Manic Monday Wrap Up

I was busy packing this morning, and really didn’t miss much as today’s tape was clearly on the tedious side – we’re talking Snooze Central here:

The Zero Lite traded in a tiny range today, which is something I often point out when it happens. For instance that little divergence today may have looked like something significant to an inexperienced observer. However, that ‘big spike up’ was only a 0.59 reading, which is pitiful and shows that there was very little participation. Which is why I suggested to ignore it – and I turned out to be right. Of course when it comes to ignoring signals you can’t have your cake and eat it too – thus the late day drop back to VWAP was always a possibility but could not be predicted.

There was not too much edge to be had today but Geronimo somehow managed to eek out one scalp. Frankly I was glad when it finally exited as I really don’t like tape like this. But the system is the system – and we won’t start overthinking it.

Public Service Announcement:

Yes, it’s that time of the year again – I will be heading for Seoul late tonight. I will only be gone for a few days and am planning on returning Friday the 18th.

I will put up the occasional comment cleaner with a few thoughts on the lastest tape. But don’t despair as I’m sure Scott will put up a few posts as well.

As a matter of fact see below his FX wrap up mega post. Scott is hoping that the currency trades I put up this weekend are about to crash and burn – he eat some bad sushi and after they pumped his stomach he inexplicably found himself on the other sides of my trades. Am I worried – heck yeah – Scott is a might opponent and although I’m currently on the plus side I am far from getting comfortable. But as Scott points out below – it’s not about being right or wrong – it’s what you do when you’re wrong (although being right does help quite a bit). FWIW – every time I take a trade I expect to be a loser – and I manage my capital accordingly. Alright with that said – here’s Scott’s update on the FX side:

Mole v. Scott Deathmatch

So Mole and I are on the opposite sides of trades today. Cause for concern – nope, because second guessing a tried and true method indicates that somehow this particular trade is important to me. Even though Mole, the rat bastard, is currently winning 😉

Another way of saying that is that you really care about the outcome, which is the exact worst state to trade from emotionally. This trade is simply one in a series of the next 1000 trades (as long as you dont blow up). As long as I stick to the system I know I *cant* blow up. Ergo, stick to the system.

That being said. I made some small, but significant errors here, and its useful to examine both sides of the case.

Lets start with the AUD. Mole and I took the same trade, Mole got a better entry from his bollinger entry, and he exited somewhere near the 50 EMA. I failed to notice that the 50 EMA would likely act as support. I should have banked some profits there, and I was stopped out on break of the daily high. I thought it had more in it to the downside, and although I’m probably right, I got stopped out for a sub-optimal exit as a result of my bias. It may seem like a small thing, but on my own ruleset I should have gotten a $3750 better exit on my position. How long do you think I will be around if I continue to make those sorts of errors each day?

Now what happened here is that I fell victim to RECENCY BIAS, a few down days and I just naturally assumed it would keep going. Its a clear error for me, and gives Mole a 1:zero start.

Its not too late for bucky to start making some moves, but the price action to date is more consistent with an corrective move than a major rise.

The Euro shows it a little clearer, price is bouncing between the 20 and 50 EMA’s (If those arent the MAs you use, it doesnt matter, since the shape of the MA’s indicates that most of them will be in the same zone)

So bottom line, I’m short the Euro, remain so, but it needs to get a move on. Any pause here will end up generating a bounce. Bounces on the smaller timeframe charts 60, 120, 240 to moving average support would be a low risk way to get in if you arent already on board. Moles Long idea would have been getting filled at a great level, so hes in a trade with a low risk and high reward.

Too early to call it. This one is inconclusive now. Mole 1: Scott Zero

The Kiwi Dollar, well Mole has this one all fucked up. To me the evidence is quite bearish at this point, although there was no way to tell what would happen at the old spike low I exited half the position there for a good profit. Price is tentatively embedded in the lower bollinger, we have a weekly sell signal as well, and potential monthly, and bounces should be limited by the moving averages just above which should act as resistance. I plan on reentering short on any bounce painting a sell setup.

Now its too early to tell. Moles entry is at exactly the point where I took partial profits, so I am in total agreement with him that the potential bounce point is here. Lets see what plays out. Mole 1: Scott zero still.

Now the USDJPY – Mole noticed the trendline which I missed, so I need to give myself a smack for that. Still, I’m inclined to think the price action on this is very bullish. Price is squeezed nicely between the keltners and bollingers, indicating high probability of a big move, but direction is unclear. I have a daily buy setup today, which I think is outstanding, hammer candle in an embedded bollinger band. I’ll be taking it on a break of the high. Right now I’m long a 1/3 size position, having taken 2/3 of my long in profits already for a multiple R win.

So price is stalled at the trendline. If that trendline holds, its probably going to fall back like Mole suggests. If it breaks, it *will* set off some upside capitulation. Risk reward on the upside trade is huge, and I will be reentering on the break of the daily high.

This one is still inconclusive, so bottom line is Mole 1: Scott 0

Motherfucker!

p.s. One more great setup, in Gold. Silver made a higher high, Gold did not follow it up. Its a good short on break of the daily low.