
    http://content.screencast.com/users/AMCabrera/folders/Jing/media/465819ba-f6bb-45af-8830-85828fe61f8e/2012-04-16_1436.png
    so sad. scouring news? I can find an explanation. There was always the risk of a “pop”, then add a sprinkle of long/short ratio about 50/50 what do you get “unexplained” pops.

  • Anonymous

     Is this painting at the Louvre or Smithsonian :-)

  • Schwerepunkt

    No, coco the gorilla

  • Anonymous

    Watching 5 min closely, break of this and more upside.

  • Anonymous

    S&P has still failed to capture 1380. Nothing really bullish about it yet.

  • Anonymous

     I see what you mean – hopefully no ‘forgery’ :-)

  • http://pulse.yahoo.com/_IF7HINHIP5ITYT6TDHACMWJUXQ Huisok

    RUT futures is stalling at 800

  • Anonymous

    Thanks!!

  • Anonymous

    Yea I’ve just walked in a few moments ago. This crap is boring. S&P just wants to hang around 1370 and AUD/USD trying to look sexy. But I remain bearish until proven otherwise.

  • Anonymous

    VWAP test from above this time, might be a good place to lighten shorts…and let the rest ride

  • Anonymous

    VWAP test from above this time, might be a good place to lighten shorts…and let the rest ride

  • Anonymous

    the whole up move smells of distribution…

  • Anonymous

    the whole up move smells of distribution…

  • Anonymous

    Bulls are having flashbacks of Fridays late day drop!

  • Anonymous

    Bulls are having flashbacks of Fridays late day drop!

  • Kudos

    What buying was there to distribute?

  • Kudos

    What buying was there to distribute?

  • Anonymous

    seems someone is buying

  • Anonymous

    battle line seems keeping vix negative today

  • http://evilspeculator.com molecool

    ¤ø„¸¸„ø¤º°¨¤ø„¸¸„ø¤º°¨ 
    ¨°º¤ø„¸  N E W  „ø¤º°¨ 
    ¸„ø¤º°¨ P O S T “°º¤ø„¸
    ¸„ø¤º°¨¤ø„¸¸„ø¤º°º¤ø„¸

  • Tronacate

    Bucky needs to get on a roll here……

  • Anonymous

    Reduced half:)




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