Maginot Lines And Textbook Entries

The Mole is back with a vengeance – all it took was a double prescription of some anti-histamines and a good night of sleep. I am not going to cover equities tonight as there is frankly nothing to be added to what I have already offered in the past few days. You guys know where my target zone is and until we hit that there’s nothing for us to do.

I am sure you guys recall all the confusion, the rumors, the news, and all the pre-FOMC madness that dominated the headlines last week. Actually personally I don’t because i wasn’t paying attention but I know how the game is played and what buttons are pressed when and how. And I think this may be a great learning opportunity for all you noobs and non-sub readers out there.

Which is exactly why we are going to make a quick visit the Evil Speculator nursery today and cover some of the technical setups that triggered during that time and which are now well on their way:

Let’s start with ole’ bucky – that was an easy one: NLSL trigger and it’s off. That NLSL expires today so it can’t serve as your stop out point anymore. I would trail it down from now on.

AUD/USD – we got not just one but two setups – an inside day followed by a Maginot Line breach. That’s a term I made up a few years ago – in general it refers to a breach of the 100-day SMA. We have used it in different contexts in the past but that has been the recurring theme. Anyway – two chances to hitch a ride and it’s well on its way now. My target: 1.07.

Crude – again two chances to get on board – ID breach and NLBL breach. My target is 95.25.

Two inside days on sugar – which it took to get it out that sideways theta burn zone. Now finally on its way – not out of the woodworks just yet but I would push my stop up a bit. My target is admittedly optimistic but no balls no cookies – or what was that expression again? 😉

I loved that entry on coffee – inside day right at the Maginot Line. Yes, it ran like a hare since but I warned you guys about that – let’s hope you didn’t get emotional and threw in the towel. Again, not out of the woodworks either but I think it has reasonable odds of hitting my target zone.

I hope you’re seeing the evolving theme here: Leave the speculations and endless debates to all those suckers on the other side of your trades. Focus on the charts – ignore the news – bank coin. Trading doesn’t have to be complicated if you stick with time tested and true approaches, throw in a bit of money management, capital commitment guidelines, stop rules, and a bit of mental discipline.

Alright, let me climb off my soap box as we just got a delivery of brand new victims. Please step into my lair:

Gold – still not eatable – but it is starting to paint a textbook sideways triangle with pretty precise touch points. I would avoid anything in between and solely trade the swings on a touch of the contracting borders. Definitely worth a break out trade once it happens. But be aware that you will often see a fake out breach ahead of the last swing preceding a true break out. It that doesn’t make sense then don’t worry as I will talk about it when we get there.

USD/CAD – right at its Maginot Line. It’s not the only one hence the title of this post. I would be long here with a reasonably loose stop below the 100-day SMA. If it breaches then we are flipping our hats to bearish.

Similar idea on the venerable AUD/JPY – we are not there just yet but once it touches I would want to be long. Same rules as on the USD/CAD just the inverse of course.

USD/CHF – sitting right at its daily NLSL, which by the way expires tomorrow. I would love to see a drop here today or tomorrow but until that happens it’s a long. The odds start to diminish the day after tomorrow.

EUR/USD – also bouncing against a Net-Lines that expires tomorrow. We are short but are hoping to be wrong so we can flip it to a long position with a stop below that NLBL.

And then there’s our ugly stepchild which lives in the basement but may one day arise as the beautiful butterfly we were hoping it would turn to. Either that or it goes into the soup next week. That NLBL on the CAD/JPY is going to expire today but I still think that a swing above would be worth taking tomorrow if it happens. Yes, if you think it’s going to drop then this is a good spot to be short with little risk.

Keep it tight and frosty – play by the rules and you’ll be in good shape. Get emotional and sloppy and you may have to start looking for a day job – that simple.

Cheers,